Parker v The Queen P20/1995 [1996] HCATrans 247 (19 June 1996)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Perth No P30 of 1995

B e t w e e n -

DAVID CHARLES PARKER

Appellant

and

THE QUEEN

Respondent

BRENNAN CJ

DAWSON J

TOOHEY J

McHUGH J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON WEDNESDAY, 19 JUNE 1996, AT 10.19 AM

Copyright in the High Court of Australia

MR G.R. JAMES, QC: May it please the Court, in that matter I appear for the appellant with my learned friend, MS M.J. WATSON. (instructed by Dwyer Durack)

MR J.R. McKECHNIE, QC: If your Honours please, I appear with my learned friend, MR A.R. BEECH, for the respondent. (instructed by the Director of Public Prosecutions (Western Australia))

BRENNAN CJ: Mr James.

MR JAMES: May it please the Court, in accordance with the direction given on the granting of special leave, fuller submissions were filed in advance of the hearing than would otherwise have been the case and your Honours have had the benefit of those submissions. Might I take your Honours to them shortly. Your Honours, the appellant was charged with various counts of stealing under the Western Australian Criminal Code. The indictment appears at page 1 of appeal book volume 1. There were a number of counts, on some of which he was convicted, on some he was acquitted. The counts were all in a common form, that is that he on or about a given date stole a sum of money, the property of a named person and others.

The short facts surrounding that form of indictment were that the appellant had been a candidate for election in various elections and had received various campaign donations. Those donations had been paid into a bank account and thereby a mixed fund was created. Those donations had accumulated and from time to time there had been withdrawals. The withdrawals, or at least certain of them, relating to particular purposes for which they were used, were said to have amounted to appropriations which were stealing, either in that he took with intent permanently to deprive or an intent to use at will under section 371 of the Western Australian Criminal Code. The way in which that arose is that, under section 373 of the Western Australian Criminal Code, there is a provision which deems property given, accompanied by a direction that it be given or applied to a particular purpose, to remain the property of the donor until that purpose is satisfied.

In each case therefore it became necessary to ascertain whether there was a direction and if so what that direction was, so that the use to which the money was put could be examined in the light of that finding. Now the Code itself has its own tracing provisions; in the general definition of property and in the definition of that part of the Code relating to stealing, which defines property and money, and allows money to be traced through to credits in a bank account and withdrawals from that account.

The appeal was successful below on a number of grounds. Those grounds included that there had been improper cross-examination of the accused by the Crown Prosecutor, that the directions given and the way in which the Crown put its case concerning the definition for the jury of what was a direction for the purposes of the Code, were entirely inadequate notwithstanding a submission put by counsel for the defence, and that the Crown in essence took a broad brush approach to the exercise to say that whatever the directions might have been, and they apparently differed from donation to donation, they were inconsistent with the use to which the appellant had put the money.

At trial, indeed, the Crown went so far as to seek to rely on what was said to be a system, that is a system involving the sending of what were described as begging letters or solicitations, the receipt of cheques variously made out and the acknowledgment of those cheques by way of receipt or otherwise, the banking into an account styled a campaign account and the eventual withdrawal from that account. The jury, however, appears to have rejected that system as of universal application in the acquittals and in addition there was an analysis made on appeal by Mr Justice Ipp concerning whether the evidence of system was such as to propound a real chance of success to the Crown on that basis.

At the hearing before the Court of Criminal Appeal however, although the accused succeeded on those grounds and substantially succeeded, because of errors either made by the Crown in the way in which it presented its case or errors into which they held the trial judge was led by the way in which the Crown case was presented, the court was of the view that there should be a new trial. It was the exercise of the court's discretion in that regard that gives rise to the present appeal, since we contend that the court erred in discretion and erred in law in granting a new trial in those circumstances, and particularly since little attention was given at the trial to the question of whose property any individual sum said to be stolen was. That of course is of real significance in a case such as this, because with a mixed fund such as existed, on an analysis as set out in our written submissions, at no point does it appear that as far as the named persons were concerned in each charge to the indictment, that one can say on what I have called a straight-forward accounting, one dollar of that person's money can be said, beyond reasonable doubt, to have been the subject of the withdrawal, when one takes into account the acquittals and the other sums in the account and the sums properly withdrawn for purposes that were accepted, at least, as not being challengeable. DAWSON J: Is that common ground?

MR JAMES: I am not sure that it is, but - - -

MR McKECHNIE: No, your Honour, it depends really on the answer to the legal issue. As an accounting exercise, if the directions were given as the Chief Justice held in Parker v Taylor, which Justice Ipp seems to have accepted, there was not sufficient undirected moneys at the time of the withdrawal of the cheques to meet those cheques.

MR JAMES: Yes, and I think we may, in fact, have common ground; that is, there was not sufficient undirected moneys to meet those cheques, those of which he was convicted, however, the question of being able to ascertain whether there was any directed moneys, the property of the person named, without resort to any doctrine of equity or any doctrine involving joint or common property, it would appear that one could not say that one dollar of the named person's money was in fact the subject of a taking.

TOOHEY J: Is it on that footing that you say the Court of Criminal Appeal erred in law in directing a re-trial?

MR JAMES: Not just that, your Honour, because that illustrated a problem for the court and this court sought to get around that problem, or to deal with that problem more correctly I should say, by invoking the doctrines relating to equitable tracing and priorities.

TOOHEY J: But they, in a sense, lead back to your primary proposition, do they not?

MR JAMES: The primary proposition arises because the difficulty is to work out who gave what direction and what directions or direction apply to the sum that was withdrawn, either in whole or in part.

DAWSON J: But presumably you say, well, whether or not you can apply the equitable doctrines, that was not the way in which the Crown put its case at trial and it cannot now seek to put its case in a different way.

MR JAMES: Your Honour reminds me of the argument that I presented in Lesley Morris King, which found favour with three of the Bench and, your Honour - - -

DAWSON J: That found favour with the minority too as well.

MR JAMES: That is right, and your Honour did in fact write the principal judgment in that decision. In this case there are a number of matters: they are that it was the Crown that led the court into error at trial, it was the Crown that did that by reason of failing to appreciate what the problem was in the use of 373 and directions as applicable to a mixed fund. There was an argument that you could regard all persons as donating to the fund as it were as though they were members of the Communist Party in a Bacon v Pianta situation, so that all moneys in the fund were to be held in common or jointly. That argument, of course, would have depended on the intention of the persons concerned, yet at trial and on appeal it was held that it was not open to the accused to prove the subjective intention of the various donors as to the way in which the money could be used.

TOOHEY J: But are you not running together questions of discretion and law?

MR JAMES: No, I was setting the context for why we say that there was an error of law, and the error of law in granting a new trial arose because on appeal for the first time resort was had to the equitable doctrines to make a case that was different and, in our submission, that is one layer of error; below that there is the further substratum of error.

BRENNAN CJ: Let us assume that the equitable approach is not correct. If one looks at the Code to see whether or not a case could be made out, one would look at section 371, the definition of "special property" and the definition of "property" in the same section.

MR JAMES: Yes, the definition of "property" at 371(7).

BRENNAN CJ: Yes, and a relevant term there would be what, debts?

MR JAMES: Bank credits.

BRENNAN CJ: Bank credits or debts, yes, depending which way one looks at it.

MR JAMES: Yes. But also any property in which or for which it has been converted or exchanged and anything acquired by the conversion or exchange whether immediately or otherwise.

BRENNAN CJ: Well now, just taking it step by step, there are cheques drawn, some of them subject to direction as to the application of the funds, those cheques are deposited to the credit of a mixed fund bank account. Now, does the person who drew those cheques and gave the direction have any, and what, interest in the bank account?

MR JAMES: Your Honour, for the purposes of the criminal law, under section 373:

such money and proceeds are deemed to be the property of the person from whom the money.....was received, until the direction has been complied with:

BRENNAN CJ: Right, well then, where does that take us in terms of the interest of the person who drew the cheque and gave the direction in relation to the blended fund, which is the bank account?

MR JAMES: If the section can be used with a mixed fund - and I put that aside for the moment - - -

BRENNAN CJ: That is really the question I am asking you.

MR JAMES: I am not sure it is, your Honour. The reasoning would be that that person retains, because of the conversion, an interest in the debt or bank credit shown in the bank account to the extent of the amount encompassed by the direction.

BRENNAN CJ: Would that be a charge or lien for the purposes of the definition of "special property"?

MR JAMES: No, your Honour.

BRENNAN CJ: Why not?

MR JAMES: Because all that has happened is that there is a deeming provision to deem what is there to be the property of the person.

BRENNAN CJ: You have got a blended fund which includes funds which have been contributed by persons who are still regarded as earning them.

MR JAMES: Yes. So they do not have a charge or lien; they have got deemed ownership.

BRENNAN CJ: Of what?

MR JAMES: The money that has come from their account by virtue of the cheque to the other account - - -

BRENNAN CJ: But we are talking about property, not what is represented; we are talking about property that is capable of being stolen?

MR JAMES: Yes, your Honour.

BRENNAN CJ: So if we are talking in those terms we have got to identify the thing or substance or cause of action or chose in action or whatever it may be called, which is capable of being stolen.

MR JAMES: If one can identify it.

BRENNAN CJ: Well now, what was taken was money out of the fund, is that right?

MR JAMES: Yes, that is right.

BRENNAN CJ: So it is the money out of the fund that has to be identified in terms of ownership?

MR JAMES: Yes, one has to identify that which comes out of the fund with that to which 373 applies.

BRENNAN CJ: Well I do not know that that follows; 373 may apply to the money that is contributed, it then goes into the fund, it is there mixed with other moneys, it is, so far as one can see, indistinguishable from other moneys with which it is then mixed.

MR JAMES: Precisely.

BRENNAN CJ: So that if the money that is taken out is to be capable of being stolen it must be because that money - that is the money taken out, not the money which is put in - is the subject of ownership.

MR JAMES: Yes, and indeed, your Honour, it goes further, because it is not just the money taken out; it is the money of which the improper use is made when that money is used, because it was plainly contemplated the money be taken out.

KIRBY J: But it was equally plainly contemplated that this would operate in the modern society in modern conditions of banking where money goes in, and I think we have got to then understand that it does not remain as money, it is not a pot of gold there, it is not as Justice Gummow said, ducats; it becomes just an entry.

MR JAMES: Yes, that is right.

KIRBY J: Somehow the Code is expected to operate in that condition; the use of words such as draft, and so on, banks, cheques, indicates that the Code is intended to operate in those circumstances. You have to, I think, show us a theory of the sections that contemplate the operation of the Code in the modern circumstances of banking. Money is not kept in a tight compartment.

MR JAMES: Your Honours, our primary argument is that 373 does not operate on a mixed fund in these circumstances, and it certainly cannot operate by way of utilising the equitable doctrines of tracing. Now, putting those doctrines aside for a moment, the Court of Criminal Appeal embarked on an exercise, particularly Mr Justice Ipp, to decide whether the evidence was sufficiently cogent so that a re-trial would be appropriate in the circumstances. That exercise was embarked on in the light of the equitable principles in order to seek to ascertain whether there was any money that could be identified to which - and I am using the word money now in the wide sense that your Honour Mr Justice Brennan has put to me - the withdrawals might attach that could be said to be the property of the persons named in the indictment, and the only way the court embarked on that exercise was in the light of the equitable principles, in effect, defining what would be, as and between the donors to the fund on distribution, their rateable entitlement in equity.

KIRBY J: So your primary submission is that, in effect, the Code misfires in this circumstance where the money has passed from being money, bank notes, bank drafts, cheques and other things, into a bank; once it has gone in there it cannot be the subject of the conversion - - -

MR JAMES: Unless it could be identified so as to match up with the indictment. But why the court embarked on this exercise was, having found that there were these grounds of appeal, that (a) should be upheld, (b) amounted to substantial miscarriages of justice, the question then was, was it appropriate, in the exercise of discretion, to order a new trial?

