Nguyen v The Queen [2013] HCA 32

Case Note: Nguyen v The Queen [2013] HCA 32

Facts and Background

On 8 November 2004 Dang Khoa Nguyen ("the appellant"), Bill Ho (“Ho”) and Dang Quang Nguyen ("Nguyen") went together to an apartment to collect a debt owed to either Ho or the appellant for drugs supplied to Mau Duong ("Mau") (at [1]-[3]). Mau was not present but seven other people were. Nguyen was armed with a samurai sword and Ho was brandishing a revolver. In the apartment, Nguyen inflicted cuts on two or three people, while Ho shot Hieu Trung Luu ("Luu") and Chau Minh Nguyen ("Chau"); the latter survived but Luu’s wound was fatal (at [4]).

The appellant, Nguyen and Ho were charged with the attempted murder of Chau and the murder of Luu (at [1]). The case against the appellant and Nguyen was advanced on three bases. The first two were that they were acting in concert with Ho; or they had a common purpose or extended purpose with Ho (at [4]). The Crown argued that the appellant and Nguyen were both parties with Ho in collecting a drug debt and would kill to achieve that end (at [4]). The third was that they aided and abetted Ho (at [4]). The basis for this contention was that, if they had not agreed to kill before they entered the apartment, such an agreement formed after they entered and began attacking people with the sword and gun (at [4]).

The trial judge (Williams J) in the Victorian Supreme Court directed the jury that, if they found Ho guilty of murder, they could only convict the appellant and Nguyen of murder; manslaughter was not open to them (at [6]). The jury convicted all three for the murder of Luu and the attempted murder of Chau (at [7]).

The appellant and Nguyen appealed the verdicts, and while Nguyen’s conviction was quashed, the appellant’s conviction was upheld (at [8]). In Nguyen’s case, the Victorian Court of Appeal held that, on either of the three bases contended by the Crown, there was insufficient to permit the jury to be satisfied beyond a reasonable doubt (at [9]).

The Crown appealed the ruling for Nguyen to the High Court, and Nguyen cross-appealed to uphold the ruling (R v Nguyen (2010) 242 CLR 491). Nguyen argued that “the trial judge had erred in law in failing to direct the jury to consider whether, in the event that the jury were satisfied that Bill Ho was guilty of murder, Nguyen and the appellant might be guilty of manslaughter rather than murder.” (at [10]).

While the High Court was satisfied there was sufficient evidence for the jury to be satisfied beyond reasonable doubt and convict the appellant and Nguyen, it held that on any of the three bases, it was open to the jury to convict Nguyen of manslaughter though they found Ho guilty of murder (at [13], citing R v Nguyen (2010) 242 CLR 491 at 505 [49]-[50].). This was so because, in relation to the three bases:

1. Concert – the arrangement may have been for Ho to only assault or threaten; 
2. Common purpose – it was possible, even if Nguyen knew of the gun, that the purpose was to do no more than serious harm short of really serious injury;
3. iding and abetting – Nguyen may have only assisted or encouraged Ho to assault of threaten, but not to kill or do really serious injury (at [17], citing R v Nguyen (2010) 242 CLR 491 at 503-504 [45]‑[46]).

The appellant also sought to appeal his conviction, arguing that his case was “materially indistinguishable” from Nguyen’s, and should likewise be allowed (at [15]-[16]).

The Decision
The Crown argued that there were material differences between Nguyen’s case and the appellant’s. The reasons for this were that, firstly, there was evidence the debt was owed to the appellant; secondly, there was evidence from Chau wherein the appellant spoke to Ho and nodded for him to shoot Chau; and thirdly, that the appellant did not give any account of his involvement in the events by way of a police interview nor by giving evidence (at [18]-[19]).

The court (French CJ, Kiefel, Bell, Gageler and Keane JJ) was dismissive of the Crown’s arguments. As to the first one, the court held that to whom the debt was owed did not shed any light on the nature of the arrangement between the appellant, Nguyen and Ho in “a way which is apt decisively to distinguish between the position of the appellant and Nguyen in relation to the criminal responsibility of each of them for Bill Ho's crimes.” (at [20]). Regarding the second of the Crown’s arguments, the court held that not only was Chau’s evidence unreliable (it was both disputed and uncorroborated) but, even if accepted, did not preclude the jury from concluding that the arrangement did not extend any further than being party to a plan to the use of violence, and not to really serious violence or homicide (at [21]). The court also held that Chau’s evidence did not preclude the jury finding that any common purpose did not extend to murdering Luu (at [21]). As to the third, the court, citing Azzopardi v The Queen (2001) 205 CLR 50 at 64-65 [34], held that the appellant’s silence could not be indicative of guilt (at [22]).

The court considered the real question to be whether the trial judge misdirected the jury in instructing that a conviction of manslaughter was not open if it convicted Ho or murder (at [22]-[23]). With reference to the preceding discussion, the court naturally answered yes (at [23]). The court further held that, even if the correct direction had been given, it was not inevitable that the appellant would have been convicted of murder regardless (at [24]). Therefore, a substantial miscarriage of justice occurred (at [24]). Thus the appeal as to the conviction for the murder of Luu was allowed.

As to the conviction for the attempted murder of Chau, the court, citing Gillard v R (2003) 219 CLR 1 at 14 [27], 33 [96], held, that where, because of an incorrect decision on a question of law, the jury has been deprived of the opportunity to consider the possibility of convicting for manslaughter rather than murder for another count tried at the same time, the error may have effected the entire trial (at [26]). Thus the appeal as to the count of attempted murder was also allowed. Both convictions were quashed and new trials were ordered (at [28]).

Analysis and Conclusions
The case illustrates, by way of comparison with R v Nguyen (2010) 242 CLR 491 that factual differences must be material to the elements of the offence charged. By arguing that, because the debt was owed to the appellant it somehow made him more culpable than his brother, is to introduce notions of motive into Australian criminal law which the courts have continually rejected. Further the court reaffirmed the right to silence as enunciated by the High Court in Azzopardi v The Queen, insofar as the appellant’s silence could not be relevant to assessing his guilt. I do note that the recently introduced s 89A to the Crimes Act 1900 (NSW) by the Evidence Amendment (Evidence of Silence) Act 2013 (NSW) will erode this position in NSW. Finally, the case, as did R v Nguyen (2010) 242 CLR 491, outlines the consequences of trial judges misdirecting juries as to the available offences they may convict on. A new trial is not simply a do-over; successful appellants have gotten to see their opponent’s cards and are in a much better position in meeting the Crown’s case than they were the first time around.

Modern Statutory Interpretation: Legislative Instruments and Extrinsic Materials Explained

Modern Statutory Interpretation: Legislative Instruments and Extrinsic Materials Explained

The intention expressed in legislation is assessed objectively–parliament is imputed to know commonly understood rules of interpretation. This is illustrative of an underlying rationale of statutory construction that informs why some materials are legitimate and others are not. The question arising in considering what matters a court may not legitimately take into account when determining the intention of the parliament in enacting a legislative provision concerns:

• approaches towards ascertaining the intention of the legislature; and,
• the limitations placed on the use of extrinsic materials by the courts at common law and in applying s 15AB of the Acts Interpretation Act 1901 (Cth).

