Chew v R
173 CLR 626107 ALR 171
(Decision by: Mason CJ, Brennan, Gaudron and McHugh JJ) Court:
Judges:
Mason CJ, Brennan, Gaudron and McHugh JJDeane J
Dawson J
Toohey J
Judgment date: 3 June 1992
Decision by:
Mason CJ, Brennan, Gaudron and McHugh JJ
The facts of this matter and the relevant statutory provisions have been set out in the reasons for judgment of Toohey J. However, it is necessary for us to set out again the provisions of s 229(4) of the Companies (Western Australia) Code:
An officer or employee of a corporation shall not make improper use of his position as such an officer or employee, to gain, directly or indirectly, an advantage for himself or for any other person or to cause detriment to the corporation.
Penalty: $20,000 or imprisonment for 5 years, or both.
The sense in which the word "to" is used in association with the infinitive may be purposive ("in order to") or causative ("so" or "so as to", though "so as to" may sometimes signify purpose rather than result). It is common to use "to" with the infinitive in the sense of "in order to" so as to express purpose, particularly in an adverbial clause, as an adjunct. [F1] No doubt the use of subordinators such as "in order to" or "so that" is more frequent and makes for more precise expression. However, that circumstance does not of itself justify the conclusion that the use of "to" with the infinitive in an adverbial clause as an adjunct is usually causative, for that is not the case.
On the other hand, the presence of a comma which makes an adverbial clause a disjunct, rather than an adjunct, may indicate that consequence, not purpose, is intended. [F2] Result clauses differ syntactically from purpose clauses, the former being disjuncts whereas the latter are adjuncts. [F3] The presence of the comma before "to gain" in s 229(4) is significant because it separates the prohibition against making improper use of position from what follows, suggesting that what follows is separated from (and thus is a consequence of) the conduct which is the subject of the prohibition. Such a separation is not readily reconciled with a purposive construction because then the conduct which is the subject of the prohibition is more restricted and should be expressed in terms of making improper use of position in order to gain an advantage or cause a detriment so that the purposive limitation becomes an integral element in the expression of the prohibition.
It is curious that, in the respect just mentioned, subs (4) differs from subs (3) which has no comma separating "officer or employee" from "to gain". It is all the more curious because subs (4) seems, as a matter of legislative history, to have evolved from subs (3) which, unlike subs (4), was to be found in the original s 124 of the uniform Companies Act 1961 and in the section as amended in 1973. Section 229(4) was introduced for the first time in 1981 and it follows, subject to differences attributable to the differences in subject matter, the structure and language of s 229(3). It is not easy to assign a reason for the absence of the comma in one subsection and its presence in the other. However, it is scarcely to be supposed that subs (4) was so drafted with a view to departing from the model in subs (3) from which it evolved. In this situation, we are not inclined to treat subs (4) as relevantly different from subs (3) which, according to its natural reading and subject to the influence of its context, would prima facie be read in a purposive sense.
In resolving the question of interpretation, no assistance is to be derived from the language of the subsection itself. The juxtaposition of the prohibition against making improper use of position with the reference to gaining an advantage might perhaps be thought to support a purposive construction but the reference to causing a detriment possibly works the other way.
Some assistance can be gleaned from the rest of s 229. Section 229(1), which obliges an officer to "act honestly in the exercise of his powers and the discharge of the duties of his office", imposes a higher penalty where the offence was committed "with intent to deceive or defraud the company, members or creditors of the company or creditors of any other person or for any other fraudulent purpose". No other subsection draws any distinction between an offence committed with an intent to deceive or defraud and an offence committed without such an intent. However, the penalty prescribed for an offence against subs (4), as with subs (3), is $20,000 or imprisonment for five years or both, which is the same penalty as that prescribed for an offence against subs (1) where that offence is committed with intent to deceive or defraud. The magnitude of the penalty prescribed by subss (3) and (4) and its correspondence with that prescribed by subs (1)(b) suggests that subss (3) and (4) should be given a purposive rather than a causative construction.