KIRBY J: But that is a couple of steps down. We understand you have the point on the equitable doctrines, we understand you have got the final exercise of discretion, but coming back to the first question of whether the offence was established, it seems unlikely that the Code was intended to lose its operation in circumstances where the money goes into a mixed account.

MR JAMES: Your Honour, it is not intended that the Code should lose its operation; the question is section 373 and its applicability to a mixed fund in these circumstances.

KIRBY J: But your theory means that if the accused puts the money into a separate account, the ALP election fund, Blog's account, then they are liable, but if they mix it up with the donations of others then the Code misfires.

MR JAMES: No, your Honour, the accused, in this case, put it into such an account, but - - -

KIRBY J: But only into a common account. I am saying that your theory is that if you keep separate accounts for each deposit, then the Code will attach because it is identifiable, but if he puts it in a common pool, as most ordinary citizens do with banking, then the Code does not attach. It seems an unlikely consequence.

MR JAMES: No, your Honour, that submission is that section 373 will operate, even on a common or mixed fund, where you can adequately define that credit standing to the account, or portion of it, as linked through to the sum, the subject of the direction, which is said to be the property of the person named in the indictment. This issue does not go so far as to say the Code does not apply to mixed funds; what it deals with is this case.

BRENNAN CJ: What is the linkage that you would propose where the Code would operate?

MR JAMES: Your Honour, take for instance the first count in the indictment, and your Honour the Chief Justice took us to this on the special leave application. One of the matters that an accused needs to know so that he can meet - - -

BRENNAN CJ: Well now, before you get on to what the accused needs to know on the conduct of the trial, I am endeavouring to discover the meaning of the Code. You say that the Code can operate when there is a fund into which is paid a sum which is subject to a direction to which section 373 applies, provided the money that is taken out of that fund can be linked to the payment in.

MR JAMES: Can be identified with the direction.

BRENNAN CJ: Right, now, how do you say that identification should take place?

MR JAMES: Well, for instance, if the fund contains only one sum, then there is no problem; if the fund contains two or more sums - - -

BRENNAN CJ: But there is a problem. If there is $1,000 of my money in the fund to start with and I receive a cheque for $500 subject to a direction, and then I take out $250, what would you say?

MR JAMES: In those circumstances, your Honour, it cannot be said that, in our submission, the Code would catch that withdrawal.

BRENNAN CJ: If I take out $750?

MR JAMES: And how much of your Honour's money is in there?

BRENNAN CJ: $1,000.

MR JAMES: The Code cannot catch that $750.

BRENNAN CJ: If I take out $1,250?

MR JAMES: The most the Code could catch would be $250.

BRENNAN CJ: Now what is the theory by which the $1,000 is deducted from each of those payments?

MR JAMES: Your Honour is now talking about the theory of the Code - - -

BRENNAN CJ: That is right.

MR JAMES: - - - not the question of whether it can be proved beyond reasonable doubt as to which sum is which.

BRENNAN CJ: I am endeavouring to discover the issue which has to be proved, not the onus or standard of proof.

MR JAMES: Well, the issue that has to be proved is defined by the charge in the indictment and that issue was, in this case, the property of X and others. Leave aside the "and others" for a moment, at least what has to be proved is that the money that was withdrawn was the property of the person named. It was that property, because that person gave a direction which has not been complied with and which was operative at the relevant time.

DAWSON J: Well now, the example given by the Chief Justice, you could say that the $250 was the property of someone else, because the payment in of the sum over and above the $1,000 would, by virtue of section 373, have created a chose in action which was not the property of the accused.

MR JAMES: You can get to the point where you say it is not the property of the accused, but the next question is - - -

DAWSON J: Well there is only one payment in. You can also say it is the chose in action of the property of the person who made the payment with direction.

MR JAMES: Provided that you have a clear, whether express or tacit, direction that the whole of that money is to be used for that purpose.

DAWSON J: Let us assume that. Now the next step is that before the withdrawal there is another payment in of moneys provided with such a direction of another amount. Now how does that alter the situation? That creates another chose in action which may be seen to be the property of that second person who gave the direction.

MR JAMES: Yes, well, that leads then to the problem the Court of Criminal Appeal sought to solve by the application of In re Hallett's Estates. That is, one would presume that the accused takes out his own property first and then, as and between the two donors that your Honour has referred to, one can say that they each rateably contribute to the amount left in so that there is a stealing of both of their property, rather than a stealing of one or the other.

DAWSON J: The difficulty with that is that does create a common fund, whereas section 373 would seem to presume that there are separate choses in action, which are not the property of the actual holder of the bank account, but of the persons who gave the moneys with directions which were paid into banks.

TOOHEY J: But section 373 only has a negative operation really, does it not? I mean, it says that where the money has been paid in or where a person receives property subject to the direction, it remains the property of the person from whom it is received:

until the direction has been complied with.

Does it have any more work to do than that?

MR JAMES: Yes. Section 373 was enacted because of the problems presented by the common law of larceny, in circumstances where persons parted with both possession and title. What 373 does is to create a deemed title remaining in the donor, who may not be the owner at law in equity at all; it is simply the person from whom it was received. So that it creates a liability for theft that would not have existed at common law and would not otherwise have existed under the Code, and indeed, it also creates an aggravated sentence by section 378(9)(b).

DAWSON J: But we cannot be talking about notes or cheques?

MR JAMES: No, we are not talking about paper.

DAWSON J: You could only be talking about a chose in action?

MR JAMES: That is right. What section 373 also does, refers to the receipt of:

money or valuable security.....whether capable of being stolen or not, with a direction in either case that such money or any part thereof, or any other money received in exchange for it, or any part thereof, or the proceeds or any part of the proceeds of such security -

et cetera. So 373, in combination with 371 and the definitions under the Code, sets up its own regimen, as it were, but it does not seek to deal with the situation where you cannot say whose it was at the end of the day, applying those provisions on their face. Now that becomes very important. It is not merely a technical matter of pleading, because what your Honour Justice Dawson has put to me is in a situation where the same directions, or the same direction, is given for the two deposits. This was not such a case.

McHUGH J: I have a problem in 373 with the word "such" where it appears in the fourth last line of the section. What is the "such" money? If you go to 373 - - -

MR JAMES: In either case that such money or any part thereof -

McHUGH J: No, no. Down four lines from the end of the paragraph. What is the "such" money that is being referred to there? If you trace the section through for relevant purposes, it is:

When a person receives.....any money.....with a direction.....that such money or any part thereof, or any other money received in exchange for it, or any part thereof.....shall be applied to any purpose.....such money.....are deemed to be the property of the person -

Now, is it the original money that we are talking about; is it the money in which it is converted. What does "such" money refer to then, which is deemed to be the property?

MR JAMES: Your Honour, I am very tempted to say I do not know; that is one of the problems about the section, but the definition of "money"- - -

McHUGH J: Well it includes a cheque, among other things.

MR JAMES: Yes, it does, but - - -

McHUGH J: You see, one of the difficulties in this case is, I have to say, I have great difficulty in seeing how there was a direction in this case, but that seems to have gone by the board. What was to happen if Parker had died, if he was inundated with funds, was the money to be sent back - there are all sorts of problems, but it seems to me that at least people expected or trusted, and perhaps you can spell out a direction that some part of the moneys would be spent on his particular campaign, but I just have very considerable difficulty relating this section to the facts of this case; that he has been, on one view, guilty of some conduct which is deserving of a severe condemnation seems fairly obvious, but whether you can fit it into this section, rather than perhaps charge him with false pretences if he had a present intention when he sent out these circulars, is another question. We have really got to track down what is the property here.

MR JAMES: Your Honour is not alone in that problem, in that that is exactly the problem experienced by the Court of Criminal Appeal, and it is because of that that the court had resort to the equitable doctrines. Without the equitable doctrines - - -

McHUGH J: But it does not say it is the property of the person who gave the direction; it says it is deemed. That means it is a fiction.

MR JAMES: And only for the purposes of this charge of stealing. If he died, the equitable principles, as with Mr Hallett, and with others, might well have been applicable for a distribution; another question.

McHUGH J: And unless there was an actual direction that they would have nothing to do with it; the property, at common law, is almost certainly Parker's; that they were a gift. When people give these political donations they expect that they will be used for the particular purpose, they trust that they will be, but the idea that there is a direction strikes me, I must say, as very strange indeed, notwithstanding that I seem to be in a minority of one on this view.

MR JAMES: Your Honour, could I say that in relation to that, that precise matter was agitated by Mr Parker at committal. This was a case when the Crown went to trial with the guidance of the Full Court that had sat, as a result of Mr Parker's appeal, from committal, and in which special leave was refused by this Court, but the authority that the Full Court laid down and governed the conduct of the case was that the direction had to be clear and unambiguous, so that the jury had to find there was a direction, that it was clear and unambiguous and its ambit.

As Mr Justice Ipp's review of the evidence makes perfectly clear, in almost every case, if not in every case, it was highly arguable either that there was no such direction, because it was not clear and unambiguous, and, of course, section 373 does provide for the purpose to be specified in the direction, in the words immediately preceding the "such" to which your Honour referred.

McHUGH J: He pays the money; he, perhaps, puts the cheque into his account; so that is money for the purpose of the section. But, when there is a drawing out it is money received in exchange for it, one assumes.

MR JAMES: Payment of a bank debt or payment of - - -

McHUGH J:. Is that the "such money" that the section is referring to, or is it the earlier money?

MR JAMES: It is certainly the earlier and it would have to be the subsequent if the Crown were to be able to utilise the section in this context. Our argument is that it is not.

TOOHEY J: I do not follow that. Again, because I am having difficulty with, I think, the use that is made of section 373, which seems to me to have a reasonably limited operation and is concerned essentially with the direction that accompanies the payment of the money. But, once the money is converted, you do not go to section 373, you go to the definition of "property", do you not, or section 371(7) which carries the notion of property through into whatever form the original payment takes.

MR JAMES: What your Honour is putting to me is that when you get the cheque made out to ALP Campaign Fund or David Parker for Fremantle Campaign Fund, that is capable of embodying a direction that it be used - - -

TOOHEY J: I am not saying that at all.

MR JAMES: No, for the purposes of what your Honour wishes to put to me, I am giving your Honour the illustration, and that document - the cheque, the piece of paper - representing, as it does, money, is accompanied by a direction that it be used for a specific purpose. In those circumstances, not only is the document, on the Crown's view, the subject of the deeming provision of section 373, but the bank credit behind it. I apprehend that is what Justice McHugh is adverting to. There is no doubt that once the money has been received with the direction then the deeming provision operates. It operates on such money, and that such money then is, by the section, deemed to be the property. The question there arises as to whether that property, as converted through the mixed fund and the bank account - - -

TOOHEY J: Before you get to mixed funds, it seems to be underlying your submission that the moment - this might be doing it an injustice - that when the cheque is paid into an account, somehow it loses its character. All I am saying is that section 373 continues to operate on the money, whatever form it ultimately assumes, because of section 371(7).

MR JAMES: The contrary argument is that such money relates to the money paid under the direction, not to the conversion that has later occurred. So that what you have is a deeming at that time, and the deemed property is then converted and section 371 - - -

TOOHEY J: You do not go so far as to say that as soon as the cheque is paid into an account, even if it is the only payment in the account, that section 373 has - in some way or other that no offence is committed.

MR JAMES: No, you would not have to go that far because the bank credit when the cheque is paid in is deemed to be the property. The admixture with it and the withdrawal from the account is a conversion of that property. The deeming does not apply to that, but you do not have to worry about that in a single cheque account because you are able to trace the property by the very operation of this section and the sections of the Code dealing with the conversion of property. Where you cannot do that, so as to have your identifiable quantum or parcel of money, section 373 only goes so far as to deem the property to be that of the person from whom the money was received at the moment of passing it over, when it is coupled with a direction.

TOOHEY J: Not necessarily passing it over. It may carry it through in combination with the references to property and so on, in whatever form it assumes. I am not suggesting that that meets your argument which is, however you look at it, at some point the Crown must be able to show that the money alleged to have been stolen - that is, taken out of the account - is referable to money the subject of a direction.

MR JAMES: By using the provisions of the Code.

