Senate

Revised Explanatory Memorandum

(Circulated by authority of the Minister for Justice and Customs, Senator The Honourable Amanda Vanstone)

Schedule 1 - Amendment of the Criminal Code Act 1995

Item 1A of Schedule 1 - Offshore installations

7. This will provide clarification in existing section 3B of the Criminal Code Act 1995 that the general rule that an offshore installation may generally be taken to be part of Australia for the purposes of the Criminal Code may be over-ridden by a provision expressing a contrary intention, and therefore enabling proposed section 16.3, and where indicated, other provisions to operate as intended. Proposed section 16.3 links the meaning of 'Australia' to the relevant primary offence.

Item 1 of Schedule 1 - Regulations

8. This item inserts new clause 5 which will enable the making of regulations under the Criminal Code Act 1995 (the Act). This would be made necessary by this Bill because it is proposed in item 23 of Schedule 1 that there should be a definition of 'Commonwealth authority' which may require the exclusion of some additional bodies by regulation.

Items 2 and 3 of Schedule 1- Adjustments to notes

9. The Act contains notes to assist readers. These provide for a reference to proposed Part 2.7 of Chapter 2 of the Criminal Code which deals with geographical jurisdiction.

Item 4 of Schedule 1 - 'engage in conduct'

10. Subsection 4(2) of the Criminal Code contains the important definition of 'conduct' which means an act, an omission to perform an act or a state of affairs. Offences refer to 'engaging in conduct'. The proposed definition of 'engaging in conduct' is designed to make it clear that 'engagement' does not only infer the relevant conduct must only be an act. The use of 'engaging in conduct' is meant to cover omissions as well. This will simplify the drafting of offences.

Item 5 of Schedule 1- repeal of a note

11. Item 5 repeals a note under section 5.1 of the Criminal Code which contains an example which refers to a Crimes Act 1914 offence which will be replaced in the proposed amendments. It is not necessary to replace the example.

Item 6 of Schedule 1 - amendment to section 5.6

12. Item 6 would omit the words 'of an offence' from section 5.6 of the Criminal Code because they are unnecessary and could result in misinterpretation of this important provision. Section 5.6 contains the rules which will apply in relation to fault where the relevant offence does not specify a fault element. It is possible some might interpret the rule as only applying to offences made up of only conduct, or only of a circumstance or a result. This was not the intention of those who developed the Model Criminal Code.

Item 7 of Schedule 1 - defence of lawful authority

13. Part 2.3 of the Criminal Code contains a range of general defences. In its 1998 and 1999 'Offences Against the Person' Reports, the Model Criminal Code Officers Committee recommended that there be a general lawful authority defence. This is in recognition that a code must specify this longstanding principle if it is to continue to apply. The defence is particularly relevant to offences against the person. Proposed Part 7.8 of Chapter 7 in this Bill includes offences of that nature. It is important that where, for example a law enforcement officer is authorised by law to physically restrain a person and does so within the scope of his or her authority, then the officer cannot be charged for harming that person. There will be many other examples throughout the Criminal Code. The main thing to keep in mind here is that the defence will not apply if there is no clear justification or excuse provided for by or under another law of the Commonwealth.

Items 7A and 7B of Schedule 1 - amendments to section 11.1 (attempt)

14. Prior to the Government Amendments in the House of Representatives, proposed section 600.1 in Chapter 11 (item 16 of the Bill as originally introduced) was for the purpose of ensuring that where there is a special liability provision (such as one applying absolute liability to the Commonwealth element in the offence of theft of Commonwealth property at proposed subsections 131.1(1) and (3)) then that rule should carry through to ancillary offences, such as an attempt (section 11.1). On reflection, proposed section 600 was an obscure way of achieving that result. Indeed, consistent with approach taken with the Criminal Code in relation to other matters, it was concluded that rules of this nature need to be much clearer. Items 7A and 7B were inserted by the Government Amendments to include proposed subsections 11.1(3A) and (6A) which specifically provide as part of the ancillary offence of attempt that special liability provisions apply. The same provisions are also provided for in relation to other relevant ancillary offences: complicity (proposed subsections 11.2(3A) and (6)); incitement (proposed subsections 11.4(2A) and (4A)); and conspiracy (proposed subsections 11.5(2A) and (7A)). It is proposed that a definition of 'special liability provision' be inserted into the Criminal Code dictionary by Item 39A. It provides a 'special liability provision' is where absolute liability applies to one or more (but not all) of the physical elements of an offence. This will mean that while the rules which require proof of fault with respect to ancillary offences (such as subsection 11.2(3) in attempt) will continue to apply to every offence (including the extremely rare occasion where absolute liability might apply to all elements of an offence), it will not be necessary where it concerns a subsidiary element such as the example given in relation to theft of Commonwealth property.

