Lipohar v The Queen HCA 65
(Judgment by: GLEESON CJ) Court:
Judgment date: 9 December 1999
1 These appeals raise questions concerning the operation, within the Australian Federation, of common law principles of territoriality in relation to the crime of conspiracy to defraud.
2 The appellants, one a resident of Queensland, and the other a resident of Victoria, were tried before Lander J, sitting without a jury, in the Supreme Court of South Australia, on a charge of conspiracy to defraud. They were convicted and sentenced to terms of imprisonment. At the commencement of the trial, Lander J considered and rejected an application to quash the indictment, or to grant a permanent stay of proceedings, upon the grounds that the alleged conduct of the appellants, even if it occurred, did not constitute an offence against the law of South Australia, and that the issue raised by the indictment was not justiciable in South Australia [F1] . The appellants appealed against their convictions, raising the same arguments as had been rejected by Lander J. Their appeals were dismissed by the Court of Criminal Appeal (Millhouse, Perry and Bleby JJ) [F2] .
3 The relevant count in the indictment commenced as follows:
"Conspiracy to Defraud. (Common Law and Section 270(2) of the Criminal Law Consolidation Act, 1935)".
4 There followed certain particulars of the offence.
5 In South Australia, conspiracy to defraud is a common law offence. The penalty for the offence is prescribed by s 270(2) of the Criminal Law Consolidation Act 1935 (SA) ("the Act") which, so far as material, provides:
"270(2) Any person convicted of any of the following common law offences, that is to say, any conspiracy to cheat or defraud ... shall be liable to be imprisoned for a term not exceeding seven years."
6 The appellants were sentenced pursuant to that provision.
7 In brief, the appellants were tried in a South Australian court, convicted of a common law offence, and sentenced under a South Australian statute, in relation to conduct which, they contend, did not constitute an offence that was punishable under the law of the forum. It is that contention which is central to the present appeal.
8 The particulars in the indictment identified the intended victim of the conspiracy as Collins Street Properties Pty Ltd ("the company"). The company was incorporated in South Australia, where it had its registered office. Its principal executive officer, the joint secretaries, and four of the six directors, resided in South Australia. It was a wholly owned subsidiary of SGIC Pty Ltd, another South Australian company. SGIC Pty Ltd was, in turn, a wholly owned subsidiary of a South Australian body corporate, the State Government Insurance Commission (SGIC), which was under the control and direction of the South Australian government. The company's central control and management was located in South Australia. In relation to the transaction in question, it was advised by Adelaide solicitors. It was in South Australia that the decision to make the payment which was the commercial objective of the intended fraud would need to be taken.
9 The company owned an office building in Melbourne, Victoria, and was looking for tenants. The letting agents for the building were in Melbourne. At the relevant time, it was common practice for owners of commercial premises to offer substantial inducement payments in order to attract suitable tenants to occupy their buildings [F3] .
10 The appellants and others devised a fraudulent scheme, the object of which was to induce the company to make a large incentive payment to a sham tenant. The scheme involved activity, or supposed activity, in Indonesia, Thailand, Queensland, Victoria, and, in respects that will appear, South Australia. The appellants and others agreed to form a Queensland company which was represented to be associated with an Indonesian company. They negotiated with the letting agents of the company for a lease of part of the Collins Street premises, seeking to obtain a cash incentive ultimately agreed at $6.5 million. They were made aware that any such payment would require the approval of the SGIC Board in Adelaide. They were required to provide security for the obligations of the proposed lessee. They falsely represented that the Krung Thai Bank would provide such security in the form of a promissory note. (In truth the bank had no knowledge of the transaction.) There was a meeting in Brisbane between representatives of the SGIC and the conspirators to discuss the proposed security. Following that meeting, a document was sent by facsimile transmission from Thailand to the office of the company's solicitors in Adelaide. The document, which was a sham, purported to confirm that the bank would provide a promissory note, in a certain form, as security for the tenant's obligations under the lease. Clearly, this was for the purpose of procuring advice to be given, in Adelaide, to the SGIC Board, and a decision to be made, in Adelaide, approving the lease incentive payment. The circumstance that the facsimile was sent to Adelaide was no mere accidental, or incidental, feature of the events. It reflected a fact which is of more fundamental importance. The central control and management of the intended corporate victim of the fraud was in South Australia, and it was there that the decisions necessary for the effectuation of the fraud were to be taken.
11 The conspiracy went no further. Some people involved in dealings with the bank were arrested, and, when news of that came out, the negotiations for the lease and the incentive payment were terminated. Subsequently the South Australian authorities prosecuted the appellants.