Firstly, the basis on which to legitimately exclude certain matters from consideration depends to a great extent on the court's interpretation of the meaning of a statutory provision. For example, it has been held not to be legitimate to consider a view expressed as to the meaning of a statute by the legislature in a subsequent statute where the earlier statute's meaning does not betray an ambiguity: DFCT (SA) v Elder's Trustee and Executor Co Ltd [1936] HCA 64; 57 CLR 610 at 625-6. As Gummow J expressed in Interlego AG & Anor v Croner Trading P/L [1992] FCA 992 at [113] in reference to subsequent amending Acts being used to interpret earlier ones, “It is, after all, a curious way of revealing parliamentary intention at the time of the earlier provision.” This is demonstrative of the view that the interpretive exercise is one which begins with the statute and its context; a statute enacted subsequently cannot objectively demonstrate the will of parliament where prior that will is clearly expressed.

The force of this argument applies even more strongly when excluding reference to delegated legislation. As Tobias JA stated in Mine Subsidence Board v Wambo Coal Pty Ltd [2007] NSWCA 137; 154 LGERA 60 at 69-70, “it is well established that as a general rule it is impermissible to call in aid in the construction of an Act delegated legislation made under that Act.” The principle was stated in explicit regard to ascertaining legislative intention by Brennan J in Webster v McIntosh (1980) 32 ALR 603 at 606 that “the intention of Parliament in enacting an Act is not to be ascertained by reference to the terms in which a delegated power to legislate has been exercised”. There are however, exceptions to this rule. The first, as noted by Pearce and Geddes in Statutory Interpretation in Australia at [3.41] is where the regulations, “together with the principal Act, form part of a legislative scheme.” Mason J observed in Brayson Motors Pty Ltd (in liq) v FCT [1985] HCA 20; 156 CLR 651 at 652, that it is of utility to look to the regulations, not to ascertain the meaning of an ambiguous statutory provision, but to determine what is the scheme. The same holds true where a contemporaneously prepared Act and set of regulations establish an independent regime: Pearce and Geddes at [3.41]. Finally, where a statutory provision permits exceptions to be made by regulations, or is expressed to be subject to regulations, the regulations may be used as an aid to interpretation: Ward v Commissioner of Police (1998) 80 FCR 427 at 437-8; O'Connell v Nixon [2007] 16 VR 440 at 447. Therefore, both the prohibition and its exceptions illustrate the objective criteria already noted above–the text is prime and not to be queried where it is clear–and, as a known rule of statutory interpretation, it is imputed to be known by the legislature in enacting legislation.

As to extrinsic materials raising matters that warrant legitimate exclusions, the first of such materials are the views of parliamentarians, ministers, and public servants as to how a provision should operate, or the meaning of that provision. In Re Bolton; Ex part Beane [1987] HCA 12; 162 CLR 514 at 518, Mason CJ, Wilson and Dawson JJ stated that,

"the words of a Minister must not be substituted for the text of the law … It is always possible through oversight or inadvertence the clear intention of the Parliament fails to be translated into the text of the law. However unfortunate it may be when that happens … the function of the court is to give effect to the will of Parliament expressed in the law."

As Mason CJ and Gaudron J expressed in Hunter Resources Ltd v Melville [1988] HCA 5; 164 CLR 234 at 241, neither should extrinsic materials be taken into account where they merely express a view as to the meaning of legislation already in existence at the time the view is expressed. While second reading speeches have been permitted in interpreting the purpose of legislation, there is a significant caveat placed upon the matters contained therein that a court can legitimately take into account. Spigelman CJ in Harrison v Melhem [2008] NSWCA 67; 72 NSWLR 380 at 384 commented that, “statements of intention as to the meaning of words by ministers in a Second Reading Speech, let alone other statements in parliamentary speeches are virtually never useful.” Mason P at 399 elaborated on this point by stating that, while these statements may be useful the “identification of mischief and purpose … statement of meaning is another.” Campbell JA in Amaca Pty Ltd v Novek [2009] NSWCA 50 at [78], drew the distinction ever more sharply between a Minister's understanding as to how a particular statutory provision will operate and the actual meaning of that provision, holding that “all or part of the speech is not capable of assisting in the ascertainment of the meaning of the provision.” This is ever more the case where the view is expressed by a public servant, as held in Collector of Customs v Savage River Mines (1988) 79 ALR 258 at 263.

Therefore, the maters that cannot be legitimately taken into account confirm the view that the objective criteria of the text and imputed legal and interpretive assumptions are what the courts look towards. These objective intentions are the best indicators of legislative intent where in reality that intent may be politically fractured and understood in idiosyncratic ways, especially as regards the meaning as apart from the purpose of statutory provisions. Those materials discussed above simply enter where that objective intent is ambiguous and only to assist in ascertaining that legislative intent.

Modern Statutory Interpretation: Meaning of Words

Modern Statutory Interpretation: Meaning of Words

The process of statutory construction whereby a Court ascertains the “ordinary and natural meaning” of words in a statutory text is one in which the everyday meaning of those words are considered within their legislative context. It is therefore, an assessment divided into two parts: (1) the popular use and definition of the words in their social situ are established; and, (2) the legislative purpose is applied to these words to determine their function within the relavent. This second part is evinced where the legislature intends to depart from the everyday meaning of words or, where the ordinary and natural meaning includes a range of meanings and the Court must determine which of those is intended. This process is more eloquently described by Campbell JA in Thomas v State of New South Wales [2008] NSWCA 316 at [22] in terms of the “hermeneutic circle”:

“That concept is that understanding of the parts is dependent upon understanding the larger whole, but the larger whole can only be understood on the basis of the parts, so that arriving at an understanding of any particular part involves movement to and fro between the parts and the whole.”

This involves a consideration of the purpose the statute, the legal milieu in which it exists, and the type of activity it seeks to regulate. Yet, as has been frequently repeated, legislative purpose is “ultimately derived objectively from the language in which the law is expressed”: Commonwealth v Yarmirr [2001] HCA 56 at [262]. As Dawson J held in Mills v Meeking (1990) 169 CLR 214 at 235 a modification of the statutory language by reference to the purposes of an Act must be consistent with the wording of that Act. Yet, words are themselves social constructions whereby meaning is dependent on their ordinary and natural use. Thus Kitto J in NSW Associated Blue-Metal Quarries v FCT (1956) 94 CLR 509 at 514 stated that, “in the end the conclusion must depend on one's own understandings of the sense in which words are currently used”. In ascertaining this “sense”, courts frequently have recourse to the same book the rest of us do, a dictionary. As Handley JA stated in Manly Council v Malouf t/as Fusion Point (2004) 61 NSWLR 394 at 396-7, a dictionary “is likely to exercise some influence over the way the definition will be understood by the court.” Yet Mason P in House of Peace Pty Ltd v Bankstown City Council [2000] 48 NSWLR 498 at 505, commented,

“A dictionary may offer a reasonably authoritative source for describing the range of meanings of a word … However, they do not speak with one voice, even if published concurrently. They can illustrate usage in context, but can never enter the particular interpretive task confronting the person required to construe a particular document for a particular purpose.”