TOOHEY J: Yes, so long as you speak of the Code at large and not focus entirely on section 373.

MR JAMES: Yes, I am speaking of the Code at large.

McHUGH J: I must say, in contrary to my brother, Toohey, it seems to me section 371(7) is irrelevant in this section. It is talking about property but you never reach the question of property until you determine what section 373 applies to in the context of a particular case, and that defines what property is, it is a deeming; it is something notional; it is quite different to what section 371(7) is. They seem to me in two different universes of discourse, really.

MR JAMES: Indeed, your Honour, section 371(7) does not talk about deemed property at all. It only talks about actual property.

McHUGH J: Yes.

MR JAMES: There is a problem using the conversion provisions of section 371 to apply to deemed property under section 373.

TOOHEY J: It is not deemed property in the sense that if the section 373 deems something which is not property to be property - - -

MR JAMES: No, perfectly true.

TOOHEY J: - - - it deems it to be the property of the person from whom the money was received.

MR JAMES: Yes, it relates to the ownership. Of course, there remains property, in a sense, in the money. All of these difficulties are exactly why the Court of Criminal Appeal - - -

DAWSON J: It cannot be talking in that sense; it cannot mean in notes and in coins, it must mean value.

MR JAMES: No, we are not talking ducats; we are not talking a 100 gold sovereigns in the person's - - -

DAWSON J: It becomes, in terms of value, a chose in action.

MR JAMES: Yes.

DAWSON J: Because of section 373, because of different people paying money with a direction which is then paid into a bank account, there must be a number of separate choses in action. Do they own the choses in action?

Is it their property?

MR JAMES: If one puts aside any form of communal or joint property in the account which, in our respectful submission, the Court of Criminal Appeal did properly put aside, particularly because the question of the intention of the various donors would otherwise become relevant, and that was ruled out, both at trial and on appeal, then what one has is property, but a whole lot of property so that one cannot separate out the identifiable parcel or quantum of property to attach to the named donor in the indictment and - - -

KIRBY J: That merely bears out what I put to you earlier, that your theory of the section is that it just does not operate where the property passes from being money or cheques into an account. It seems an unlikely - - -

MR JAMES: Unless you can identify in a given place.

DAWSON J: It does operate, but you find it difficult to say how it does, because the bank account does not do - or is not kept in such a way as you can see how the section has operated.That is interesting.

MR JAMES: In answer to the question that I have still left unanswered from Justice Brennan, that no matter how you look at section 373 in this context, and whatever meaning you attach to the provision, you have the problem of evidence - how you prove the given case. That is exactly why, in this case, we say the Court of Criminal Appeal fell into error. In applying the equitable principles, they did so because otherwise one could not see that the Crown had a cogent case. If you cannot see that the Crown has got a cogent case, after you have told the Crown, when sitting in the Full Court, how to run their case and how to direct the jury, and the Crown has gone to trial, disregarded what it has been told in substance by the Full Court on how to run the case, and has allowed, or procured, the trial judge to fall into error on his directions of law as to this very section, and what is a direction, and who relevantly should give it, then, in our submission, it would not have been proper in the light of the authorities to direct a new trial, particularly where the accused has already served, at that stage, the custodial portion of his sentence, now the whole of his sentence - - -

KIRBY J: You are getting into the discretion issue, again, now. Is all of this building up to say that if only the Full Court had not made the mistake of ordering a retrial we would not be troubled.

MR JAMES: That is the only ground of appeal. We are only here because the Full Court directed a new trial instead of an acquittal.

KIRBY J: Do you attack that order on two footings: one, that it was a miscarriage of the Full Court's discretion in all the facts of the case; and/or two, that you were entitled to an acquittal and therefore the Full Court should not have ordered the retrial?

MR JAMES: Primarily, one; and two - - -

KIRBY J: It is enough for your purposes to have two?

MR JAMES: Enough for our purposes, but the acquittal to which we were entitled before the Full Court was an acquittal on the basis that it could not be said that the Crown had a cogent case applying section 373 properly, and putting aside the equitable principles. In addition to that, it was the Crown that procured the errors on which the appeal was allowed, or which allowed the trial judge to fall into error on those occasions. We have set out - - -

BRENNAN CJ: The answer to Justice Kirby's question seems to me to be in the affirmative so far as both points are concerned. What you are saying - - -

MR JAMES: I thought I should particularise, your Honour.

BRENNAN CJ: Unless you want to accept the proposition that there was a case which the accused might properly have been called on to answer, in this case you are remitted to the question of the exercise of the discretion by an accused who, though he may be guilty, has served his time. That is not what you want to say, as I understood it.

MR JAMES: No, it is not.

BRENNAN CJ: You want to say that he is entitled to an acquittal as of right and on that account he is entitled to an acquittal.

MR JAMES: There are two ways we can argue that, your Honour. One - we can say, unsafe and unsatisfactory; or, no case below. The other way is to say, "We have shown error amounting to substantial miscarriage at the trial; the onus passes to the Crown to show the court why a new trial should properly be granted."

BRENNAN CJ: Yes.

MR JAMES: That onus is satisfied if the Crown can show that there was a cogent case on a proper application of the law below and that the Crown should have the opportunity for a second trial in circumstances in which it has been the Crown's conduct of the trial that has led the trial to miscarry.

BRENNAN CJ: Mr James, you might be entitled to put your argument in either way, but I think it would be fair to say that special leave would not have been granted to consider the exercise of the Court of Appeal's discretion as such. It was granted chiefly in order to elucidate the operation of these difficult sections of the Code in the context of the facts that appeared in this case.

MR JAMES: I am perfectly prepared to accept that, your Honour.

BRENNAN CJ: And to argue it, as I understood it.

MR JAMES: Yes; or trying to.

BRENNAN CJ: Could I just take you back again to section 373 and to words which Justice McHugh drew to your attention, namely, the proceeds of the money - that is, money:

or any other money received in exchange for it, or any part thereof, or the proceeds or any part of the proceeds of such security -

MR JAMES: Yes.

BRENNAN CJ: If one gives that its literal interpretation, the cause of action, which is the bank account, is the proceeds of the several deposits. Is that correct?

MR JAMES: Did your Honour say cause of action?

BRENNAN CJ: I said cause of action - chose in action.

MR JAMES: Chose in action. Such money or the proceeds thereof as are represented in that account are deemed to be the property of the person from whom the money was received; yes, by their separate quanta - notionally.

DAWSON J: There might be separate choses in action by virtue of the section.

MR JAMES: But only for the purposes of the criminal law.

DAWSON J: Yes.

BRENNAN CJ: It may be that one can say, "What are the proceeds, first of all?". The proceeds might be identified as the bank account.

MR JAMES: The whole account, your Honour?

BRENNAN CJ: Yes; since the whole lot is, in their respective parts, proceeds of each payment in.

MR JAMES: No, your Honour, with respect; because the whole lot was not - or normally would not be, in any event - that is to say, such money is the money the subject of the direction.

BRENNAN CJ: I see.

MR JAMES: The proceeds are the proceeds of the money, the subject of - - -

McHUGH J: I do not think that is right, is it? The proceeds are not the proceeds of the money. It is:

the proceeds or any part of the proceeds of such security -

That is, the proceeds or any part of the proceeds are the valuable security and that is defined to include any document which is the property of any person which is evidence of ownership.

MR JAMES: Your Honour, I would like to accept that, but unfortunately lower down, "such money and proceeds" - that word "proceeds" there may relate back to "the proceeds or any part of the proceeds of such security", or it may relate to such money and the proceeds of such money. The construction, we would submit, is that it relates to the proceeds or any part of the proceeds of such security.

TOOHEY J: If you had a bank account into which a number of payments have been made, and they are identifiable in the sense that they related to cheques which had been given, in this case let us say to the appellant. Leaving aside the question of whether that money could be shown to have been stolen, you accept, do you, that one could go through the bank statement and say that is the payment from X. That is the payment from Y, and that constitutes property that is capable of being stolen but it is up to the Crown to show that it has been stolen.

MR JAMES: In most cases, yes, your Honour. In most cases you can take a running account and you can see money going in, money coming out; you can apply presumptions - - -

TOOHEY J: I am not talking about applying presumptions. I am just trying to get the first step along the way, that if you have these various payments in, accepting that section 373 operates to deem that property to be the property of the original donor until the direction has been complied with, does the Crown have any problem in saying those ten payments in constitute property which is capable of being stolen. It is up to the Crown to show that, in fact, it was stolen.

MR JAMES: Yes.

TOOHEY J: Those particular payments do not lose their identity by virtue of being paid into an account.

MR JAMES: They all certainly remain property that is capable of being stolen within the meaning of the Code.

DAWSON J: When you pay a cheque in you get a credit, and if that cheque was one - this is all that I think his Honour is putting to you - if that cheque was paid in with the requisite direction, the credit remains, speaking colloquially, the property of the person who gave the direction. You do not translate credit into proceeds and proceeds into a chose in action, if you like.

MR JAMES: Your Honour, it is property capable of being stolen within the meaning of that term under the Code. But, as to identifying - - -

DAWSON J: We know that is a problem.

MR JAMES: - - - and identifying it with the direction - if you leave the direction out for a minute, and you have payments in - 10 payments in - and after each payment in there is a taking out, then you have no problem in working out which money has been paid in and taken out. If you do not have that simple case, what is in the account is property capable of being stolen, but whose and whether it was stolen is dealt with - "whose" by section 373; whether it was stolen by the section 371, and to apply them to an account in circumstances where you are unable to say that the directions are all the same; that the withdrawals - some are for proper purposes; some for improper purposes - gives you an immense difficulty in relating the money taken out to any particular payment in with a direction unless it happens to be a fortuitous enough case in accounting terms to boil down to an analogy to the one payment in, one payment out exercise.

KIRBY J: This is why we have a problem here; that they use the word "money" and they have talked of bills of exchange and so on. We are trying to apply this in a circumstance of modern banking where it is merely book entries and electronic messages, and your assertion, as I understand it, is that is just the Crown's problem. But, the Code is intended to operated in the real world and it obviously contemplates banking by use of bills of exchange, cheques and so on, so if the question is whether fairly, within its language, it can be made to operate in the real world; but your thesis would really defeat any case where a person receiving money - or almost any case - puts it into a pooled account which contains some of his money, some other money, some moneys given with obligation, some moneys not. What is the history of the section? Is it in the original Code?

MR JAMES: If I recall correctly, it was. I do not think I brought it - there is a letter by Sir Samuel Griffith which is referred to in the Practices, which sets out the genesis of this section, which is a very rarely used section, and indeed, I think, unique to the Griffith Codes. It is covered by fraudulent appropriation and fraudulent misappropriation in other common law jurisdictions, and there is a slightly different provision in the Tasmanian Stephen's Code, but I do not say that such a person could not be prosecuted.

McHUGH J: If you read the word "money" literally, it may be that there is a hiatus for a time under section 373 in this sense - that somebody gives X a cheque with a direction. At that moment the cheque is money and it is caught by the section. X puts it into an account with his own moneys. There is a chose in action that the bank owes him, but at that stage section 373 does not operate. But, the moment the bank gives him a cheque in discharge of the chose in action, then that is money received in exchange for the money that he has put in, and then, again, that money received in exchange is property. So, one asks has he fraudulently disposed of it? What do you say about that?

MR JAMES: One goes back a fraction to section 1. Money, in the Code, is defined as including:

bank notes, bank draft, cheques, and any other orders, warrants, authorities, or requests for the payment of money;

The term "money" in the Code, generally, is not defined as including the chose in action of the bank. When one turns to Part VI Division 1 dealing with stealing and like offences, it firstly defines - uses the terminology relating to money, in particular in section 371(2)(f), that is, the special case of taking with intent to use at will, although intent to repay is there. Section 371(6) provides:

The act of stealing is not complete until the person taking or converting the thing actually moves it or otherwise actually deals with it by some physical act.

Then:

"property" includes.....money, debts, bank credits.....such property as has been originally in the possession or in the control of any person but also any property in which or for which it has been converted or exchanged and anything acquired by the conversion or exchange, whether immediately or otherwise.