15. It is also proposed that the definition of 'special liability provision' include those special provisions which provide that it is not necessary to prove the defendant knew or believed a particular thing. An example of this is proposed subsection 141.1(2) which concerns bribery. It provides it is not necessary to prove that the defendant knew the official bribed was a Commonwealth public official. The amendments will mean it will not be necessary to prove knowledge about the Commonwealth characteristic of the public official providing the defendant was attempting to bribe a public official of some kind.

Item 8 of Schedule 1 - amendment to subsection 11.1(7)

16. Section 11.1 of the Criminal Code concerns the general principles which apply in relation to an attempt to commit an offence. Subsection 11.1(7) provides that it is not an offence to commit complicity and common purpose (section 11.2) or conspiracy (section 11.5). It does not make sense to provide for attempting those offences. The proposed amendment simply extends the rule, for the same reason, to another form of conspiracy which it is proposed should be included in Chapter 7 of the Criminal Code - conspiracy to defraud (proposed section 135.4).

Items 8A to 8F of Schedule 1 - amendments to sections 11.2 (complicity), 11.4 (incitement) and 11.5 (conspiracy)

17. These are the proposed amendments in relation to the ancillary offences of complicity, incitement and conspiracy which are explained in the note on items 7A and 7B.

Items 9, 10 and 11 of Schedule 1 - amendments to section 11.6

18. Section 11.6 of the Criminal Code is an interpretative provision which provides that references to offences against an Act also include relevant extensions of criminal responsibility such as attempt, complicity and conspiracy. This simplifies the drafting of criminal statutes. The proposed amendments in items 9 and 10 make it clear this rule extends to not only Acts but other laws of the Commonwealth that create offences (for example, regulations). Proposed new subsection 11.6(4) which would be inserted by item 11 preserves references in existing laws to extensions of criminal responsibility.

Item 12 of Schedule 1 - Part 2.7 - Geographical Jurisdiction

19. Item 12 proposes the insertion of a new set of general principles into Chapter 2 of the Criminal Code which deal with the geographical reach of Commonwealth offences. These are contained in Part 2.7 entitled 'Geographical Jurisdiction.'

20. The purpose of Part 2.7 is to clarify, and to provide in an orderly way for, the geographical application of Commonwealth offences. There are several instances where the geographical reach of Commonwealth offences is not clear, or where general application provisions are not adapted to the purpose of particular offence provisions. Commonwealth offence provisions are usually enacted to give effect to a specific governmental purpose. Depending on that purpose, and considerations of international law, practice and comity, it might be appropriate for an offence to have a broad or narrow application.

21. The scheme of Part 2.7 is to provide for the most appropriate of those categories to be chosen. First, for a 'standard geographical jurisdiction' to govern the geographical application of future offences in the absence of any provision to the contrary. Provision is then made for four categories of 'extended geographical jurisdiction'. One of those categories might be chosen for express application to govern the geographical application of a particular offence. The five options for geographical jurisdiction set out in Part 2.7 make available a convenient way of covering most offence provisions, although it is possible that for some reason a future law might need to specify yet another kind of jurisdiction.

Proposed section 14.1 of Division 14 - Standard geographical jurisdiction

22. Proposed subsection 14.1(1) enables standard geographical jurisdiction to be applied to a particular offence by an express provision to that effect. However, express application will not be necessary for offence provisions commencing at or after the commencement of proposed section 14.1, where standard geographical jurisdiction will apply unless contrary provision is made. The same form of jurisdiction will also govern a related ancillary offence. ('Ancillary offence' is to be defined in the Dictionary (item 19), and includes, for example, attempt, incitement and conspiracy.)

23. Proposed subsection 14.1(2) sets out the situations where a particular case will fall within standard geographical jurisdiction. It does so by reference to 'conduct' and 'result', these being possible physical elements of an offence as stated in section 4.1 of the Criminal Code. When Part 2.7 refers to a 'result' it is referring to a result that is an element of the offence itself and not to something that is merely a consequence or effect of the offence having occurred. (See proposed section 16.4.)

24. Standard geographical jurisdiction will be satisfied if the conduct constituting the alleged offence occurs wholly or partly in Australia (see proposed section 16.3) or wholly or partly on board an Australian aircraft or an Australian ship (see the proposed definitions in the Dictionary (items 20 and 21).

25. The jurisdictional requirements will also be satisfied if a result of the conduct occurs wholly or partly in Australia or wholly or partly on board an Australian aircraft or an Australian ship. As noted, this condition of jurisdiction can only be satisfied where a 'result' is an element of the offence. Only a few Commonwealth offences have a 'result' in that sense, so the 'result' basis for jurisdiction will only be applicable to those offences. An example might be an offence of destroying an aircraft where the conduct occurs outside Australia but the destruction of the aircraft (say a foreign aircraft) occurs in Australia, or an offence of obtaining something by deception where the deceptive conduct occurs outside Australia but the thing is received in Australia.

26. In the case of an 'ancillary offence', such as attempt, incitement or conspiracy, it may be that the conduct occurs wholly outside Australia and there is no relevant 'result' in Australia of the ancillary offence itself. In that case, by virtue of proposed paragraph 14.1(2)(c), the jurisdictional requirement might still be satisfied by reference to the primary offence, for example where D incites a person, in a foreign country, to commit an offence and the person commits that offence (the primary offence) in Australia or D intends that the primary offence be committed in Australia.