Section 229(6) does not assist. That subsection enables a court to order a convicted person to pay compensation to a corporation where (a) the person is convicted of an offence against the section and (b) the court is satisfied that the corporation has suffered loss or damage as a result of the act or omission that constituted the offence. It would not be surprising if the court were given power to order the payment of compensation in circumstances where an officer's misuse of information or office resulted in a detriment to the corporation, even when that detriment was not intended. On the other hand, it is easy to understand that the power conferred upon the trial court to award compensation is necessarily conditioned upon a conviction for an offence, whatever the elements of that offence may be. And a corporation has remedies in equity against an officer who makes a profit in breach of his or her fiduciary duty. Accordingly, we are unable to divine anything in subs (6) which assists the resolution of the question. are unable to discern any other indications of relevant statutory intention from the context. The historical and contextual relationship of s 229(4) with s 229(3) leads us to the conclusion that "to" in s 229(4) should be read as "in order to". Had we not come to that conclusion, we would have considered that the provision was ambiguous in that respect. In that event, all other indicia having failed, the provision, being penal in character, should be interpreted in favour of the strict, that is the purposive, meaning in preference to the causative meaning. [F4]
In concluding that the purposive interpretation is to be preferred, we have not found it necessary to deal with s 23 of the Criminal Code (WA). The answer to the critical question turns simply on the construction of the provisions of s 229(4). Once, as a matter of interpretation, the conclusion is reached that "to" means "in order to", s 229(4) expressly declares purpose to be an element of the offence and purpose, in the context of that subsection, is the equivalent of a specific intention. [F5] In terms of the second paragraph of s 23, "the intention to cause a particular result is expressly declared [by s 229(4)] to be an element of the offence constituted... by an act or omission".
It follows that we do not agree with the respondent's contention, accepted by Murray J in the Western Australian Court of Criminal Appeal, that s 229(4) is satisfied by a willed act performed by an officer or employee of a corporation which can be categorised as an improper act and which in fact gains an advantage or causes a detriment within the terms of the subsection. Nor do we agree with the view expressed by Malcolm CJ that s 229(4) is satisfied by a deliberate act or combination of acts done by a director as such, "with knowledge that what is being done is not for the purpose of furthering any interest of the company, but [of] achieving a collateral purpose which will gain an advantage for himself or another, or cause a detriment to the company."
It is a corollary of the interpretation which we favour that the accrual of an advantage or the suffering of a detriment is not an element of the offence. Thus, an officer who makes improper use of his or her office in order to gain an advantage is guilty of an offence, even if his or her purpose be thwarted as, for example, by the grant of an injunction preventing execution of an instrument or implementation of a transaction. Section 229(6) is consistent with this approach because it conditions the making of an order for payment on the corporation suffering loss or damage.
In the course of argument, it was suggested that it was not necessary to establish that an accused person perceived that the alleged advantage or detriment was an advantage or detriment. We do not read the provision in that way. Once one concludes that there is a purposive element in the offence, it is necessary to establish not merely that the accused intended that a result should ensue, but also that the accused believed that the intended result would be an advantage for himself or herself or for some other person or a detriment to the corporation.
The accused's state of mind is relevant not only to the requirement of purpose but also to the element of improper use of his or her position. If, for example, an accused person reasonably but mistakenly believed that a particular transaction which he or she authorised was genuinely for the benefit of the corporation, that belief may, in an appropriate case, be material in determining whether the accused person can be held criminally responsible for using his or her position in a manner which would objectively be seen to be improper.
It is not in contest that s 229(4), in so far as it prohibits an officer or employee from making improper use of his or her position, requires proof of a willed or deliberate act which constitutes making "improper use" of that position. Nor is it in contest that "to gain... an advantage" and "to cause detriment" are alternatives. It is not necessary to establish both elements in order to make out an offence against subs (4). However, the respondent took on the burden at the trial of establishing both elements in relation to each count charged in the indictment. Nothing turns on this because the appellant's argument is confined to the point of construction already discussed.