Section 373 refers to money and contrasts money with a:

valuable security.....pledge, or other disposition, of any property, whether capable of being stolen or not -

envisaging that there is a class of money, power of attorney, mortgage, pledge, or other disposition which would not be capable of being stolen under the Code, and if that money is accompanied by a direction, even though it might not be capable of being stolen under the Code, then it is deemed to be the property of the person and presumably - although the section is not entirely clear on this - deemed to be property, in which case it would presumably fall within section 370, which provides - at least at the commencement of the section that:

Every inanimate thing whatever which is the property of any person, and which is movable, is capable of being stolen.

BRENNAN CJ: The Code proceeds on the basis of two things, does it not? One is, things that are capable of being stolen by asportation, that is one. The other is conversion of property to the use of somebody. The two things are the two limbs of 371(1).

MR JAMES: Yes, and, your Honour, 371(7) adds to what 370 had referred to, for the purposes of stealing property of that description.

BRENNAN CJ: Yes. You can convert the various items that are described as property in subsection (7) so as to be guilty of the offence, but that is not touching the question of ownership of the property which is the element with which we are now chiefly concerned.

MR JAMES: The mere fact that the Crown cannot use 373 would not, in the modern banking world, cause any problem for someone who steals from a bank account - bank teller or otherwise - by 371.

BRENNAN CJ: The problem is not one of modern development, is it? It is just a question of a blended fund.

MR JAMES: The common law, your Honour, had a view that you could trace into a mixed fund or a blended fund provided that it was such a fund as in which you could still identify the particular property. The problem arose, as we would say in this case, that there are such funds in which, because of the transactions that have occurred on them, you can no longer identify the particular property. Where that happens, equity would grant relief in the case of the distribution of that fund, but the Code does not take up the same point.

KIRBY J: It is a rather inconvenient result. It may well be what is required was the language of it. It means the Code completely miscarries in 95 per cent of modern banking because people do not actually hang on to their cheques any more than they hang on to ducats. They put them in banks and they are converted into electronic messages.

MR JAMES: Your Honour, with respect, then you would be charged on 371, but 373 - - -

TOOHEY J: Well, section 373 is not an offence-creating section.

MR JAMES: It is not an offence, it is a mechanical device to apply to a circumstance where section 371 on its face would not cover the field.

TOOHEY J: Could I ask you this, Mr James. What should the trial judge have said to the jury in relation to these charges? I mean, I am not asking you to go and take us through each one in any detail but, speaking broadly, what sort of a direction should the trial judge have given?

MR JAMES: In the judgment of Mr Justice Ipp, he set out the various matters which he says - and there is general agreement from the Chief Justice and agreement from Mr Justice Steytler, as to the form of directions that should have been given to the jury at least in summary.

TOOHEY J: I am focusing on the direction so far as it relates to the connection between moneys paid in and moneys paid out. I am not speaking of directions at large.

MR JAMES: Before you could find against the accused on that count, you must be satisfied beyond reasonable doubt that the money he withdrew from the bank and expended for a purpose which you find is not within the purposes specified in the directions accompanying the payment in of such moneys as you can find such directions associated with, sufficient identity to be able to say that the money that was expended was the property of the person named in the count, even if there should also be in that money expended moneys of others.

TOOHEY J: All right. The jury goes out and they come back and they say, "We don't understand that, your Honour. Could you be a little more specific?"

MR JAMES: Your Honour, the general submission we would make is if you look at the directions the Court of Criminal Appeal have suggested - indeed held should have been given to the jury - it illustrates that it would be well nigh impossible for a jury to have understood the position. Section 373 and its complexities in explanation by way of directions would involve a most complex and difficult exercise in summing up.

TOOHEY J: I think you have to be careful at this point, because a lot of the judgment of Justice Ipp and of the Chief Justice relates to section 373 and to the sort of elements of 373 that are necessary, but the question of whether the money paid out was the money paid in is a question to which, on my reading of the judgments, the Court of Criminal Appeal certainly referred in a general way to equitable principles and so on but, essentially, it focused on the question of directions or non-directions leaving, to some extent, perhaps not in the air, but not analysing each transaction by reference to identity of moneys paid out.

MR JAMES: In fact, putting aside the equitable principles, they did not do that at all, your Honour, and that appears from page 372 of the appeal book.

KIRBY J: That was your complaint at the trial, that the Crown did not do that either. The Crown took a very broad brush.

MR JAMES: That is right, and that resulted in the judge taking a broad brush, and the Court of Criminal Appeal, indeed, looked at this precise question of 372 in the judgment of Mr Justice Ipp where he said:

whether there has been a substantial miscarriage of justice in accordance with the ordinary test involves two issues. Firstly, there is the issue whether there was a fair chance of a properly instructed jury finding that the donation made by each person specifically identified in each particular count was not subject to s 373 directions. That is relevant as, if the donation concerned was not subject to s 373 directions, the identified donor could not be the owner -

Now, in our submission, he stated it the wrong way round and imposed, in effect, the onus the wrong way round.

The second issue is whether there was a fair chance of a properly instructed jury, after examining each and every donation and withdrawal, finding that after applying the principles governing the appropriation of money, which was the application of the equitable principles his Honour had embarked on commencing at page 352, the person specifically identified in each count, although having made a donation subject to section 373 directions, was not the owner of the moneys alleged to have been stolen by reason of the status of the balance of funds standing to the credit of the campaign account on each relevant date.

His Honour then goes on to say it is necessary only to have regard to the former issue. So that in that sense it is our submission that the Court of Criminal Appeal's exercise of discretion was plainly in error because they did not do that which was essential, and they did that because they utilised the equitable principles and thought that answered the question.

TOOHEY J: You go further. You say that there should not have been a retrial because on the evidence it was not possible for the Crown to demonstrate that the moneys said to have been stolen were stolen because it was not possible to link particular payments out with particular payments in.

MR JAMES: The Crown could not answer this very question - - -

TOOHEY J: But that is your submission to us, is it not? I take it that it is on that submission that you found your case that there should be no retrial. Otherwise, you move into discretionary considerations.

MR JAMES: And, in essence, that comes down to the way in which your Honour the Chief Justice put it to me. Whether one has it as no case below or unsafe and unsatisfactory - which is what we did in fact take as the ground of appeal 15(d) in the Court of Criminal Appeal, but the court declined to deal with that ground on that basis upholding it only on the question that his Honour had failed to give adequate directions, again because of the equitable principles, and not otherwise expressly dealing with it.

It is our submission that when one looks at section 373 and the definition of "property", in the circumstances, construing it in accordance with Code principles and applying those principles to the state of these accounts, one cannot say that at least any of the named victims in the counts have had one dollar of their moneys stolen. More importantly, one cannot say because of the diversity in directions that the 9,000, taking one example, that the parcel of money said to have been stolen in any one case was the subject of such directions as to make it the property of someone else other than Mr Parker in whole or in part.

BRENNAN CJ: Mr James, leave aside money for the moment. Let us assume that there is an appeal for flood relief, "Please contribute bags of flour". A, B and C each contribute a bag of flour which is put into the big bin, and from that mixed flour a container is extracted and used for an impermissible purpose. Would it be possible under the Code to bring a charge? If so, laying the property in whom?

MR JAMES: One would have to say as to the first, yes. If so, laying the property in whom, it may well be that it has to be in a person or persons unknown or in the fund or in the trustees of the fund, but there is a difficulty there particularly, your Honour, because the question may turn on whether the intent of the persons donating the flour is a relevant matter to the question of the direction. Let us assume that there is a direction stamped on the bags of flour so that it is for the Eritrea Relief Fund, so that one has it and one has it specified. It would otherwise answer the criteria of section 363 but, if you cannot say that the deeming provision can operate to make it the property of the person from whom it was received because you cannot work out which body of flour it is, then 373 is not the appropriate mechanism to use to prove the stealing under 371.

BRENNAN CJ: It may not be a section 373 case at all in the case of flour, of course.

McHUGH J: Because it is not money. The Chief Justice is - but assuming it had a wider - you would have the same problem if the three bags of flour having been delivered, they were put in a 44-gallon drum and then the accused took out a cupful and used it for his own purpose. Now, how would you lay the charge there?

MR JAMES: When defence counsel, or the appellant's counsel, is confronted with the proposition that he should draw the indictment, he always has a difficulty. What one would be tempted to do in that context is lay the property in whomsoever had the property in the flour if he or she was holding it as a trustee, factor or agent, but if the property had passed along with possession to the accused, the Code makes no provision for any other deemed relation-back type doctrine and that person had, at common law, both property and possession. Unless the person fraudulently appropriated or misappropriated, they would not have been liable, and it is our submission that on a construction of 373 it does not go to that extent.

BRENNAN CJ: Let me vary the example. A, B and C each contribute a bag of flour and they put it onto the carrier to go to Eritrea or to the flood relief, so there is no question of the accused being entrusted with it either in possession or in terms of property, but somebody who is engaged by the carrier feloniously takes it. In whom do you lay the property? You lay the property, do you not, in A, B and C?

MR JAMES: You could, but you could sneakily lay it in the carrier because he has got a lien over it.

BRENNAN CJ: All right. It has not been loaded up yet. It is still on the farm.

MR JAMES: No, you would not lay it in A, B and C - - -

BRENNAN CJ: Would you not?

MR JAMES: - - -if you have got one bag taken out of the three and you cannot tell which one it is.

BRENNAN CJ: I am suggesting that the three have been blended and something has been taken from them, and it seems to me you would have to lay it in A, B and C.

MR JAMES: That is only, your Honour, if there is an intention that their property be pooled and that they retain title in their property as part of the communal or the pool or the common fund or the joint property, however one wants to regard it. That gets you into the Bacon v Pianta area of country and, in which case, the evidence of intention of the donors becomes important and should have been permitted in this case and should have been permitted on appeal.

BRENNAN CJ: That might be right but it seems to me that if you are talking in terms of the problems that are raised by the blending of funds, the same problem must surely arise in the case of blending of property capable of being stolen by asportation.

MR JAMES: Yes, your Honour.

BRENNAN CJ: And if one takes the analogy precisely and looks at section 373 and sees that moneys which are placed into a blended fund can be regarded as still the property of the persons who placed them there or from whom those funds were derived when they were placed there, what is the difference?

MR JAMES: Section 373 does not do that. 373 says that it shall be deemed to be the property of the person from whom it is received, notwithstanding who had the property or who in equity might have the property.

BRENNAN CJ: Very well. The person who drew the cheque and gave the direction, to use the phrase that I put to you before.

MR JAMES: Your Honour, you could, with the blended examples you have been given, lay the property in the owner at law or the owner in equity, in which case you do not even have to get near 373. If you are resorting to 373, you are resorting to that in a circumstance in which the true owner becomes irrelevant. The deemed owner is the relevant person.

BRENNAN CJ: Quite, and what I am putting to you is that 373, adopting your argument, maintains the identity of the moneys which are severally deposited, and if then there is money taken out and you cannot identify from which deposit it is taken, why is it that you do not regard the fund as belonging to each of the depositors, but you describe it in the same way as you describe the blended flour, namely, belonging to all?

MR JAMES: Because 373 does not purport to make it belong to all or belong to others. It maintains a severalty, an identifiable severalty, if one likes, of the property and of the person. It does not create and does not give the slightest suggestion in the language, and one is dealing with the Code - - -

BRENNAN CJ: That is your answer.

MR JAMES: That is right.

McHUGH J: Before you sit down, could I ask you what your answer is. Assume X has got $100,000 of his own and he is given $25,000 for a particular purpose and puts it into an account and he draws out $25,000 and spends it. Now, how does one prove in that case that there was an offence committed?

MR JAMES: So that X is given 100,000 - - -

McHUGH J: He has got 100,000 of his own and he is given 25,000. He puts the 25,000 with his - 125,000. A week later, he draws a cheque for 25,000. He goes and buys options. Now, the Crown says, "This is really part of the 25,000 he got". Now, how does it go about proving it?