The alleged crime
12 Lord Diplock, in R v Bhagwan [F4] , said of the role of criminal conspiracy in the common law:
"The least systematic, the most irrational branch of English penal law, it still rests upon the legal fiction that the offence lies not in the overt acts themselves which are injurious to the common weal but in an inferred anterior agreement to commit them."
13 As has been pointed out by other judges, however, there may be very good reasons why the law would wish to punish people who make some agreements without waiting for the agreements to be performed [F5] .
14 The elements of a common law conspiracy to defraud were considered in Peters v The Queen [F6] , where McHugh J said [F7] that, in most cases, a conspiracy to defraud arises when two or more persons agree to use dishonest means with the intention of obtaining, making use of or prejudicing another person's economic right or interest, or inducing another person to act or refrain from acting to his or her economic detriment. To that proposition, in its application to the present case, there should be added a significant rider. The fact that an offence of conspiracy is complete does not mean that it has come to an end [F8] . Parties can join, or leave, a conspiracy after it has been formed, and acts done in furtherance of a conspiracy will constitute continuing performance, as well as evidence, of the unlawful agreement. An agreement formed in one territorial area may be aimed at people in another area or other areas, or may reach into such other area or areas in the course of its performance. It is this aspect of criminal conspiracy that has made it difficult to relate to the theory of territoriality which has had so much influence upon common law rules concerning the administration of criminal justice.
The territorial theory of crime
15 Lord Halsbury's famous, and dogmatic, assertions that "(a)ll crime is local", and that jurisdiction over a crime belongs to the country where the crime was committed [F9] , were made in a case about the reach of a statute enacted by a colonial legislature, but they reflected the territorial focus of the common law of crime, and they embodied a presumption of the common law which applied to the interpretation of statutes of all parliaments, including the parliament of the United Kingdom, whether or not their legislative competence was limited territorially. Considerations of international comity were influential in the development of this focus. Dixon CJ pointed this out in The Queen v Foster ; Ex parte Eastern and Australian Steamship Co Ltd [F10] :
"It does not follow from the adoption of the Statute of Westminster that Commonwealth legislation should be construed as if there were no territorial considerations affecting its interpretation. Indeed it may be fairly said that when the consequence of invalidity is removed from extra-territorial legislation it becomes more important to give effect to the presumption governing the interpretation of English legislation. That is a presumption which assumes that the legislature is expressing itself only with respect to things which internationally considered are subject to its own sovereign powers." [F11]
16 In R v Treacy [F12] Lord Reid said:
"It has been recognised from time immemorial that there is a strong presumption that when Parliament, in an Act applying to England, creates an offence by making certain acts punishable it does not intend this to apply to any act done by anyone in any country other than England."
17 One aspect of this territorial focus was the idea that most crimes have but a single location which, once established, is relevant both to the question of the jurisdiction of a court to deal with an alleged offender, and the different, although usually related, question whether the conduct of the offender violated the law of the forum in which the offender is tried [F13] . The techniques adopted by common law courts to determine that location have been criticised as artificial, and lacking coherent principle [F14] , but they were developed as a response to problems of practical necessity, and considerations of pragmatism were probably more influential than a desire for theoretical symmetry. An example of such practical necessity is Ward v The Queen [F15] . In that case a decision as to whether the unlawful homicide of a person, fatally shot whilst standing near the bank of the Murray River, occurred in New South Wales or Victoria, determined the availability of a defence of diminished responsibility, with the potential to reduce the offence from murder to manslaughter. Judgments of that kind may often appear to turn upon fine, and even artificial, distinctions, but in the administration of practical justice they are inescapable. It was the fact that New South Wales and Victoria had different laws about homicide, (a commonplace example of federalism at work), that made a territorial decision necessary.
18 Where a crime is created by statute, which normally describes the crime without making any particular reference to territorial locality, and where the nature of the crime is such that elements may occur in a number of territories, the resolution of questions of jurisdiction and justiciability may involve both questions of statutory construction, and the application of common law principles according to which courts decide where, out of a number of competing possibilities, a crime has been committed. An example is provided by the common law rule by which courts in England, and Australia, decide where the statutory offence of obtaining property by false pretences has been committed [F16] . According to the preponderance of authority, the offence is committed in the place where the property is obtained, which may be different from the place or places where the deception occurred. Discussion of the rule usually proceeds upon the assumption that the offence is committed in only one place. That assumption is not a logical necessity, and whether it should be revised is a question that may be addressed in some future case.
19 The last mentioned assumption would be inconsistent with a rule, of common law or statute, to the effect that, in the case of a crime consisting of multiple elements, an offence was committed wherever one of those elements occurred, or a rule to the effect that the offence would be taken to be committed in any territorial area where there is a real and substantial link between the offence and the territory. When the Supreme Court of Canada, in Libman v The Queen [F17] , decided to adopt the latter rule for Canada, involved in that decision was an abandonment of the objective of finding a single situs of a crime [F18] .