This warning is particularly salient where the court has to consider compound expressions–where the individual words that make up the expression may mean something quite different than the expression itself (Collector of Customs v Agfa Gevaert Ltd (1996) 186 CLR 389 at 399-400) and as already noted above, the meaning of words or expressions take their definition from the context in which they appear. This is known as the noscitur a sociis rule: the meaning of a word or phrase is to be derived from its context. Spigelman CJ in Lend Lease Real Estate Investment Ltd v GPT RE Ltd [2006] NSWCA 207 at [30] enunciated the rule as being that, “the general principle of the law of interpretation that the meaning of a word can be gathered from its associated words” and can likewise be limited by them. Illustrative of the issue this rule poses in relation to the use of dictionaries is the statement by Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ in Collector of Customs v Agfa Gevaert Ltd (1996) 186 CLR 389 at 396-397 where their Honours held that the meaning of a sentence is determined by the meanings of the words within that sentence, yet simultaneously, “the meaning of the individual words of that phrase is bound up in the syntactical construction of the phrase in question.” It is here that the hermeneutic circle described by Campbell JA comes into focus as an activity in which the interpreter ascertains the meanings of the words, expressions and sentences in relation to one another.

Despite the circular nature of the interpretative exercise though, an interpreter must begin somewhere—with an objectively accepted basis or predicate from which they may launch their logical exploration as to legislative purpose and statutory effect. As Mason P stated in House of Peace Pty Ltd v Bankstown City Council [2000] 48 NSWLR 498 above, dictionaries provide the range of meanings and therefore, offer a starting ground from which to begin the interpretative endeavour. Per Dixon J in Herbert Adams Pty Ltd v FCT (1932) 47 CLR 222 at 228-9, it is always easier to show that a word has a wider meaning than a narrower one, as there is no loss of meaning involved in adopting the broader definition. In this sense, the interpretative exercise in ascertaining the meaning of “ordinary and natural” words is one of peeling away meaning by reference to the statutory context in which they appears–the noscitur a sociis rule. The meaning is so narrowed by reference to the syntactical construction of the statutory phrase, as noted by Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ in Agfa Gevaert Agfa Gevaert (1996) 186 CLR 389 above.

A court cannot therefore be primarily guided by dictionary definitions as these are simply starting points; often ones which serve to confirm the range of meanings understood by those sitting on the bench, as stated by Kitto J in NSW Associated Blue-Metal Quarries v FCT (1956) 94 CLR 509 cited earlier. They provide evidence of a socially accepted range of usage in which the word is employed and from which the court may, with regard to the statutory context, narrow down such meaning in order to ascertain the legislative purpose the word expresses.

Modern Statutory Interpretation: An Overview

Modern Statutory Interpretation: An Overview

Throughout Australian jurisprudence, there have been a variety of approaches to the interpretation of legislation at different times. Presently, we have two dominant approaches: one under statute; and another at common law. Both are similar yet also different, and the courts are not often clear which they are employing, if any. The following broadly outlines these two approaches and how they have been employed by modern Australian courts.

Under Statute – Acts Interpretation Act 1901 (Cth) s 15AA
Under the Acts Interpretation Act 1901 (Cth), s 15AA, courts are required, “In interpreting a provision of an Act, [to adopt] the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act)”. This construction is to be preferred to any other interpretation.[1] Section 15AA was considered by Dawson J in Mills v Meeking (1990) 69 CLR 214 at 235, where his Honour stated that the purposes of an Act “are to be taken into account in construing the provisions… not only where those provisions on their face offer more than one construction, but also in determining whether more than one construction is open.” This means the court must look to the purposes of a statute at first instance, not simply where the text is ambiguous. However, such can not simply override the wording of the text otherwise adopted by the draftsman; it must be consistent with it.[2]

Extrinsic Materials – Acts Interpretation Act 1901 (Cth) s 15AB
An issue with the purposive approach arises though, where the text is not only ambiguous, but admits of different purposes when read in the context of the legislation as a whole. In this situation, s 15AB allows a court to refer to extrinsic materials: (a) to confirm the meaning of a provision is its ordinary meaning, taking into account the Act as a whole and its purpose; or, (b) to determine the meaning of the provision where its text is (i) “ambiguous or obscure” or (ii) its ordinary meaning in light of the purpose and context of the Act would lead “to a result that is manifestly absurd or is unreasonable.” [3] The question though, is when at what stage of the interpretive process may extrinsic materials be considered. Pearce and Geddes in Statutory Interpretation in Australia write that s 15AB contains “an inference that the underlying purpose or object of a provision will have already been established when the possible application of those provisions is considered.”[4] An exception is possibly s 15AB(1)(b)(i) that states an ambiguity in the text may be resolved by reference to the purpose or policy disclosed in the extrinsic materials.[5] This is not, however, the approach courts have taken. For example in NAQF v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 130 FCR 456 at 471-2, Lindgren J held, “Section 15AB(1)(a) and (b)(ii) and subs (3) assume that the ordinary meaning of a provision “taking into account its context in the Act and the purpose or object underlying the Act” has been identified before any occasion arises for the consideration of extrinsic materials in accordance with those provisions.” Despite the wording of s 15AB then, the courts have construed the section as not allowing purpose to be established by reference to extrinsic materials.[6] The text is paramount and only where the words are unclear may extrinsic materials be considered. Yet where a provision is textual ambiguous and admits of more than one purpose, how does one establish its operation without considering extrinsic materials? The answer is in the practical approach adopted by the courts in applying ss 15AA and 15AB, and the approach of the common law.

At Common Law – The Modern Approach
The High Court (Brennan CJ, Dawson, Toohey and Gummow JJ) in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 stated that,

… the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy.

These two principles are frequently invoked together with references to ss 15AA and 15AB yet, being derived from the common law, are qualitatively different from the position under the Acts Interpretation Act 1901 (Cth), insofar as the statutory context as disclosed by extrinsic materials is considered at the outset, not after such is ascertained solely by reference to the text. That being said, the consideration of extrinsic materials at first instance does not deny the primacy of the text; the language of the legislation “is [still] the surest guide of legislative intention”.[7] Nonetheless, the judgment cited above in CIC Insurance Ltd and Alcan (NT) Alumina Pty Ltd invoked the statutory “context”, itself a much wider term than “purpose”. While courts have held that such items as ministerial speeches and statements of public servants are “seldom”[8] or “unlikely”[9] to be helpful, such has not been prohibited from being proffered, or dismissed as never being of assistance in ascertaining legislative purpose. Therefore, while the context in which a statute came into existence may, in effect, be reduced in utility to considerations of mischief and purpose, it nonetheless admits of a wide variety of material and, in the common law modern approach, can be invoked in ascertaining purpose at the first link in the interpretive chain, not later as under the Acts Interpretation Act 1901 (Cth).