MR JAMES: Your Honour, to that we would say if his initial float, his own money in the tin, to use the analogy used in this case, or his own money in the account is big enough, then you cannot do that - - -

McHUGH J: I thought that is what you would say, but that leads you to this, that maybe you have to look at 371(2), and if he has an intention to permanently deprive the owner of the money, that may be sufficient to link the two up. What do you say about that?

MR JAMES: Section 371(1) requires that he must take the thing or convert it fraudulently. Section 371(2) deems the taking or conversion to be fraudulent if it is done with the intent. So if you have got your taking or your conversion and you can show what he has taken or converted, then you are able to link it up with the intent, but you still have the problem of whose is it? If you choose to charge the matter as being the property of X and you get it wrong and you decide not to amend but to erect a theory of communality to justify your count, you run the risk of losing.

McHUGH J: I have some difficulty about this, because supposing he made an admission. He said, "Yes, well, I did take that 25,000 and the reason I took the 25,000.....the other 100,000, I had another debt and I had to pay it in another fortnight's time and I had that 100,000 appropriated to that." Now, it strikes me as strange that on your analysis the accused commits no offence.

MR JAMES: No, I did not say he commits no offence. He does not commit the offence for which 363 is the mechanism. There may be other ways, other ways of pleading, other ways of analysis, which would yield an offence, and I am not concerned as to those. Section 363 is not intended to be a cover-all provision to take up any hiatus under the Code. It is limited to a specific area.

McHUGH J: It is difficult to know what the other offence would be unless there was some form of false pretences, because the hypothesis that 373 is acting on is that usually the accused has got the property at law and probably in equity.

MR JAMES: Yes, but in the sort of situation your Honour has described, the question will arise as to whether by the confession the Crown can identify the 25,000 taken or converted as having been taken with any of the following intents under 371(2) and can identify it as being the property of the other person. If they cannot, if the Crown cannot show that he has not taken his own money, even if he was confessing because he thought he had taken someone else's, then it would still lose.

McHUGH J: So if he got a cheque one minute earlier for the 100,000 to pay the debt that is payable in a fortnight's time, then he would be guilty of an offence but not if he draws the $25,000 cheque one minute ahead of the 100,000 - - -

MR JAMES: The Code embodies the philosophy that you might be trying as hard as you can to commit a criminal offence but, if you do not do it, you do not do it. You may be guilty of attempt, you may be guilty of other things, but that is a different question. Your Honours, there are no presumptions that have other than evidentiary significance in this context, and such things as Clayton's Case and similar doctrines which permit tracing proceed on a presumptive basis. They are only applicable in the circumstances of the given case. In Re Hallett's Estate and British Red Cross Fund.....The Balkans and so forth, and in Re Diplock, make all those points, but I am putting those aside for this argument, which is really an argument of construction of a limited provision, a criminal provision, creating criminal liability in circumstances where its applicability seems very difficult.

Now, this cannot be the first time that somebody has been the subject of the attention of the Crown law authorities for withdrawals from a mixed fund into which moneys were paid and from which he has withdrawn moneys in breach of trust contrary to a common law fiduciary obligation or subject to a direction. But this case starkly throws up the problem because it seems as though this is the first time that this section has ever been used in this context. Our submission comes down to the proposition that, on a proper analysis, it does not apply to this context.

BRENNAN CJ: How are defaulting solicitors dealt with, that is, those who take money out of their trust account?

MR JAMES: In .....v the Legal Practitioners Board, which is not on our list of authorities, there is a single judge decision suggesting that 373 or its equivalent - I cannot remember which - was applicable, but that judgment turned on the question of whether or not a claim might be might on a legal guarantee fund as a consequence of a finding of the commission of a crime, and solicitors' trust funds are notionally somewhat different. There is no admixture or there should not be and, indeed, there should be defined funds held in the bank capable of being established by the trust account records relating to each individual client.

BRENNAN CJ: But who owns the fund?

MR JAMES: The bank, but the credit - - -

BRENNAN CJ: The bank owes the debt. Who owns the - - -

MR JAMES: The bank owes the debt to the trustee, but it is a succession of individual quanta or identifiable parcels kept separate, and if the solicitor intermingles his own money with them, then one can, for civil purposes, happily apply - - -

BRENNAN CJ: No, my question is this. If A, B and C are the clients of the solicitor and the solicitor, without putting any of his own money in, puts cheques to the credit of those clients into his trust account and then extracts a cheque from the trust account and converts it to his own use?

MR JAMES: He is simply charged with stealing because - - -

BRENNAN CJ: Stealing whose property?

MR JAMES: Stealing theirs because he - - -

BRENNAN CJ: All of them, the three of them?

MR JAMES: I am sorry, your Honour, would you say it again?

BRENNAN CJ: Stealing the property of the three beneficiaries?

MR JAMES: Might I deal with that in two ways, your Honour. Firstly, he is simply charged with stealing without resort to 363 because he is a trustee, agent, et cetera. Section 363 is limited to that - - -

BRENNAN CJ: What section is he charged with then for stealing as a trustee?

McHUGH J: Section 375, I suppose, is he?

MR JAMES: It may well be, your Honour. There is 375, there is 376, there is - - -

BRENNAN CJ: Whose property is it?

MR JAMES: The person on whose behalf it is received under 375, unless there is a debtor and creditor account.

BRENNAN CJ: You have got three clients.

MR JAMES: Under 376 you can have different properties or different owners in respect of different properties in the one thing. Now, the client has property in a bank credit, property in equity in a bank credit to that extent. If you can work out which credit it is - and you should be able to if the solicitor has kept any records - then you can charge it properly client by client. If you cannot, you may have to plead your case differently. Similarly, 374 in relation to funds received by agents for sale.

BRENNAN CJ: In the Queensland Code, there is a provision 566(15) which deals with the laying of the indictment when it - property and things that have been stolen:

if it is uncertain to which of 2 or more persons the property belonged at the time -

Is there such a provision in Western Australia?

MR McKECHNIE: Section 584(15).

BRENNAN CJ: Section 584(15).

MR JAMES: Your Honour will find, firstly, 584(5) deals with money, any form of money, and that is:

sustained by proof that the offender obtained or dealt with any coin or anything which is included in the term "money", or any portion of the value of either, in such a manner as to constitute the offence -

Co-owners, (6):

In an indictment in which it is necessary to mention any co-owners of property it is sufficient to name 1 of such persons, adding the words "and another" or "and others", as the case may be, and to state that the property belonged to the person so named and another or others, as the case may be.

BRENNAN CJ: Then why is not 373 the one which establishes co-ownership of the fund?

MR JAMES: The same argument I put to your Honour earlier. It does not. It establishes several ownership of each person who gave the direction and gave the property, and the reason for that is the directions can be entirely different. You cannot put into a common ownership the funds of three people for the purposes of 363, in our submission, the funds of three people whose directions are completely different, otherwise you run into real difficulties as to which direction you may be in defiance of. Section 584(15)deals with naming property of one or other of such persons naming each of them, but without specifying which of them, and I know no specific warrant in the section - - -

McHUGH J: There just seems to be some difficulty in applying 584(15) to a 373 situation.

MR JAMES: As here, yes. What the Crown did here was to pin its flag to section 584(6).

McHUGH J: It is easy enough in the case of the solicitor because of the necessity for the terms of the direction and whether it has been complied with if he ascertains - it is not easy to fit - - -

MR JAMES: I know of no specific warrant in the Code, but I know nothing to the contrary that would suggest that one cannot use person or persons unknown, and particularise the basis upon which you say the stealing of the flour came from either A or B or C or A and B and such combinations. I know nothing in the Code that specifically permits an indictment in respect of the property of person or persons unknown. Obviously, there would be room for such an indictment.

TOOHEY J: Such an indictment has been upheld, has it not, in the Western Australian court.

MR JAMES: I would be amazed if it had not, your Honour.

TOOHEY J: It is Marriott. There is a reference in the work on criminal law in Western Australia, I think to Marriott's Case. The comment is made. It is in the commentary on section 371 and the author says there is no reason why the Crown can on the indictment lay the property and the thing alleged to have been stolen in a person or person unknown, and by evidence proving necessarily by way of inference to be drawn from the circumstances that the thing that was taken was owned by someone other than the taker. It refers to Marriott which is a decision of the Full Court, apparently unreported.

MR JAMES: I should draw your Honours' attention to section 582 in relation to the indictment also.

BRENNAN CJ: Are you speaking about the Queensland or Western Australian - - -

MR JAMES: The Western Australian. I regret, your Honour, I have not brought the Queensland, nor do I have a concordance. There might be one with us - - -

BRENNAN CJ: Perhaps Mr McKechnie to tell us what the Queensland equivalent of 582 is?

MR McKECHNIE: I am in the same position as my friend, I am sorry.

BRENNAN CJ: Yes. Is the concordance in the front or the back?

MR JAMES: It is in the front. Section 582 is the general provision, your Honour, concerning the form of indictments.

BRENNAN CJ: 582 of Western Australia seems to be 564 of Queensland, but it is in italics, so I presume it has been withdrawn.

MR JAMES: Section 582 provides:

An indictment is to be intituled with the name of the court in which it is presented, and must, subject to the provisions hereinafter contained, set forth the offence with which the accused person is charged in such a manner, and with such particulars as to the alleged time and place of committing the offence, and as to the person (if any) alleged to be aggrieved, and as to the property (if any) in question, as may be necessary to inform the accused person of the nature of the charge.

It also requires that where the offence may be committed, by the doing or omitting to do any one of different acts in the alternative or the doing where there is alternative different capacities or differing intentions, they may be stated in the alternative of the offence and:

that the court may at any stage of the proceedings amend the statement if it appears to the court to be so framed as to be embarrassing.

The court has always had power to amend the description of property and owner or person aggrieved in the indictment. No application was made. No application has yet been made. Further, of course, stealing under section 363 carries a more severe sentence than other categories of stealing. Section 378(9)(b) provides for that increased sentence.

KIRBY J: That is because it is in the nature of a breach of trust altercation.

MR JAMES: Yes, that is so. Of course, in accordance with De Simone?? there does have to be that circumstance of aggravation in the indictment and it is in this indictment by reference to the marginal note setting out the relevant section, 378(9)(b), which adverts to or carries with it the implication of 373.

KIRBY J: Is there any principle on the construction of the Code that is relevant to solving my problem, which is that the Code is intended to deal in the real world of modern banking where the notion of money being kept in its own little purse is ridiculous, and it is intended to deal in the case of people who give cheques, which is contemplated by the definition of money, that they will put it into banks and that therefore the Code is intended to operate in the modern circumstances of mixed electronic message banking. That is what I will presume, but is there some principle about the construction of the Code that is helpful to the approach that one takes in trying in a sense to squeeze its language into operation in the real world of modern banking?

MR JAMES: The general principle in relation to the interpretation of a Code statute is that one reads its language, applies the language according to its ordinary sense and that one does not give it any extended or artificial or term of art sense. Indeed, the passage in the judgment of Justice Brennan as he then was, the Chief Justice, in Boughey v The Queen (1986) 161 CLR at page 10, in the judgment of his Honour at pages 30 to 31 - - -

BRENNAN CJ: Perhaps you should add that this was a dissenting judgment.

MR JAMES: Yes, your Honour. I have indeed in that respect not adverted to the particular application of those principles concerning the use of the word "likely or not" in Tasmania, but adverted to the general principles of which this is an illustration. It is just one case that illustrates but it happens to be a concise and precise summary of the general nature of a Criminal Code. If the language on its ordinary meaning does not extend that far, then it does not extend that far. The legislature has made it perfectly clear by the enactment of a Code and indeed by section 4 of the Criminal Code Act Compilation Act - it is a separate Act to the Code - which is to be found also in the Practice, that one takes the word of the statute as it is. There is no complementary statutory and common law regimes to develop and take up the slack. It is for the legislature to take up the slack should it wish to do so.

KIRBY J: What is the name of that Act?