20 In South Australia, as in a number of Australian States, there is now legislation which, in cases to which it applies, involves a similar abandonment. Section 5C of the Act provides, without derogating from any other basis on which the courts of the State may exercise criminal jurisdiction, that an offence against the law of the State is committed if all elements necessary to constitute the offence (disregarding territorial considerations) exist and a territorial nexus exists between the State and at least one element of the offence. The respondent did not place primary reliance on that section, probably for the reason given by Lord Diplock in the passage from R v Bhagwan quoted above. Technically, the elements of the offence of conspiracy occurred outside South Australia, and it is at least doubtful that there was a territorial nexus between an element of the offence and the State. There was a subsidiary argument based on the section but, as will appear, I find it unnecessary to deal with that argument. The point of referring to the existence of s 5C is that, like its counterparts in other Australian jurisdictions, it represents a legislative departure from the theory that crimes generally have a single situs.
21 The courts of England have declined to make such a substantial alteration to the common law [F19] , and to do so in Australia would involve overturning established authority in this country, of the kind applied by this Court in Thompson v The Queen [F20] and Ward v The Queen [F21] . It would also involve disturbing the common law background to legislation such as s 5C of the Act. The general common law requirement of a single situs has never been absolute, and there is no reason, either in principle or in practical necessity, why it should be. Conduct which occurs within a single territory may well offend a number of laws of that territory. As the case of Brownlie v State Pollution Control Commission [F22] illustrates, conduct which occurs in one Australian State may well be affected by the laws of that State and another State as well. There is nothing new about trans-jurisdictional activity giving rise to potential breaches of the laws of a number of territories. As La Forest J pointed out in Libman , developments in communication by post and telegraph more than a century ago gave rise to such problems [F23] .
22 The implications of attempts to regulate the activities of trans-jurisdictional combinations or conspiracies, including considerations of international comity, have been explored in cases arising out of antitrust legislation. There is a discussion of such issues, in the context of the interpretation of the Australian Industries Preservation Act 1906 (Cth), in Meyer Heine Pty Ltd v China Navigation Co Ltd [F24] . That case provides an example of the extra-territorial reach of a penal statute, aimed at combinations, being affected by issues relating to international comity which were obviously taken into account by the legislature.
23 The common law offence of conspiracy which, by its nature, is capable of having trans-jurisdictional operation and effect, has not been subjected to a rigid, single-situs, rule of territoriality. Before examining the leading authorities on that subject, however, it is necessary to advert to an issue which arose in argument concerning the significance of this being a common law offence.
The common law and the statute
24 This Court, in Lange v Australian Broadcasting Corporation [F25] , said that "there is but one common law" in Australia, and explained what was meant by that, contrasting the position in the United States. That common law, however, recognises the States as separate jurisdictions, or law areas, where to do so is appropriate in the application of common law principles. Decisions such as Breavington v Godleman [F26] and McKain v R W Miller & Co (SA) Pty Ltd [F27] illustrate this.
25 When this Court, in Ward , and Thompson , set about resolving issues relevant to the situs of homicide, it did so pursuant to what Deane J, in the latter case, referred to as "a general thesis of the common law and an incident of the doctrine of sovereignty under international law that crime is essentially local or domestic" [F28] . In the former case they treated Victoria and New South Wales as relevantly separate territories. In the latter case the relevant territories were New South Wales and the Australian Capital Territory. No question of sovereignty under international law, or of international comity, arose as between those territories. Nevertheless, the assumption was that, for purposes of applying a common law principle concerning the reach of criminal laws, although part of the Australian Federation, they were distinct. The implications, constitutional and otherwise, of treating the States as separate law areas for various purposes associated with penal laws have not yet been fully explored. As has been observed [F29] , a case such as Brownlie illustrates some of the issues that may need to be resolved.
26 What is involved in the present case is not only the application of the common law. The punishment to which the appellants were subjected was prescribed by a South Australian statute. The Act, in s 270(2), establishes a penalty for the common law offence of conspiracy to defraud. Plainly there are territorial limitations upon the operation of that provision. Does it apply to a conspiracy to defraud, entered into and carried out in England, having no connection of any kind with South Australia? Surely not. Does it apply to a conspiracy to defraud, entered into and carried out in Tasmania, having no connection of any kind with South Australia? I would give a negative answer, for substantially the same reasons, which are to be found in the common law principles earlier discussed. The premise that there is but one common law in Australia, not fragmented between different States, does not require or justify the conclusion that, when a South Australian Act refers to a common law offence, it is referring to conduct occurring anywhere in Australia regardless of any connection with South Australia. If it were otherwise, in its operation within the Australian Federation, the scope of s 5C of the Act would be narrower than that of s 270(2).