How the approaches are applied
As alluded to above, the courts have adopted a practical approach in applying the Acts Interpretation Act 1901 (Cth); one that is often employed using the common law principles discussed above. An example is the High Court decision in Minister for Immigration & Citizenship v SZJGV (2009) 238 CLR 642 cited by former Chief Justice Spigelman of the Supreme Court of New South Wales in The intolerable Wrestle: Developments in Statutory Interpretation (2010) ALJ 822 where he examined a number of recent cases on statutory interpretation. From that case, he considers two joint judgments that approached the task in differing ways. The first (French CJ and Bell J) stated the task of interpretation begins with “the ordinary meaning of the words “having regard to their context and legislative purpose” (at [5])”, while the other (Crennan and Keifel JJ) “referred to “the context, general purpose and policy” of the statutory provision being “the surest guide to construction” (at [47]).” In turn, one cited CIC Insurance as authority for the position that a court may only depart from a term’s natural and ordinary meaning if the result would otherwise be irrational by one (at [9]), while the other joint judgment cited case as authority “for the proposition that “the modern approach to statutory construction uses context” in its widest sense (at [47])”.[10] That being said, both joint judgments had recourse to extrinsic materials in ascertaining the legislative purpose.[11] The former chief justice ultimately concluded that while “the basic principles do not appear to be in dispute. It is the application of these principles that differences emerge.”[12] This demonstrates a flexible approach taken by the courts, but also one liable towards admitting of differing and somewhat unpredictable results. Therefore several factors must be kept in mind. Firstly, the courts will consider the text at first instance, and will have recourse to purpose (if stated) and context of the legislation in either upholding or overturning a preliminary view of the text. Secondly, if the text is unclear, either on its face or with reference to its purpose and context, the courts will consider extrinsic materials, often being explanatory memorandum, second reading speeches and law reform commission reports. This approach is in accordance with both that mandated under the Acts Interpretation Act 1901 (Cth) and by the common law modern approach. Finally, the approach adopted by the courts is not often well articulated. I have read many decisions that are clearly statutory interpretation decisions, which make no reference to any of the statutory provisions and cases discussed above, but whose rationales and principles are clearly present therein. This is why practitioners should be mindful of the approaches to statutory interpretation as a tool of basic legal reasoning that permeates so much of modern day legal practice.

[1] The state and territorial equivalents to s 15AA are: Legislation Act 2001 (ACT), s 139; Interpretation Act 1987 (NSW), s 33; Interpretation Act 1987 (NT), s 62A; Acts Interpretation Act 1954 (Qld), s 14A; Acts Interpretation Act 1915 (SA), s 22; Acts Interpretation Act 1931 (Tas), s 8A; Interpretation of Legislation Act 1984 (Vic), s 35(a); Interpretation Act 1984 (WA), s 18.
[2] Mills v Meeking (1990) 69 CLR 214 at 235.
[3] The state and territorial equivalents to s 15AB are: Legislation Act 2001 (ACT), ss 141-143; Interpretation Act 1987 (NSW), s 34; Interpretation Act 1987 (NT), s 62B; Interpretation Act 1954 (Qld), s 14B; Acts Interpretation Act 1931 (Tas), s 8B; Interpretation of Legislation Act 1984 (Vic), s 35(b); Interpretation Act 1984 (WA), s 19.
[4] Pearce DC and Geddes RS, Statutory Interpretation in Australia (7th ed, LexisNexis Butterworths, Chatswood, 2011) at [3.18].
[5] Pearce and Geddes, n 4.
[6] Pearce and Geddes, n 4 at [3.18].
[7] Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27 (Hayne, Heydon, Crennan and Kiefel JJ).
[8] Harrison v Melham (2008) 72 NSWLR 380 at 399.
[9] Collector of Customs v Savage River Mines (1988) 79 ALR 258 at 263.
[10] Spigelman JJ, ‘The intolerable wrestle: Developments in statutory interpretation’ (2010) ALJ 822 at 831.
[11] (2009) 238 CLR 642 at [9], [44]-[45], cited at 831.
[12] Spigelman JJ, Ibid.

Galea v Farrugia [2013] NSWCA 164

Case Note: Galea v Farrugia [2013] NSWCA 164 

Facts and Background 

The appellants, Mr and Mrs Galea, had arranged with the third respondent, Mr Cauchi (or through him, the fourth respondent, J and L Cauchi Pty Ltd) to supply landfill to build a platform on their property on which they wished to erect a machinery shed (at [2]). The first respondent, Mr Farrugia was an earth moving contractor who Mr Galea had contracted with to level out and compact the landfill to make the platform, and who placed the Galea's in contact with Mr Cauchi (at [8]). The third appellant, Lepipi Pty Ltd, a company controlled by the Galeas, also contracted with Mr Cauchi to deliver landfill to a separate property (at [3]).

The landfill was not authorised by Council though, and it made an order under the Environmental Planning and Assessment Act 1979 (NSW), s. 121B requiring its removal (at [12]). Officers of the Council subsequently took samples of the landfill to to test and detected the presence of asbestos fibres (at [19]-[21]).

However, at the time of these events (30 March 2002 to 30 April 2002) there was was also evidence that third parties had been dumping asbestos contaminated fill on private semi-rural land in the surrounding area, and therefore it was unclear where the contaminated fill had originated from (at [28]-[29]).

Nonetheless, the Galeas sued Mr Cauchi, and the other respondents, for the costs of removing the landfill from both properties, alleging they were the parties responsible (at [4]). The trial judge, Hislop J, in Galea v Farrugia [2012] NSWSC 77 found the evidence did not establish, on the balance of probabilities, that the contaminated landfill had originated from the fill delivered by Mr Cauchi; the evidence relating to cross-contamination of samples via the compacting and removal work cast too much doubt on where the asbestos came from.

One of the bases upon which the Galeas sought to establish their claim was tendency evidence introduced pursuant to the Evidence Act 1995 (NSW), ss. 97 and 98, that Mr Cauchi (and/or his company) had delivered fill to other properties in which asbestos was also detected (at [33]). The trial judge treated this evidence as admissible without recourse to ss. 97 and 98, however, his Honour rejected this evidence established anything in relation to the Galeas' properties on the grounds that those other properties were unsecured (thus vulnerable to third parties), with one also having been a building site, and another containing a large amount of building material ([2012] NSWSC 77 at [120]).

The Galeas appealed to the NSW Court of Appeal, challenging the trial judge's findings of fact, and relevantly here, his rejection of the tendency evidence (at [44]-[52]).

The Galeas' case – Tendency Evidence

The Galeas submitted before the Court of Appeal (Bathurst CJ, Macfarlan and Ward JJA) that when considering evidence admitted as tendency evidence, the court must evaluate that evidence and determine whether or not two or more events, along with the circumstances in which they occurred, are substantially and relevantly similar (at [83]). The court must then determine whether these similarities are purely coincidental or “whether it is so improbable that they are coincidental that the only conclusion could be that they are not” (at [83). As the Galeas submitted (at [83]),

“In determining whether the evidence has significant probative value a trial judge may take into account the time, context and essential critical content of the evidence: see Twynam Pastoral Co Pty Limited v AWB (Australia) Ltd [2008] FCA 1922 per Jagot J at [13]; whether the evidence establishes a pattern of behaviour or even a modus operandi per Simpson J in Fletcher at [67]; whether the person was, at or about the time in question, engaged in a special kind of business, line of conduct or manner of living per Evatt in Martin v Osborne (1936) 55 CLR 367 at 402. See also R v Smith [2008] NSWCCA 247.”

In other words, in evaluating whether the evidence has significant probative value, the court is to consider the context and circumstances, including the time frame in which the conduct adduced as evidence took place, and the business or activities the relevant person was engaged in at the time (at [83]). The Galeas argued that the trial judge had failed in this task (at [83]).

The Decision

The decision of the Court of Appeal dismissing the appeal was delivered by Macfarlan JA (Bathurst CJ at [1] and Ward JA at [104] agreeing). Macfarlan JA could find no error in the trial judge's findings of fact relating to the conclusion that the evidence did not establish the origin of the contaminated fill (at [78]-[79], [95]).