MR JAMES: The Criminal Code Act Compilation Act of Western Australia of 1913. Section 3 provides for specific matters of construction and section 4 provides that:

No person shall be liable to be tried or punished in Western Australia as for an indictable offence, except under the express provisions of the Code -

and so forth. Indeed, Bank of England v Vagliano Bros is I think still the seminal authority on how one goes about interpreting Code statutes generally, if that is of any assistance to your Honour. That is to be found - - -

KIRBY J: I will have a look at that later. Thank you for the reference to the case of Boughey.

MR JAMES: Indeed, your Honour, there is a decision of this Court. If one turns to Brennan v The King [1936] HCA 24; (1936) 55 CLR 253 - - -

KIRBY J: Yes, that is referred to in the concise passage of the Chief Justice??

MR JAMES: Yes, and Stuart v The Queen [1974] HCA 54; 134 CLR 426.

KIRBY J: Of course, the alternative theory is that it is intended to operate in the situation of banking. It was intended when Sir Samuel Griffith drew it because, even at that time, the banks did not keep separate..... One can adopt what the Crown puts in its submissions, leave aside equitable principles but that the general principle of presumption of innocence says that you approach each case on the facts with an assumption that if there is a legitimate basis for the use of the funds, that is not an offence but, once you have run out of your legitimate basis, it is open to a jury to convict for the misuse of the funds which have been put in which carry the tag of the equitable or the trust type obligation.

MR JAMES: Your Honour, firstly, Sir Samuel Griffith undoubtedly drew the Code in the light of the existence of the law of banking and in the light of the existence of the law relating to mixed funds, because it was clear that by the time of the Code the common law had taken the view that is referred to in R Diplock that you could trace at common law where you could identify the money and follow it. But where it went into a mixed fund - and there were two conditions that had to be satisfied - as a result of the operations on that fund you could no longer identify the money with the donor, then the common law stopped at that point.

Equity, it was said, permitted you to charge the whole fund with a charge in favour of the donor or a donor, good as against the holder of the fund as affecting his conscience and, as and between various donors to such a fund, providing for them taking rateably on distribution but only in equity. So that they would have to come to court and get themselves an order, a charging order or, in modern terms, a declaration of a constructive trust to some extent charging the fund.

The Code knew of this, at least knew of it as it was developing, but declined to deal with it. That does not suggest that the Code abdicated the field of banking. It just suggests section 373 was not to have applicability in a situation in which the evidence did not allow you to establish what was whose.

Further, the principle that the Crown seeks to espouse, the Re Hallett's Estate distribution principle, starts with a presumption of guilt: that is that the man stole something but we are not able to say which transaction was the theft. Having started with that presumption of guilt, we will then proceed to say, "Well, we'll make him appear in conscience in equity to eschew the maximum guilt and have the minimal guilt so that he will, although a thief, take his own property first". Thus the property at the end of the day left after his property has all been exhausted will have been property taken unlawfully.

KIRBY J: Yes, but I understand the Crown's submissions to be saying that, though the Court of Criminal Appeal of Western Australia tried to justify that by reference to equitable principles which you say were not argued and were not presented at trial but that if you start afresh and look at simply the presumption of innocence, that the presumption of innocence is enough to lead to the inference that, when you are seeking to prove a criminal offence, it will be presumed that you took your own money first.

MR JAMES: Your Honour, with respect, that is not a presumption of innocence. It starts with a presumption of guilt. It starts with a presumption that you have thieved something but you are not able to say which one it was and it is further not a presumption of innocence as applicable to each count. It is a presumption that would say that the counts earlier in time are not guilty; counts later in time you are guilty. That is not an application of the presumption of innocence as we know it in the criminal law. It may be something that affects a doctrine that equity is able to utilise for the purpose of acting on the conscience of the holder for the sake of distributing the moneys or, indeed, if necessary, for the sake of defining an opportunity for compensation from a legal guarantee fund. It has nothing to do with the deliberations of fact of a jury or the doctrines of criminal law.

DAWSON J: It is really a series of presumptions resulting in a presumption of guilt.

MR JAMES: That is the point. It is utilising what is said to be a presumption of innocence to in fact presume somebody to be guilty. It is not even natural and probable consequences of one's act. Unless I can assist the Court further, they are the arguments that we would put.

BRENNAN CJ: Thank you, Mr James. Yes, Mr McKechnie.

MR McKECHNIE: If your Honours please. Could I just very briefly state what I believe to be the position of the appeal only, because my friend strayed into areas and, although it was the subject of some discussion from the Bench, the ground of appeal is that the court erred in granting a new trial. That as we saw was particularised in the submissions of my learned friend and those submissions as we see in the grounds really relate to this one question, broadly speaking, about section 373.

The question of the exercise of the discretion of the court generally did not, with respect, seem to us to arise on the grounds, nor, perhaps disappointingly to your Honour Justice McHugh, did the question as to whether or not there was cogent evidence of sufficiency of a direction. It really seems to us on the material that there is one issue which broadly seems that the Crown would be unable to ever prove ownership and therefore there was an error in ordering a retrial. I do not understand in the end my friend went beyond that submission, but we are approaching the matter on that basis. Indeed, the submissions may in one sense boil down to the resolution of a pleading point as much as anything in relation to the framing of the indictment.

Can I say, your Honours, very briefly that the Crown contend for a simple operation of section 373. The Court of Criminal Appeal approached the matter and, with respect to them, led themselves into error and clear error in defining it as a trust. But having said that, in our respectful submission, an alternative approach of applying equitable principles is not necessarily wrong and has much to commend it. But the Crown does not go so far as to adopt now what was said in volume II at page 276 by the Chief Justice. If he had left it at this, it may have been unexceptional:

In my opinion, the principles applicable to the appropriation of deposits and withdrawals on trust moneys were applicable in the manner described by Ipp J in his reasons -

That so much is perhaps unexceptional, but then his Honour at page 277 did go on to say in the second paragraph:

In my view, the relevant effect of s373 in the present context is that the moneys are deemed to be trust moneys in the hands of the recipient.

We would, with respect, have to say that is an error. It is an argument by analogy and it may have been an attractive analogy - in our submission, it was an attractive analogy - but their Honours have slipped the analogy into the actual position.

KIRBY J: Did the Crown put that argument before the Court of Criminal Appeal of Western Australia?

MR McKECHNIE: My understanding is no, your Honour. In fact, my understanding - I was not counsel - is that indeed much of the analysis by the court of the question of trust was not really the subject of argument before their Honours.

KIRBY J: But did the Crown refer to Hallett's Case?

MR McKECHNIE: I do not believe so, your Honour, no. My friend, who was there, might respond to that.

MR JAMES: I can assist your Honours. The Crown did not refer to Hallett or seek to bring it in aid. The argument the Crown put is set out in the judgments of Mr Justice Ipp and the Chief Justice, that the money was in co-ownership. That was dealt with by the court and Bacon v Pianta was looked at. Then came this question of what was the proper way to appropriate and that was a matter the court raised for itself.

MR McKECHNIE: I am obliged to my friend. The Crown argument, your Honour, is set out at pages 354 and 355 where his Honour does not uphold the contention of the Crown that it was co-ownership. He then says:

Nevertheless, in my view, s 373 remains the key -

and moves into this notion that it is to be regarded as trust moneys and, first of all, at page 355 says:

under the circumstances defined, in effect imposes a statutory trust -

but by the next paragraph has moved to in effect propose as a statutory trust and says:

in effect, deemed to be trust moneys -

and then seems to treat them as trust moneys.

Your Honours, it may not be necessary in the resolution of the issues which arise to actually need to have regard to equitable principles because, in our submission, much can be derived from section 373 which your Honours have already read. But could I say that in very short form our submission is that section 373 is simply a deeming of ownership in certain circumstances. If a man is given $10 to buy a specific book with a direction - if he is given it in coin and he changes the coin into a note, then that is money in exchange and that money remains the property of the giver until the direction has been complied with.

DAWSON J: What about money paid into a bank account?

MR McKECHNIE: If the money is paid into a bank account, the money still remains the property of the person until the direction is complied with. The only thing that can - - -

DAWSON J: What do you mean by "money" there?

MR McKECHNIE: Well, the cheque.

McHUGH J: But it is not; it has disappeared. It is now the property of the bank, is it not? The bank has obtained the money on a debtor/creditor relationship. So the property is gone. The money may have - if it was coins, it had been dispersed to the world, substituted as a chose in action.

MR McKECHNIE: A sensible reading, your Honour, is that when money is taken out - let us take my $10 which is paid in by cheque and then taken out - - -

McHUGH J: I think that covers it. That means you have to concentrate on the money being taken out of the account.

MR McKECHNIE: Yes, it is exchanged and the deeming provision attaches to the money coming out.

McHUGH J: Yes.

MR McKECHNIE: So also, before we get on to the question of blended funds, if it was an unblended fund and the cheque was paid in and then taken out, it would continue to attach until the direction is complied with.

DAWSON J: You see, money is not the physical properties in which it is embodied. Money is merely a medium of exchange. You do not even need physical characteristics, as has been pointed out, these days. So that you can be deluded by the fact that a cheque may represent money and coins may represent money, but money is something different from any of those. If you look at it merely as value, then you get closer to a solution, I think.

MR McKECHNIE: Our submission is simply that section 373 does not simply end at the bank door, or it may go into hiatus, I think were the words of your Honour.

BRENNAN CJ: I wonder if that is really right. If one looks at 373, it is really dealing not with the situation of conversion of one piece of property into another but only with the ownership of the original piece of property. In other words, the section has as its first element the receipt of money or valuable security, et cetera. The second part of the definition is that there is a direction and it is a direction with respect to the money received or part of it or proceeds of it. Then the operative part of the section says that "such money and proceeds", that is the money or proceeds which are the subject of the direction "are deemed to be the property".

MR McKECHNIE: "Or any other money received in exchange for it", which are words your Honour left out which, in our submission, are critical because those - - -

BRENNAN CJ: But those words are also in the second element, are they not? That is:

with a direction -

to use those words -

that any money received in exchange for it.....shall be applied - - -

MR McKECHNIE: Yes.

BRENNAN CJ: So that the first element is the receipt by the offender, the second is the direction given by the putative owner, and the third is that the ownership of that which has been the subject of the direction is to be taken to be the property of the person who gave it. If one is dealing with a cheque, one may say, "Here is a cheque to be applied to the purpose of X", and one might by inference say, "And that cheque or its proceeds are to be applied to the purpose of X", because that is the nature of a cheque, that its proceeds should be the subject. Does it go any further than that? It does not deem anything else to be the property of the person who gave the direction, does it?

MR McKECHNIE: I would say, or what the cheque may be exchanged for. To put it another way, for the purposes of the criminal law, the actual physical piece of paper, the cheque, with the direction. The mere fact that it is paid into the bank - property for some purposes might pass to the bank or for some other purposes, but for the purposes of the criminal law that piece of paper remains the property of the person who gave the money with the direction and remains their property until the purpose is fulfilled. If through a process of banking that cheque is exchanged for money or another cheque, then by operation of section 373 the ownership attaches to that exchange.

BRENNAN CJ: What does it attach to in this case?

MR McKECHNIE: In this case it would - I propose to deal with the question of the blended fund in a moment, your Honour. Could I deal with it as if it were unblended. It would deal with the exchange when it comes out of the account and, if that is then converted or not - well, there are two steps. It has to be fraudulently converted and it has to be used for a purpose different from the direction. If it is not used in accordance with the direction, then it remains the property of the giver, whether or not it is fraudulently converted. If it is used in the purpose of the direction, it is applied and its purpose is fulfilled and property transfers to wherever it was intended to transfer or go.

BRENNAN CJ: So you say that if A gives a cheque to B with a direction to apply it to the purpose X, then if B places it to the credit of an account with the bank and subsequently draws a cheque on that account and applies it to the purpose Y, then the cheque which is drawn and applied to purpose Y is deemed to be under 373 the property of A?

MR McKECHNIE: Yes.

McHUGH J: There is no difference. If the accused was given $100 in cash for a specific purpose, he went down to the bank and got a bank cheque, the bank cheque would also be the property for the purpose of the section?

MR McKECHNIE: Yes.