It is necessary now to refer to the trial judge's instructions to the jury with a view to determining whether they correctly stated the issues and, if not, whether any deficiency resulted in a miscarriage of justice. The trial judge instructed the jury that they must be satisfied, according to the criminal standard of proof:
- (1)
- that the accused was an officer of the company, there being no dispute about this element of the offence;
- (2)
- that the accused used his position to gain an advantage for himself and to cause detriment to the company;
- (3)
- that his use of his position for that purpose was improper.
The judge told the jury that what was improper was to be determined by reference to the powers and duties of a person in the accused's position, namely, the chairman of directors of the company. The judge also told the jury that the conduct alleged to have been an improper use of that position need not be illegal and that conduct could amount to improper use of that position even if the person concerned believed it to be in the interests of the company. No objection is or was made to what his Honour said on that score.
What his Honour said by way of elaboration of the second element of the offence is of critical importance. Having read out subs (4) to the jury, he did on more than one occasion repeat the words of the subsection in a way that would have conveyed to the jury the need to be satisfied of the element of purpose. Thus, he said:
... when I read the section out to you it was said that an officer was not to act this way to gain directly or indirectly an advantage for himself or to cause detriment to the corporation. In this particular case, the Crown has alleged that, in fact, Mr Chew did both, namely gained an advantage for himself and caused detriment to GCA.
Later, in speaking of the second and third elements to be proved, he said: "Secondly, that he used his position in the manner alleged in each case -- the first one being, authorising the payment by GCA of a certain sum -- to gain advantage for himself and to cause a detriment to GCA. So, of course, you have to be satisfied that he authorised the payment and that it caused an advantage to himself and caused a detriment to GCA. Thirdly, that the use of his position for that purpose was improper in the manner that I am going to talk about in a moment" (emphasis added).
He then succinctly restated the three elements, saying that the third element was "that the use of his position for that purpose was improper".
His Honour then proceeded once again to reiterate the three elements in this way: "It is the case that the use of the position must cause the gain to the person involved, namely Mr Chew, and must cause the detriment which results in each case, and obviously you will look at that matter from that point of view when considering the second element. It is also the case that the purpose or purposes of using the position was to cause a gain to himself or a detriment to the company, so that you will consider that at the same time" (emphasis added).
The trial judge should have isolated the element of purpose as a distinct element of which the jury should be satisfied before it could bring in a verdict of guilty. However, what he said was sufficient to alert the jury to the fact that the improper use of position must be for the purpose or purposes prescribed. In fairness to the trial judge, we should point out that purpose seems not to have been an issue at the trial. Indeed, counsel for the appellant did not seek any redirection on the element of purpose. The issue of purpose was first agitated in the Court of Criminal Appeal. In these circumstances, even if there was some deficiency in the instructions given to the jury on this point, that deficiency did not result in a miscarriage of justice.
The trial judge did not instruct the jury that they must be satisfied that the appellant had deliberately engaged in the conduct which amounted to an improper use of position. But, once again, this was not an issue at the trial and no direction was sought upon the point. And, having regard to the particular conduct relied upon by the Crown as amounting to improper use of position -- authorisation of the payment to Rothwells Ltd (count 1), of the establishment of the commercial bill facility in favour of Wain Holdings Pty Ltd (count 2), of the acquisition of shares in GSC Pty Ltd (count 3) and of the acquisition of shares in Ikpen Pty Ltd and Maroly Holdings Pty Ltd (count 4) -- it is inconceivable that it would have been in the interests of the appellant to have contended that he did not engage in that conduct deliberately.
In the result, we are of the opinion that no case has been established for setting aside the convictions "on the ground of a wrong decision of any question of law or that on any ground there was a miscarriage of justice" within the meaning of s 689(1) of the Criminal Code.
The appeal should be dismissed.