As to the tendency evidence, MacFarlan JA accepted the authorities advanced by the Galeas, but not their application to the facts. His Honour held that even if Mr Cauchi delivered contaminated fill to a few other properties (which the evidence in relation to those properties did not establish), such could only, taken at its highest, show that he was the kind of person who was prepared to deliver contaminated fill if the opportunity arose; not that he actually did so here (at [85]). This finding was further supported by the fact that over the relevant period (30 March 2002 to 30 April 2002), Mr Cauchi delivered “hundreds of truckloads of fill from a wide variety of sources.” (at [87]). What would have helped the Galeas' case was if they could show that the source of the fill delivered to their properties was the same as the fill delivered to the other contaminated properties. This would have assisted in establishing, on the balance of probabilities, that the material delivered to their properties was contaminated by the fill delivered by Mr Cauchi (even if their land was also contaminated by third parties) (at [86]).

The test, as stated by Dixon J in Martin v Osborne (1936) 55 CLR 367 at 375, is whether, “[A]ccording to the common course of human affairs, the degree of probability that the occurrence of the facts approved would be accompanied by the occurrence of the fact to be proved is so high that the contrary cannot be reasonably supposed.” (at [89]). Therefore, proof of deliveries without proof of their source, established neither a pattern of behaviour (R v Fletcher [2005] NSWCCA 338 at [67]), nor “any special kind of business, line of conduct or manner of living where the proved acts would ordinarily be accompanied by the further act” (Martin v Osborne (1936) 55 CLR 367 at 392) (at [88]).

Conclusions

The decision highlights the hurdles plaintiffs face in proving that respondents/defendants should be held liable for environmental harm. This is particularly salient as it occurs in the context of asbestos, a material greatly feared in Australia for its deleterious health effects, and rightly so. In this case, Mr Cauchi was effectively saved by the fact that someone else did something wrong (third party dumping) and the fact that the soil analysis could pick up even minute traces of asbestos fibres, thus cross-contamination was a real factor.

As regards tendency evidence, the decision illustrates that showing a person performed acts contemporaneously is not sufficient. As Macfarlan JA held, even if Mr Cauchi delivered contaminated fill to other properties (which there was no evidence he did so), the most that could show was that he would do it, not that he did here. In order to overcome the hurdle of the previous acts establishing that, on the balance of probabilities, a person performed an alleged act now, the court/jury must be convinced the person probably did it, because the previous acts show they have done it before. In this sense, the characterisation, adopted by Macfarlan JA, of showing that someone is willing to do something in the past is not sufficient to show they have done something now, is problematic. The reason is because the way a party would show someone is willing to do something would be by their actually doing it; thus they have done it. That is why his Honour considered the importance of the Galeas needing to demonstrate the source of the fill material, as absent that evidence, sufficient similarity between the circumstances could not be established.

Finally, the discussion of tendency evidence leads me to one other conclusion. What plaintiffs must demonstrate is that a person performed similar acts in similar circumstances and those acts must disclose a similar mental element. Tendency evidence must evince a mental state that would convince a court/jury that physical acts performed elsewhere would compel such acts alleged to be performed here. The reason for the use of the word 'compel' rather than stating something like 'referable to' is that being willing to do something in a similar situation is referable to the previous acts, but it does not show actual performance of the alleged act. The circumstances must show that such a willingness would probably be carried out, not possibly. As the decision illustrates, this requires a careful comparison of all the facts and circumstances; not just the previous actions of a person, but a minute and careful examination of the context in which they took place.

Agius v The Queen [2013] HCA 27

Case note: Agius v The Queen [2013] HCA 27 

Facts

The appellant, Agius, was charged and convicted of two counts of conspiracy to defraud the Commonwealth in relation to tax fraud (at [1]). The first count was brought pursuant to ss 86(1) and 29D of the Crimes Act 1914 (Cth) (“Crimes Act”) (at [1]). The second count was brought pursuant to s 135.4(5) of the Criminal Code 1995 (Cth) (“the Code”) (at [1]). The reason why two counts were brought was because the offences under the Crimes Act were repealed with effect from 24 May 2001, being replaced by s 135.4(5) of the Code (at [2]).

Agius’ Case

Agius contended before the trial judge, NSW Court of Criminal Appeal (“NSWCCA”) and the High Court that the second count was bad, as the particulars of the charge did not allege the formation of a new conspiracy after 24 May 2001 (at [3]). Section 135.4(5) of the Code states,

“A person is guilty of an offence if:

(a) the person conspires with another person to dishonestly cause a loss, or to dishonestly cause a risk of loss, to a third person; and

(b) the first-mentioned person knows or believes that the loss will occur or that there is a substantial risk of the loss occurring; and (c) the third person is a Commonwealth entity.”

Agius argued that the offence under s 135.4(5) of the Code was the entering into of a conspiracy (at [17]). To support this construction, Agius cited s 135.4(9) of the Code (at [18]), that states,

“For a person to be guilty of an offence against this section:

(a) the person must have entered into an agreement with one or more other persons; and

(b) the person and at least one other party to the agreement must have intended to do the thing pursuant to the agreement; and

(c) the person or at least one other party to the agreement must have committed an overt act pursuant to the agreement.” (emphasis added).

His argument was that s 135.4(9) of the Code formed an element of the offence of conspiracy, and as such, it was the entering into of the conspiracy, not its existence, that was the relevant criminal conduct.

Neither the NSWCCA nor the trial judge accepted this argument, finding that s 135.4(5) criminalised the existence of a conspiracy, and not its formation (at [21], [35]-[36]). The basis for this conclusion is that, it would be “highly artificial – to an absurd degree” that a conspiracy formed prior to the effect of the Code, but which continued to be implemented afterwards, could not be punishable “because the alleged conspirators failed, on the change of legislation, to renew, or remake, their agreement.” (R v Agius [2011] NSWSC 367 at [40], cited at [20]).

Before the High Court, Agius also contended that on his construction of s 135.4(5), the trial judge and the NSWCCA wrongly applied s 4.1 of the Code (at [21]-[22]), that states,

“(1) A physical element of an offence may be:

(a) conduct; or

(b) a circumstance in which conduct occurs; or

(c) a result of conduct.

(2) In this Code: conduct means an act, an omission to perform an act or a state of affairs. engage in conduct means:

(a) do an act; or

(b) omit to perform an act.”

As the interpretation adopted by the trial judge and the NSWCCA of s 135.4(5) was that it criminalised the existence of a conspiracy, and that constituted a ‘state of affairs’, the relevant conduct (physical element) of the charge was made out. Naturally, if Agius’ interpretation of s 135.4(5) were accepted, then this construction adopted by the trial judge and the NSWCCCA of s 4.1 must be rejected.

On the basis that s 135.4(5) criminalised the formation of a conspiracy and not its continued existence, Agius also argued that s 135.4(5) was applied retrospectively. As the rules of statutory interpretation require that, for a penal statute to have retrospective operation, such must be expressed by clear words within the legislation to that effect (at [23]).