DAWSON J: It seems to follow whatever instrument transmits the value.

MR McKECHNIE: Indeed.

DAWSON J: If you have finished with that line of inquiry, can I ask this question. At trial the Crown put its case upon the basis that this was a common fund owned by a particular person who had given a direction and others who had given directions.

MR McKECHNIE: That was the indictment. I hesitate to split hairs because - - -

DAWSON J: That was the charge.

MR McKECHNIE: That was the charge.

DAWSON J: That was the way the Crown put its case.

MR McKECHNIE: Yes.

DAWSON J: Now what the Crown concedes is it cannot put its case that way.

MR McKECHNIE: Not necessarily, your Honour. I have not come to deal with that.

DAWSON J: That is what I want to get at.

MR McKECHNIE: It was my next point. Can I make a general comment, your Honour, before dealing specifically with the question of the blended fund. We would not see on a retrial the Crown would be changing its case or altering its case in any way. The evidence would be the same, the issues would be the same. It is true that there was criticism within the Court of Criminal Appeal that the Crown - I would not put it as high as changed the case, but certainly a submission made in closing address was unhelpful and changed direction of a certain nature. The net effect of that change of case was, along with other things, to cause the Court of Criminal Appeal to allow the appeal. It does not follow and, with respect, I do not see how the Crown would change its case in a King sense or any other sense on a retrial.

KIRBY J: That is important because otherwise that would be a consideration to deny you a retrial.

MR McKECHNIE: Indeed, your Honour.

KIRBY J: But what is complained before us is that, whatever the section means, you have failed to prove in the particular donations the direction and the obligation that attached to it and the conversion of any other money received in exchange for it and you cannot make that better in a second trial, or you should not be allowed to make it better.

MR McKECHNIE: I am not sure if I agree entirely with the way your Honour put it, but certainly obviously it is a relevant consideration if the Crown changes tack or is allowed to make better. In this case the issue is, in my submission, really as much as anything a pleading issue or an issue involving the interpretation of section 373. It is not a factual issue by which the Crown could ever say, "Well, now we can call this evidence or that evidence or present the case in another way". The Crown case would still be presented as a stealing by direction and the specific conversions would be the same conversions that are in the count.

DAWSON J: That is not really right, is it, because if you say there is a common fund, then you are alleging that the ownership is not only in one person but in others. Now the case that the Crown wants to put is that there were different owners of different parts of that fund and that is a quite different case.

KIRBY J: Why should you be allowed to present that very different case at the second trial? That does not seem to be fair and it seems to conflict with the principle which the Court of Criminal Appeal took into account that you should be held to the way you presented at the first trial.

MR McKECHNIE: I do not have a specific argument with your Honour as to the general proposition. The reason I am hesitating is that, in my respectful submission, the Crown is not actually changing the case. It depends, in the end - - -

DAWSON J: Well, only in the sense that it is still saying that the money was stolen but it is a very different case, is it not, because what you are saying now is that there are different owners of money which is to be found at the bank account and we can employ certain principles to identify whose money was taken out at a particular time. You previously said there was no need.

MR McKECHNIE: I am not - with respect, I could not agree with your Honour that one is changing the case if one has set out at the previous case to prove that the money stolen was the property of Aerodata and others and one would set out, subject to one matter I will mention later, to prove in a new case that the money was the property of Aerodata and others and the same others. It may be that the legal principles upon which it is said that the property was Aerodata's and others has received amplification by the Court of Criminal Appeal and maybe by this Court but the Crown case would still be precisely the same on the same indictment.

DAWSON J: Only in a broad sense. I mean, you take the accused as he finds himself now. He was never called on to meet a case based upon presumptions and I take it you rely on some sort of presumptions, you must.

MR McKECHNIE: I would prefer to say that I rely on the deeming provisions of section 373.

DAWSON J: Yes, but that does not carry you far enough, does it? You have got to employ some other principles to be able to identify the moneys that were taken out.

MR McKECHNIE: I will come to that, your Honour.

DAWSON J: Yes, but if you do, then what the accused has to meet is a different case based upon principles which were not employed at the trial and which he did not have a chance to counter if it had been a matter of argument. He may have been able to convince the trial judge that this was not the correct way to go about it and why should he be brought back again, particularly when he has served his sentence, to answer arguments which he was not given a change to argue in the first instance?

MR McKECHNIE: Your Honour, I accept the general principle behind which the specific question - - -

DAWSON J: But I am putting it specifically.

MR McKECHNIE: The specific response is that we are not, in fact, changing the case, that on analysis we are would present the same - - -

DAWSON J: How could you not be changing? I presume you are going to accept or are bound to accept what was said by the Full Court in its judgment. Is the Crown not going to accept that and present even yet a different case?

MR McKECHNIE: Well then, it comes to this, your Honour, and I have already indicated - - -

DAWSON J: To put it bluntly, are you in the trial going to rely on Diplock and Re Hallett's Estate if there is another trial?

MR McKECHNIE: If there was another trial, that is the issue to which I keep coming, we would first of all rely, and principally, on section 373.

DAWSON J: You might, but are you going to rely on Diplock and Re Hallet's Estate?

MR McKECHNIE: Well, if that is the basis of the law as laid down and correctly set out, there would be no reason why the Crown should not and - - -

DAWSON J: That is right, but are you going to say it is the law if, having been told so by the Court of Criminal Appeal?

MR McKECHNIE: I would not want to answer that only equivocally, your Honour, yes.

KIRBY J: I thought you conceded before us that the Full Court of the Court of Criminal Appeal had fallen into error in these principles. Why would the Crown present a case based on what it believes to be an error and that it did not present in the first trial. Your case in the first trial was co-ownership and now you are saying you will go to a second trial on a very different basis.

MR McKECHNIE: I have not actually presented my argument here on co-ownership, your Honour. It might be that when I do it finds favour and, in my respectful submission, is not actually different from - - -

DAWSON J: We have perhaps taken you out of turn, Mr McKechnie.

MR McKECHNIE: The short point and we have set out in our submissions, I think, and I do not want to waste time, but the short point, we would say, is that section 373 or the fund does not create different funds. True it is that money may be given with different directions and it may need - not in this case we would say on facts - but it may need in times an analysis when money is withdrawn to see whether direction is complied with, not because it creates different positions, that is a factual case. I am putting this badly.

If money is paid in with three different directions, that money remains the property, each amount paid in, remains the property of the person who gave it until the direction is complied with. When it is paid out a factual question may be whether it has complied with all or any of those directions. If it has complied with one or two or three of those directions, then property may well pass in that amount of money.

McHUGH J: Can I just stop you there because I have a problem which seems to me not to be dealt with in the Court of Criminal Appeal judgments and it is this. It is a particular cheque that is drawn out. Let us assume that he draws out $5,000 to pay some maintenance payments. Now, accepting your theory of 373, how does one say that $5,000 is part of Aerodata's money or somebody else's? How does one link it up?

MR McKECHNIE: We would say it is all of their money. Let us assume, for the purpose of your Honour's question that the maintenance plainly does not comply with anyone's direction.

McHUGH J: Yes, we would assume that.

MR McKECHNIE: Yes, then it is all of their money and it is appropriate in an indictment to indict as the property of A and B and C.

McHUGH J: Now, where do you get the right to say that the cheque for $5,000 was, by reason of 373, the property of all of them because 373 does not seem to me to take you that far. I must say, for my part, this is one of the most critical aspects of the whole case, Mr McKechnie.

MR McKECHNIE: I appreciate that and I will come to the actual facts but if I can use a hypothetical for the moment to answer your Honour's question. Let us say that the money has gone in from three persons with a direction and that there is no other money in the account but theirs. It is taken out and not used according to the direction.

McHUGH J: Yes.

MR McKECHNIE: He has fraudulently converted somebody else's property. The question is, whose property, because it was paid in with a direction?

McHUGH J: Yes.

MR McKECHNIE: The answer to that, in our submission, is simply every person who was part of that fund.

McHUGH J: Well, that is the real problem I have. Now, if it was their property in the common law sense, then 584(15) solves your problems, no problems; but 373 just simply deems a payment out to be the property of a person who put it in. It does not deem every one of them and if you have got three different directions, how do you know that the direction has not been complied with?

MR McKECHNIE: That is why I said earlier that is a question of evidence or might be a question of evidence in a particular case.

KIRBY J: Yes, but we are entitled to test your theory of the section by the possibility, as Mr James has said, that different donors might have different directions to that.

MR McKECHNIE: Indeed, your Honour, and I will answer that but before I do, if I could deal with your Honour. Section 584(15) is, in my respectful submission, designed to actually deal with this position. It may be that the Crown ought to have indicted on the basis of A or B or C which I may be doing a disrespect. I understood my friend at one point to be putting that that may have been an acceptable indictment. In our respectful submission, I have got to go on the indictment that there is obviously, A and B and C covers precisely the same point.

With your Honour, if the money is paid out and it complies, if there are three different directions and three purposes; each contributes $2,000, $6,000 is drawn out as a cheque which does not comply with the direction from A and B but does comply with the direction from C, the section no longer has any application for C. He is charged with stealing.

KIRBY J: Does this not demonstrate the difficulty of our trying to do surgery on this section to cope with a problem which does not seem to have been contemplated by the drafter and to have attached it to common funds? It is requiring a lot of surgery from the Court. That is why I asked for the principles that govern approach to codes.

MR McKECHNIE: Your Honour, it is probably me, but we do not see, with respect, that while we do not walk away from the surgery that the Court of Criminal Appeal applied as an alternative approach, we do not actually see that it really requires surgery from this Court. It applies an ordinary construction of the words to the Code. In short term, we say that section 373 actually does the job in this situation and can be construed that way. Not to construe it that way would lead to manifest absurdities in situations whenever money is placed in accounts mixed with other funds.

TOOHEY J: Does that mean then that you do not take a stand on paragraph 4 of your submissions, Mr McKechnie, because they seem to suggest that the test posed by Justice Ipp really is an answer to the appellant's case, namely that there was sufficient evidence to justify a finding of guilt, if there was a finding that each payment was not capable of being satisfied from undirected funds.

MR McKECHNIE: Well, that is not a submission we do not take a stance on. We rely on that finding and also on another one in answer, as the earlier question, in that in relation to each payment, we would say, and I do not understand this to have been a challenge other than this particular way, but in relation to each payment there were not sufficient undirected funds in the account to meet the payment so that with count 1 at $9,000 there was not $9,000 undirected funds. That is what we understand Justice Ipp to say and also if I could give your Honours the reference but I will not take your Honours to it in Parker v Taylor which was the Full Court on the committal.

The Chief Justice dealt with this very issue and did the same analysis in ground 1(c) at page 30 and the conclusion that I have just stated is to be found at page 49.

KIRBY J: What is the citation?

MR McKECHNIE: It is unreported. Your Honour should have a copy of it. It was the Full Court decision, your Honour.

KIRBY J: Is it your thesis that whatever may be the situation in other cases, here there were common begging letters, common direction attached into a common single banking account and there were no undistributed or private funds and, therefore, anything that was paid out from it for a purpose other than the directed purpose was of necessity open to the jury to accept as being contrary to the direction? Were there private - you are not sure there was private money in the bank account?

MR McKECHNIE: Yes, it depends on private money. There was no money that the appellant paid in himself. What there was was undirected money which was, therefore, his property.

KIRBY J: If you took that off the total, was there still misapplication in the Crown's submission?

MR McKECHNIE: Yes, that is my submission.

TOOHEY J: Can I just put my earlier question to you in a slightly different way, Mr McKechnie. In regard to paragraph 4, do you say that it was incumbent upon the Crown to prove that each payment was not capable of being satisfied from undirected funds or that it was enough that the Crown did make good that proposition?

MR McKECHNIE: I would say that the Crown would have to prove that it was not capable of being satisfied from undirected funds whichever way one puts it. I was intrigued by the proposition my friend put in argument which your Honour, I think, tentatively took up about it leading to a presumption of guilt but whichever way you do it, I would prefer to say that presumption of innocence would simply apply to undirected funds. Even more, undirected funds would be Parker's property. He could do with them as he liked. It is only when you go beyond the undirected funds that you are potentially misapplying somebody's property.