27 The issue whether the conduct of the appellants constituted an offence punishable according to the law of South Australia raises questions both as to the common law principles concerning the required nexus between conduct and territory for the offence of conspiracy to defraud, and as to the meaning of s 270(2) of the Act. Both questions should be given the same answer.
Was there sufficient connection?
28 This question should be approached without any preconception that, in the case of the crime of conspiracy, there is a requirement of the common law, or a principle of statutory construction, that there can be only a single situs.
29 Conspiracies to export drugs from one jurisdiction to another have provided cases in which courts have had to address this issue [F30] .
30 In R v Doot [F31] , Lord Wilberforce said:
"In the search for a principle, the requirement of territoriality does not, in itself, provide an answer. To many simple situations, where all relevant elements occur in this country, or, conversely, occur abroad, it may do so. But there are many 'crimes' (I use the word without prejudice at this stage) the elements of which cannot be so simply located. They may originate in one country, be continued in another, produce effects in a third."
31 In that case the House of Lords upheld convictions of conspiracy to import drugs into England even though the conspiracy had been entered into, and the offence was in that sense complete, elsewhere. By hypothesis, a crime had been committed outside England, but the conspiracy was a continuing offence, and continued into England.
32 Lord Wilberforce said [F32] :
"In my opinion, the key to a decision for or against the offence charged can be found in an answer to the question why the common law treats certain actions as crimes. And one answer must certainly be because the actions in question are a threat to the Queen's peace, or, as we would now perhaps say, to society. ... Conspiracies are intended to be carried into effect, and one reason why, in addition to individual prosecution of each participant, conspiracy charges are brought is because criminal action organised, and executed, in concert is more dangerous than an individual breach of the law. Why, then, refrain from prosecution where the relevant concert was, initially, formed outside the United Kingdom?"
33 Lord Pearson said [F33] that the fact that the offence of conspiracy is complete when agreement is reached does not mean that it is finished, and that a conspiracy to commit a crime in England ought to be triable there if it has been wholly or partly performed there. That was sufficient to dispose of that case.
"Unfortunately in this century crime has ceased to be largely local in origin and effect. Crime is now established on an international scale and the common law must face this new reality. Their Lordships can find nothing in precedent, comity or good sense that should inhibit the common law from regarding as justiciable in England inchoate crimes committed abroad which are intended to result in the commission of criminal offences in England. Accordingly a conspiracy entered into in Thailand with the intention of committing the criminal offence of trafficking in drugs in Hong Kong is justiciable in Hong Kong even if no overt act pursuant to the conspiracy has yet occurred in Hong Kong."
35 I respectfully agree with that proposition which was also accepted by the English Court of Appeal in R v Manning [F36] .
36 As the facts of the present case show, a conspiracy to defraud, unlike a conspiracy to go into another territory and there commit a discrete crime, such as robbing a bank, or supplying prohibited drugs, may involve an agreement to engage in conduct where the dishonesty is practised by trans-jurisdictional communications, and where the inducement of another person to act to his or her economic detriment operates across jurisdictional boundaries.
37 Trans-jurisdictional commerce and intercourse, whether within the Australian Federation or international, is now accomplished with such speed and facility, that for many purposes jurisdictional boundaries are irrelevant. They remain relevant for purposes of criminal law, but there is every reason to apply the law in a manner which accommodates the reality, especially in relation to transactions occurring within the Federation, where considerations of international comity do not inhibit such accommodation [F37] .
38 When the appellants and their co-conspirators set out to defraud the company, it was probably not material to them to consider where it had its central management and control, or where the money for the lease incentive payment was to come from, or where the company's legal advisers were located, although some of these facts were later made known to them. They knew that the building in respect of which the lease incentive payment was to be made was in Melbourne, but geographical considerations beyond that were probably unimportant to them. Even so, as a matter of objective fact, there was a real connection between the conspiracy and South Australia. The intended victim of the fraud was a South Australian company, whose business was controlled from that State, and in the way in which the affairs of that company were managed, the effectuation of the fraud involved the making of a false representation to people in South Australia, and their acting on that representation. That is why the facsimile communication went to South Australia. People in South Australia were intended to act on it, to the detriment of the South Australian company.
39 I see no material difference between a conspiracy, entered into in Queensland, to bring prohibited drugs into South Australia, and a conspiracy, entered into in Queensland, to perpetrate a fraud which, by reason of the objective circumstances, involves practising a deception upon people in South Australia with a view to their acting, in South Australia, to their detriment. The conspiracy to defraud was of such a nature that its implementation involved deceiving people in South Australia, and inducing them to act to their detriment. It was, for that reason, punishable according to the law of that State.
40 The appeals should be dismissed.