Finally, Agius submitted that, by virtue of the transitional provisions under the Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 (Cth), Sch 2, Item 418 (“the Transitional Provisions”), the offences under the Crimes Act continued to have operation after the coming into effect of s 135.4(5) of the Code, and so it was unnecessary to charge the second count in respect of a conspiracy formed before 24 May 2001 (at [24]).

The Decision

The High Court (French CJ, Hayne, Crennan, Keifel, Bell and Keane JJ, Gageler J agreeing) rejected Agius’ submissions, accepting almost completely the conclusions reached by the courts below.

The Construction of s 135.4(5)

With regard to the offence of conspiracy, the majority held that, while the Code did codify the criminal law, nonetheless in accordance with the previous decision of the High Court in The Queen v LK [2010] HCA 17 at [59], [72] and [93], that “except as expressly modified by the statutory text, common law concepts informed the provisions of the Code concerned with conspiracy” (at [32]). That decision was important since it considered s 11.5(1) of the Code, which was “cast in materially similar terms to s 135.4(5) of the Code” (at [27]). The reasoning for this is that the terms ‘conspiracy’ and ‘conspire’ are not defined within the code (at [32]). At common law, while the offence of conspiracy is complete when the conspiratorial agreement is entered into, it does not end at that point (at [30]). If the conspiracy is performed, it is a continuing offence that does not come to an end until the completion of its performance or its abandonment (at [30], see R v Doot [1973] AC 807 at 827).

The majority further held that s 135.4(9) did not form an element of the offence, again citing The Queen v LK [2010] HCA 17 at [133] where the court considered the equivalent to s 135.4(9) of the Code, as the offence of conspiracy is constituted by the intention to be, and the act of being, a party to an agreement to perform an unlawful act (at [34]). Section 135.4(9) is not an element, rather the statement “entered in an agreement” refers to the conduct criminalised under s 135.4(5) (at [34]).

Gageler J, while agreeing with the majority, and adopting their reasons with regard to the other arguments advanced by Agius, nonetheless handed down separate reasons (at [53]-[62]). While expressing his agreement with the majority’s construction of s 135.4(9), and the continued application of the common law to the offence of conspiracy, his Honour nonetheless expressed doubt as to how s 135.4 was addressed to transitional provisions though he did not elaborate (at [61]).

Construction of s 4.1(1)

As a matter of ordinary language, the existence of a conspiracy is a state of affairs. Also an on-going conspiracy must be an on-going offence (at [42]). The court concluded that to be party to a conspiracy – to engage in the physical act of participating in a conspiracy – is the bringing about of one’s part in that state of affairs (at [42]-[44]). In accordance with the court’s construction of s 135.4(5) as pertaining to the existence of conspiratorial conduct and not entry into a conspiracy, s 4.1(1) merely supports that interpretation.

Retrospectivity and Transitional Provisions

The court gave both these arguments short shrift. Firstly, s 135.4(5) was not given a retrospective operation, as the only way that contention could be accepted was if Agius’ construction of s 135.4(5) (that it criminalised only the entering into of a conspiracy) was likewise adopted (at [49]). As for the Transitional Provisions, they merely served to criminalise conduct that occurred before 24 May 2001 and not on or after (at [49]). Indeed, in oral arguments before the High Court, counsel for Agius’ accepted that the convictions under the Crimes Act would not justify a sentence for “adherence to the conspiracy between 24 May 2001 and 23 October 2006.” (at [50]). The conspiracy that continued over this period could only be punishable under s 135.4(5).

Conclusions

The case is authority for the correct interpretation of s 135.4(5): it will apply to being a party to a conspiracy. This is broader than merely entering into a conspiracy, but nonetheless is inclusive of such entry. It is also instructive insofar as it signals that the common law continues to have application to construing the Code, at the very least with regard to conspiracy offences by reason of it leaving the terms ‘conspiracy’ and ‘conspire’ undefined. Also, the function of s 135.4(9) was clarified. As the court said, it sets out what the Crown must prove in order for a person or persons to be found guilty of an offence under s 135.4 (at [36]). Gageler J further explained that the purpose of s 135.4(9) was “directed to teasing out the essential distinction made in that common law definition. They were explained as having been drafted so as to "clearly separate the agreement component of the conspiracy from the intent to commit an offence pursuant to that agreement" (Australia, Criminal Law Officers Committee of the Standing Committee of Attorneys-General, Model Criminal Code, Chapter 2: General Principles of Criminal Responsibility, Final Report, (1992) at 99).” (at [59]). In other words, s 135.4(9) was not directed towards modifying the understanding at common law, but clarifying it (at [60]).

The offence of conspiracy under s 135.4 may therefore be defined as follows. The physical element of the offence is being a party to an agreement to perform an unlawful act. The mental element is proven via the person shown to have voluntarily intended to be part of that agreement. As stated under s 4.2(5) of the Code, “If the conduct constituting an offence consists only of a state of affairs, the state of affairs is only voluntary if it is one over which the person is capable of exercising control.” Naturally, agreement may be demonstrated by acts done in pursuance of the conspiracy, and proving that those acts were intended to be performed in pursuit of the conspiracy, demonstrates intention. Thus, it is possible to show that acts performed that assisted a conspiracy were nonetheless not done in pursuit of it.

Kakavas v Crown Melbourne Limited [2013] HCA 25

Case note: Kakavas v Crown Melbourne Limited [2013] HCA 25

The case concerned whether a casino could be held liable to a patron for unconscionable conduct insofar as it permitted him to gamble while knowing that he suffered from a gambling addiction. The High Court (French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ) held that casinos were a unique business in which the sole goal of both casino and patron were to inflict financial harm on each other via winning money from the other in games of chance. In this context, while there may be some circumstances where a casino could be liable for unconscionable conduct, such as where a gambler was intoxicated, it could not be in the ordinary course of conducting its business. Furthermore, knowledge of a gambling condition suffered by a patron is not sufficient if that patron held himself or herself out as able to manage that condition.

Facts

Between June 2005 and August 2006, Harry Kakavas lost $20.5 million playing baccarat at the Crown Casino in Melbourne (at [1]). He was what is known as a ‘High Roller,’ a wealthy individual who gambles large sums of money at casinos around the world (at [28]).

However, for years since 1995, Mr Kakavas had been excluded from Crown, as well as other casinos in New South Wales and Queensland on various grounds including clinical diagnoses as a pathological gambler, criminal acts and charges, and police orders (at [41]-[42], [46], [48]-[54]). Many of these exclusions were self-exclusion orders, applied for by Mr Kakavas and granted by the relevant casinos, including Crown, even though it did not believe that Mr Kakavas actually had a gambling problem (rather that it had originally been made up in relation to fraud charges as a plea in mitigation) (at [41]-[42]). For this reason, along with “an acknowledgment that the appellant [Mr Kakavas] had given careful consideration to the matter and would contact Crown immediately if he had any concerns about his decision”, and a favourable report from a psychologist, the order was lifted in 1998 (at [46]). However, while the self-exclusion order was lifted, it was replaced in June 1998 by a “withdrawal of licence (WOL) to enter or remain in the casino or on Crown premises”, due to pending armed robbery charges (at [48]). Mr Kakavas made repeated attempts to have the order lifted between 1998-2001 and 2003, before ultimately being successful in January 2005 (at [68]). As a condition of having the WOL lifted, Crown required a further report from a psychiatrist or psychologist clearing Mr Kakavas of any gambling problems (at [62]). Although he could not obtain such a report from his treating psychologist at that time, at the urging of Crown to “try any psychologist” he was successful in obtaining one from another which stated that, while an assessment was unable to be performed, Mr Kakavas had said that he could successfully self-exclude if he relapsed (at [63]-[65]). Needless to say Crown accepted this as being sufficient, as its primary concern was not Mr Kakavas’ gambling problem (which it did not believe was real), but rather his “behavioural issues” (at [67]) relating to the WOL. At the time of his application to have the WOL lifted though, and throughout the relevant period, he was also the subject of an interstate exclusion order (IEO) made by the NSW Police Commissioner, the effect of which under the Casino Control Act 1991 (Vic), s 78B, was to forfeit any gambling winnings of Mr Kakavas to the Victorian government (at [8]). The existence of the IEO was known by Crown in late 2004 (at [60]).