KIRBY J: But his argument - and this is pressing Justice Toohey's question - is that at that stage you still have to show that the particular payment is attributed to a particular person contrary to that person's direction. Now, do you accept that or not?

MR McKECHNIE: I accept that you have to show, so long as I could say particular person or persons and contrary to his or their directions, yes.

McHUGH J: I must say I think you are in serious trouble unless you can rely on Re Hallett's Estate because at every stage when a cheque is drawn on the account there is more funds in the account than is the subject of directions.

DAWSON J: Well, you can take that into account.

McHUGH J: That is not undirected funds. There are more undirected funds in the account, I think. There is always money there over and above the amount of a particular cheque.

MR McKECHNIE: Yes. I am not entirely sure that I understand your Honour's question although it sounds a very simple question. It might be me. In the fund at any time, there was either undirected moneys or directed moneys, if we can put it that way. When a cheque was drawn it could not be met entirely at any relevant time by undirected moneys. It always would spill over into directed moneys.

DAWSON J: If I can just put a question you can think of over lunch, whatever you might say about the way in which the Crown would conduct a case if there were to be a retrial, the fact of the matter is, the basis on which the Court of Criminal Appeal ordered a retrial was that there would be an application of Re Hallett's Estate as a means of proof of the Crown case. Now, that represents a departure from the way in which the case was conducted previously and that being the basis on which the court ordered the retrial, may it not have fallen into error, whatever the proper construction may be? You do not have to answer that now.

MR McKECHNIE: I understand the question.

BRENNAN CJ: We will consider it at 2.15 pm.

AT 12.44 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.19 PM:

BRENNAN CJ: Yes, Mr McKechnie.

MR McKECHNIE: I have had an opportunity to reflect and could I answer your Honour Justice Dawson and also, I think, answer your Honour Justice McHugh, because my instructing solicitor tells me I did not actually understand your Honours' questions, and I think she is probably right, and I can do it very briefly in relation to the change of case and also in relation to the case generally and make a concession in relation to one aspect of it. In our respectful submission - I have really said this, so I do not want to repeat myself too much - for the Crown to proceed on the basis that the Court of Criminal Appeal judgment, if that is the law, would not involve a material change of case and, more particularly, would not involve prejudice to it.

DAWSON J: I am sorry, I did not hear you, Mr McKechnie, "to proceed on the basis"?

MR McKECHNIE: Of the Court of Criminal Appeal judgment, assuming it to be correct. One of our submissions is the reasoning is correct if it starts on a false analogy about trusts. It would not involve prejudice to an accused. He would not lose a fair opportunity of an acquittal or anything of the sort because the law which a trial judge would have applied would have or should have been the law as laid down now in the Court of Criminal Appeal. All another judge would do would be to apply that law. We do not change either the evidence or the indictment or the manner in which the Crown would proceed. The only thing in issue is the question and the legal principles in relation to ownership. I have not, for obvious reasons, repeated our argument which we have put in our written submissions and which is part of our argument.

Our argument proceeded this morning on an analysis of section 373 primarily, and on that analysis depends the question of co-ownership which we would say is not joint ownership. The fund is co-owned, if that is a word, that each person who pays in with a direction is a co-owner of the fund, and it has got nothing to do with joint ownership. The answer to your Honour Justice McHugh - - -

DAWSON J: Could I just stop you there. You mean each is an owner of part of the fund and in that sense is a co-owner, but each is not the owner of the whole of the fund?

MR McKECHNIE: No.

KIRBY J: According to the several directions that each may have given?

MR McKECHNIE: Indeed. If that is not accepted, if that argument is not accepted, then your Honour Justice McHugh is right. We would rely then on the alternative as put by the Court of Criminal Appeal in Hallett or that line of reasoning. For the line of reasoning to be adopted the Crown would need then to rely on section 584(15), the section to which your Honour the Chief Justice directed attention. That section could not apply without amendment to the present indictment and the reason is that the present indictment as under section 584(6), names as co-owners Aerodata and others.

In order for subsection (15) to apply it would be necessary for the Crown in each case to name each party. The section requires that. Therefore, the Crown would, in order to proceed on that basis, require an amendment and I would have to accept that an amendment of such a nature in a case at this point, having regard particularly to the fact that the appellant has served all his time, the inevitable result would be that there would be no order for retrial because that would be such a material change of that amendment in these circumstances that the appropriate order would be no retrial. We reach that on the basis, as I say, if the principal Crown submission about co-ownership is not accepted. Those are our submissions, if your Honour pleases.

BRENNAN CJ: Now, if the principal submission is accepted, there is still the position of the person who has served his sentence and who has now been at liberty for some time. Having served the sentence, what is the purpose of having a retrial in those circumstances?

MR McKECHNIE: All I can say by answer to your Honour in that question is that those were matters which the Court of Criminal Appeal considered and spent some time both quoting and analysing the relevant legal principles applicable to a retrial and concluding that a retrial was appropriate in the public interest. In my respectful submission, there has been no argument directed, other than of course the principal one, to show that that which is plainly a discretionary judgment in the court has miscarried. That particular matter was a matter expressly taken into account by the Court of Criminal Appeal. They did not accord it such weight as to decline to order a retrial.

KIRBY J: Is not the correct analysis that the Court of Criminal Appeal came to the conclusion it did on retrial after it had determined the principal matter that was contested, and that, if it is shown that an error infected their decision on the principal matter, then does it not fall to this Court to exercise its own discretion in relation to whether there would be a retrial or not?

MR McKECHNIE: Well, if the error was, if I can put it shortly, an error of interpretation as to how section 373 works, in our respectful submission it is not even a question of discretion. It is simply that a retrial should not be ordered as a matter of law. If although some of their reasoning might be in error the result is nevertheless correct, then the only question for this Court is a question put to me, with respect, by your Honour Justice Dawson, as to whether that would then be a change in the Crown's case of sufficient magnitude as to justify not an order and that is a live question for this Court.

McHUGH J: Can I just ask you a couple of questions about the form of indictment. As I understand the way you put the question of co-ownership, a cheque being drawn and part of the proceeds being the accused's, how would you go about specifying the property? Would you just rely on 504(6) and say it is A, B and C being donors or do you just simply say A and others? Is that the way you - - -

MR McKECHNIE: A and others.

McHUGH J: Just A and others?

MR McKECHNIE: Yes, that is what the section allows.

McHUGH J: Is there any complication if a donor - let us say that is was Kraft, I think, which donated $100. If at the time a cheque was drawn Kraft was one of those that you would allege was one of the co-owners, but before the accused disposed of that cheque a payment for $100 was made for legitimate campaign purposes, how would you deal with that? In other words, that $100 would cover Kraft exactly. Would you say that Kraft was no longer an owner of the cheque? Just how does that fit in?

MR McKECHNIE: Consistently with our argument we would say that Kraft is a co-owner.

McHUGH J: He remains a co-owner even though.....sum of $100.

MR McKECHNIE: Yes.

McHUGH J: I thought you would have to say that, yes.

MR McKECHNIE: If your Honours please.

BRENNAN CJ: Thank you, Mr McKechnie. Mr James.

MR JAMES: Your Honours, the Court of Criminal Appeal rejected the pooled or co-ownership mode of conducting the case in their judgment, particularly relying on what was said in this Court in Bacon v Pianta and, consistent with that, rejected the evidence that it was sought to tender as to the intention of the donors which is, of course, a question that is entirely relevant to whether they believed that their funds were entering into a communal pool. Section 373 does not deal with that matter. Indeed, the Crown point out in paragraph 9 of their written submissions that the section itself is silent as to how directed funds from several sources are to be treated once mixed by the recipient.

That silence is eloquent in the Code just as was the silence in the New South Wales Crimes Act provision considered by this Court in Grant v The Queen [1981] HCA 32; (1981) 147 CLR 503, a thing which might reasonably be suspected of having been stolen or otherwise unlawfully obtained, and what had happened is that it had passed through an account and since what was involved was cash, and since it had passed through the process of bank credit and payment out, the notes that were eventually received were things to which the section did not speak. I merely point out that there is another section that draws the line at a particular point because of the passing through a bank account.

McHUGH J: The big distinction between that case and this case is that section 373 refers to any other money received in exchange for it.

MR JAMES: Yes, but it keeps it as the property of the individual owner. It does not postulate any form of communal deemed title. Indeed, there is no notice of contention from the Crown and it is now conceded that if the Court of Criminal Appeal's approach is invalid or in error on that question of the equitable tracing doctrine in the application in Re Hallett then resort would be had to the very approach that the Court of Criminal Appeal had ruled out, which is the communal case.

BRENNAN CJ: Why does that matter?

MR JAMES: That is to say that what the Crown is indicating is that they would wish this Court to find in favour of co-ownership but co-ownership of a kind contemplated by a section which is silent on the topic, not co-ownership at law. No matter how one looks at it, that would not be a change in case but it is the very thing the Court of Criminal Appeal ruled against.

BRENNAN CJ: That does not matter, does it?

MR JAMES: No, it does not if this Court is of the view that that is, in fact, the right conclusion. But it is a change in case in a sense and that sense is that 373 does not contemplate it. What was talked about at trial was, as it were, a common law ownership. Now, that becomes most important because, both at trial and on appeal, evidence of intention was ruled out, so the accused was prejudiced. He had a trial in which he was not able to lead evidence that might well have been directly relevant to the question of whether any such co-ownership could arise. The co-ownership that was asserted at trial was a sort of co-ownership by operation of law and it is our submission, of course, that 373 does not speak about that at all.

KIRBY J: You embraced Justice McHugh's question about "or other money received in exchange for it", but is not the point the Chief Justice made earlier correct, that that is an adjectival phrase that is qualifying direction. It is the direction in either case that money, or any part thereof, or any money received in exchange for it.

MR McKECHNIE: Yes.

KIRBY J: So, it does not seem to be a verbal part of the provision. It is simply a qualification of the direction.

MR McKECHNIE: It relates to the direction, your Honour. That is one of the reasons why you do not get communal title out of it. Indeed, the question your Honour asked earlier, and I think your Honour Justice McHugh asked earlier, on one view, with each of these withdrawals there was some money that was capable of being the subject of a direction, not necessarily the amount shown, because the amount was the withdrawal, and often considerably less than that amount. But that only occurred if you took out the undirected funds and operated on a presumption that he was first taking out the undirected funds and then leaving in the moneys that were subject to directions. But how much, whose, subject to what direction, and did he know that the moneys he was withdrawing came from the undirected funds, a question in respect of which how much was undirected funds, how much was directed funds, was very material to, was left moot.

Your Honours, we would submit - and, indeed, I should say that in relation to the more general questions of the exercise of discretion I went no further than I did when your Honour Justice Brennan put to me that special leave would not have been granted except on that substantive question, but I should draw your Honours' attention to the fact that the decision to grant a new trial was based on an assessment of the evidence as cogent in the light of the equitable principles. If the court was in error in defining the ownership by reason of the equitable principles, then it is a matter for this Court to exercise its discretion de novo and to exercise its discretion in all the circumstances - House v The King.

To do so, the Court can have regard not only to the factors defined by the Court of Criminal Appeal below, not only to the further lapse of time, not only to the fact that the man has suffered and paid for one trial which aborted through no fault of his, therefore, he must have suffered prejudice, but in addition to the fact that one of the bases on which the new trial was granted was that he at the time enjoyed a certain occupation which, although it did not relate directly to the moneys in question, gave to him a local and particular significance such that it was thought it was in the public interest that he should be retried. That is, he was a Minister of the Crown at the time, although he did not commit the crime as a Minister of the Crown.

Now, we would submit that that is in error in creating a position of inequality, although the crime did not result from the occupation of that privileged status. Your Honours, it would be our submission that, in all the circumstances, the appeal should be upheld.

BRENNAN CJ: Thank you, Mr James. The Court will consider its decision in this matter.

AT 2.36 PM THE MATTER WAS ADJOURNED