The above being said, the trial judge found against Mr Kakavas, stating that, “Crown accepted what Mr Kakavas wanted Crown to believe: that, by November 2004, he had become a highly respected Gold Coast businessman whose liking for the gaming tables had caused problems in the past, but who had since conquered those problems to the extent that he had been able to amass wealth from his business activity.” (Kakavas v Crown Melbourne Ltd [2009] VSC 559 at [441]). This decision was upheld by the Victorian Court of Appeal (Kakavas v Crown Melbourne Ltd [2009] VSC 559).

Mr Kakavas’ Case

The cases in the courts below were contested on a quite different basis than that advanced before the High Court. Mr Kakavas had previously argued that Crown lured him to its premises and prayed on his gambling addiction (at [5]). The arguments advanced before the trial judge and the Victorian Court of Appeal were, “Crown … should be required to accept responsibility for the appellant's loss because they deliberately preyed upon his personality flaws to entice him to gamble in Crown's casino.” (at [21]). The case he advanced before the High Court was that Crown exploited his inability to cease gambling once he was there (at [5], [21]). The problem this caused for Mr Kakavas was that, in the view of the court, he was essentially now advancing a case resting on “a complaint about the outcome of risk-laden activity between the parties conducted in the ordinary course of Crown's business.” (at [21]).

In both arguments, the foundation of his claim for relief was that Crown had engaged in unconscionable conduct as defined by Mason J in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462 as being a “general principle which may be invoked whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party.” Mr Kakavas claimed his pathological gambling condition constituted just such a special disadvantage. (at [5]). A further contention was advanced that the IEO also constituted a special disadvantage (at [8]). Mr Kakavas argued that Crown knew, or ought to have known about these special disadvantages, took advantage of them, and therefore should “be made to disgorge its takings” back to him (at [9]).

The Decision

In discussing how unconscionable conduct is to be assessed, the court identified the following factors:

1. As the principle seeks to invoke the conscience of equity it looks to the conduct of both plaintiffs and defendants (at [15]-[16]);
2. Courts must therefore look closely at the facts and circumstances that exist between the parties (at [17]-[18]); and,
3. Mere loss or hardship suffered by one party is not sufficient, equity will not relieve a party of the consequences an improvident transaction (at [18]-[20]).

The fundamental hurdle for Mr Kakavas to overcome was the fact that gambling is a commercial transaction, in which parties engage for the sole purpose of inflicting financial loss on one another (at [25]). Given the advantages enjoyed by ‘the House’, casinos might well in a social and moral context be described as being in “the business of victimisation of the gamblers who chose to frequent it” (at [26]. But nonetheless, so far as the law is concerned, such business activity is perfectly legal (at [26]). That is not to say that a casino may not, in the course of conducting its business, be found to have engaged in unconscionable conduct. A patron may present themselves to a casino in such a way as such to make it apparent they suffer from a special disadvantage, for example: an intoxicated person, someone who is underage, or even a person who appears to be “simply incompetent” (at [30]). A further instance cited by the court may be “a widowed pensioner who is invited to cash her pension cheque at the casino and to gamble with the proceeds” (at [30]).

Another obstacle for Mr Kakavas was that he was a high roller, a species of gambler who regularly wagers monumental sums of money, sustain incredible loses and because of this are regularly sought out by casinos with incentives of many and various complimentary benefits (at [28]). During the period of gambling for which Mr Kakavas sought relief, he regularly won and lost millions of dollars, and for his patronage was paid handsome commissions by Crown, provided with free accommodation and food, and was even granted the use of Crown’s private jet (at [77]-[106]).

The final problem for Mr Kakavas in maintaining his claim was that he regularly ceased gambling during his visits at Crown to entertain guests, and at times did not frequent Crown for months (at [108]). While the primary judge did find that Mr Kakavas was a pathological gambler, nonetheless as a result of the above and his ability to self-exclude, he did frequently demonstrate his ability to control this condition (at [126]). Most importantly, he demonstrated it to Crown.

On these facts, the High Court could not conclude that Mr Kakavas suffered from any special disadvantage in his dealings with Crown. Indeed, many of the benefits he enjoyed (commissions, private jet, etc.) were the product skilful negotiations he conducted with Crown in consideration for his patronage (at [108]). Accordingly it could not be concluded on this basis that Crown had any reason to believe Mr Kakavas suffered from any disadvantage, regardless of whatever conditions he claimed to have suffered from.

The argument as to the IEO was given short shrift as:

1. It could not be described as a personal disability, merely a legal constraint on Mr Kakavas’ ability to retain his winnings (at [138]); and,
2. There was no finding that Crown adverted its mind (via its employees) to the effect of the IEO when Mr Kakavas resumed frequenting its casino, nor was it aware that he did not appreciate its effect (at [139]).

Finally, the court considered Mr Kakavas’ argument that if Crown did not know of his special disadvantages, that they ought to have known, i.e. it had constructive notice. Mr Kakavas relied on the further statement of Mason J in Amadio (at 467) that “if A having actual knowledge that B occupies a situation of special disadvantage in relation to an intended transaction, so that B cannot make a judgment as to what is in his own interests, takes unfair advantage of his (A's) superior bargaining power or position by entering into that transaction, his conduct in so doing is unconscionable. And if, instead of having actual knowledge of that situation, A is aware of the possibility that that situation may exist or is aware of facts that would raise that possibility in the mind of any reasonable person, the result will be the same.” (at [151]). However, the court here was wont to point out that constructive notice only applies to determining priorities with regard to competing interests in property (at [152]). Constructive notice is not to be applied to commercial transactions (at [152]). Rather, what Mason J in Amadio should be taken to refer to is wilful ignorance (at [156]). The difference is that constructive notice is knowledge a person would have had he or she made inquiries “usually made in similar transactions, and of which he or she would have received notice had he or she investigated a relevant fact which has come to his or her notice and into which a reasonable person ought to have inquired” (at [152]). Wilful ignorance, on the other hand, is “if the dealings are such as fairly to lead a reasonable man to believe that fraud must have been used in order to obtain [the advantage], he is bound to make inquiry, and cannot shelter himself under the plea that he was not called on to ask, and did not ask, any questions on the subject.” (Owen and Gutch v Homan (1853) 4 HLC 997 [10 ER 752] at [275], cited at [155]). Therefore, “Heedlessness of, or indifference to, the best interests of the other party is not sufficient for this purpose. The principle is not engaged by mere inadvertence, or even indifference, to the circumstances of the other party to an arm's length commercial transaction.” (at [161]).

The court therefore dismissed the appeal with costs (at [164]).

Conclusions

The case stands as authority for the propositions, firstly, that unconscionable conduct is heavily context dependent, and the courts will therefore look, not only to the circumstances and conduct of both parties, but also to their mental states. In this case, despite the seriousness of gambling addiction, Mr Kakavas held himself out to Crown as having it under control, and it was entitled to rely on this representation. This gives effect to the proposition stated above that the conscience of Equity looks to the conduct of both parties, not just the defendant’s. The second proposition, which is indelibly related to the first, is that given the nature of the casino business, and that Equity will not intervene to relieve the consequences of improvident transactions, the principle of unconscionable conduct will be difficult to invoke in the relationship of gambler and casino operator. This is because the very nature of the transaction is, as noted repeatedly above, for parties to inflict financial loss on each other. The gambler is walking into this situation with both eyes open, so-to-speak. Thus there can be nothing unconscionable in he or she losing money to the casino, unless there is something in their behaviour that indicates to the casino they do not know what they are doing by engaging in gambling activities.

The problem arising from their Honours’ conclusions in this case is that it completely turns on the understanding the court took of the condition of pathological gambling and its effects on Mr Kakavas. In other words, the question is not one of law but a question of fact, answered by reference to expert evidence. The court devoted a considerable portion of its judgment to detailing Mr Kakavas’ activities at Crown during the relevant period by way of demonstrating that he had full control of his gambling proclivities. Taken alone, it might be surmised that the court did not accept that Mr Kakavas had a gambling addiction and nor should have Crown. Unfortunately, it accepted the findings of the trial judge that he was a pathological gambler, but that he could control his condition. Firstly, by way of analogy, such is akin to asserting that because an alcoholic sometimes drinks water, that they have control of their condition. A similar comparison could be made with smokers. The fact is, whatever Crown’s motivations in seeking undertakings with regard to Mr Kakavas’ gambling problems, through its employees it knew that he could not obtain a psychological assessment clearing him to gamble. In other words, it was prepared to accept his word that he was okay to gamble, even though it knew a psychologist did not think he was. If it is accepted that a pathological gambler might not always gamble, but will do to dangerous excess by virtue being unable to resist the urge (such being the nature of the condition; for example, see the University of Maryland Medical Centre, Pathological Gambling [http://www.umm.edu/ency/article/001520.htm] retrieved June 2013), then the reasoning of the trial judge and the court of appeal, which was accepted by the High Court is erroneous and based on a misunderstanding of the condition. Indeed, it is difficult to see how the court can take the view that simply because someone is elderly, female, widowed and on the pension, they suffer from a special disadvantage (a rather insulting proposition to many people, I am sure), but someone with a disclosed gambling problem is not, by reason of their net worth and business acumen. Even if such a conclusion as to the nature of the disease was reasonably open to the court, it should, at the very least, have noted that this is a relatively new condition and medical and psychological understanding of it is developing all the time, in which case, the finding as to it being controllable by sufferers is open to revision in future. While this must be the ultimate effect of the decision (since if medical and psychological understandings do change, the factual basis of this decision vanishes), it nonetheless presently stands as authority for the proposition that, even if a person has a disclosed condition relevant to a transaction, if they somehow represent that it will not affect the transaction (even if, by definition, it would otherwise), then the other party is entitled to rely on that representation whatever knowledge it has to the contrary. Whether the other party is entitled to disregard this knowledge and rely on the representation will depend on current understandings of the applicable condition taken by experts and the ultimately the court.

Reliance Financial Services (NSW) Pty Ltd v Abdallah [2013] NSWCA 125

Case Note: Reliance Financial Services (NSW) Pty Ltd v Abdallah [2013] NSWCA 125

The case examines the principles the courts adhere to when considering appeals based on findings of fact arising from determinations of credibility made by a trial judge. It restates the primacy the trial judge is to be given in such situations as the one actually able to perceive the demeanor of witnesses, and that a failure to give reasons why some evidence is not preferred will not alone be sufficient to successfully ground an appeal.

Facts
The case concerned whether Mr Michael Abdallah owed certain moneys to Reliance Financial Services Pty Ltd or, whether the moneys were in fact repayments of advancements made by Abdallah to Mr Sam Cassiniti (trustee for Reliance). Reliance pointed to executed loan agreements between Cassiniti and Abdallah detailing the money it claimed was owed. Abdallah rather, argued that the loan agreements were something he signed at the request of Cassiniti so as to avoid potential money laundering charges and for other taxation related reasons: at [20]. Each party to the proceedings adduced inconsistent and, at times, differing evidence in support of their respective cases, including the recounting of an incident involving $550,000 in a bag that was handed by Abdallah to Cassiniti to be placed in a safe in the latter’s office: [14]. In the NSW Supreme Court, the trial judge, Black J, ultimately found Abdallah’s evidence to be preferable and consistent with objectively verifiable facts, such as the aforementioned loan agreements. Reliance appealed the decision to the NSW Court of Appeal on the basis that Black J had failed to give reasons for why he preferred some of Abdallah’s evidence to Reliance’s.

The Court of Appeal Decision
The court (Bathurst CJ, and Beazley P and Macfarlan JA agreeing) dismissed the appeal on the basis of that Reliance could not show that the conclusions reached by the trial judge were “glaringly improbable”: at [96]; see, Fox v Percy [2003] HCA 22 at [28]-[29]. In stating the law, this does not mean the trial judge must “state expressly his or her reasons for each factual finding made which led to, or was relevant to, his or her ultimate conclusions of fact”: at [101]. Rather all that is required is “that the essential ground or grounds upon which the decision rests should be articulated”: at [101]; see, Soulemezi v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 28 (per McHugh J). In light of the fact that a trial judge is taken to have a considerable advantage in assessing the credibility of witnesses, as compared to that of an appellate court simply reading the transcript, the latter is only to reverse a finding based on an omission to record reasons as to why the former “has made a made a finding of fact contrary to the evidence of a witness” where that “advantage enjoyed by the trial judge by reason of having seen and heard the witnesses, could not be sufficient to explain of justify the trial judge’s conclusion”: Abalos v Australian Postal Commission (1990) 171 CLR 167 at 178 (per McHugh J), citing Watt or Thomas v Thomas [1947] AC 484 at 488. Bathurst CJ alternately put the proposition in terms of the primary judge having “too fragile a base to support his or her findings based on credibility that the findings will be overturned and a new trial ordered”: at [98]. In this case, the court found that the trial judge had given sufficient reasons for preferring the evidence of Abdallah over Reliance, and such matters that he did not address individually were found to have been done so when the evidence and his reasons were considered at a whole.

Conclusion
The decision ultimately rests on the fact that the court found the trial judge did address the various issues in each party’s evidence, and articulated why he preferred Abdallah’s to Reliance’s. However, Bathurst CJ also articulated the bases upon which appellate courts should look at such issues in future. Importantly, it would seem that so long as trial courts articulate the reasons the “essential grounds” upon which a decision is based, they are safe from appellate review. That being said, in doing so a trial judge will naturally address why one party’s evidence is preferred over another’s, and therefore, the test appears to be whether the factual basis upon which a decision rests is sufficiently strong to support it.