27. Proposed subsection 14.1(3) provides the possibility of a defence where standard geographical jurisdiction is satisfied but the conduct occurs wholly in a foreign country, for example where only a 'result' occurs in Australia or (in the case of an ancillary offence) the primary offence is intended to occur in Australia. The defence is that there was no offence (or ancillary offence) in the place where the conduct occurred (country X) corresponding to the Commonwealth offence charged. The inquiry is not into whether the particular conduct alleged would have amounted to an offence of some kind or other under the law of X. Therefore it need not be relevant that in country X there is an applicable defence, relating, for example, to age, nationality or other capacity. The inquiry is into whether X has in its law a corresponding offence. 'Corresponding' does not mean 'exactly the same' but means 'of a corresponding kind'. For example if the charged offence was bribing an Australian official, a corresponding offence of X could be bribing an official of X. If the charged offence was destruction of (or theft of) Australian government property and X had not legislated specifically for government property, a corresponding offence could be simple destruction of (or theft of) property.

Proposed Division 15 - Extended geographical jurisdiction

28. This includes the categories A, B, C and D. A being the most limited extension, D being the broadest.

Proposed section 15.1 Extended geographical jurisdiction - category A

29. Where this category of jurisdiction applies, jurisdiction will be satisfied if a requirement for 'standard geographical jurisdiction' is met or the alternative requirement in proposed paragraph 15.1(c) is met. That alternative requirement is met if at the time of the alleged offence the person charged with the offence was an Australian citizen or was a body corporate incorporated by or under a law of the Commonwealth or of a State or Territory ('a national').

30. As in proposed section 14.1, there is a defence in proposed subsection 15.1(2) which may be available depending on the law of a foreign country where the conduct has wholly occurred. However, that defence is not available if jurisdiction is to be exercised under proposed paragraph 15.1(c) on the basis of the person's nationality.

Proposed section 15.2 Extended geographical jurisdiction - category B

31. This category of jurisdiction is the same as under category A, except that a further possible basis for jurisdiction is added in proposed subparagraph 15.2(1)(c)(ii). This is that at the time of the alleged offence the person was a resident of Australia. The defence in subsection 15.2(2) is in the same terms as the defence in subsection 15.1(2). It may be available if jurisdiction is to be exercised on the basis of residence, but not if jurisdiction is to be exercised on the basis of nationality.

Proposed section 15.3 Extended geographical jurisdiction - category C

32. Category C jurisdiction is unrestricted. It applies whether or not the conduct or the result of the conduct constituting the alleged offence occurs in Australia. However, by virtue of proposed subsection 15.3(2) a defence may be available depending on the law of a foreign country where the conduct occurs. The defence is in the same terms as in proposed subsections 15.1(2) and 15.2(2) and is not available if the person charged is of Australian nationality.

Proposed section 15.4 Extended geographical jurisdiction - category D

33. Category D jurisdiction is unrestricted and is in the same terms as in proposed section 15.3, except that there is no foreign law defence corresponding to that in proposed section 15.3(2).

Proposed section 16.1 Attorney-General's consent

34. The purpose of proposed section 16.1 is to require the Attorney-General's consent where a prosecution is to be brought in reliance on Part 2.7 and the conduct constituting the alleged offence occurs wholly in a foreign country and the person charged or to be charged is not of Australian nationality.

35. There will be situations, among those situations where the Attorney-General's consent is required, where it will not be appropriate for a prosecution to proceed in Australia even if the usual criteria for a prosecution are met. It is intended that the Attorney-General will have regard to considerations of international law, practice and comity, international relations, prosecution action that is being or might be taken in another country, and other public interest considerations and decide in his or her discretion whether it is appropriate that a prosecution should proceed.

36. Proposed subsection 16.1(2) contains the usual provision enabling a prosecution to be initiated before consent is given. If another Commonwealth law requires the consent of the Attorney-General or another person for a prosecution, and consent of the Attorney-General is also required under proposed section 16.1, it will be necessary for consents to be obtained under both provisions.

Proposed section 16.2 When conduct taken to occur partly in Australia

37. Proposed subsection 16.2(1) is directed to the situation where a thing is sent to or from Australia. If a person, while outside Australia, sends a thing to Australia (for example by mailing a parcel) or causes it to be sent (for example by arranging for another person to mail a parcel), that action of the person might be conduct constituting an offence, and by virtue of subsection 16.2(1) it is conduct that is taken to have occurred partly in Australia. On that basis, an alleged offence could be within the jurisdiction provided by proposed sections 14.1(1), 15.1(1), or 15.2(1). (It would not matter if the sending of a thing from Australia would otherwise be conduct wholly within Australia, because those subsections do not distinguish between conduct wholly or partly in Australia.)

38. Moreover, such conduct would not be conduct 'wholly outside Australia' or 'wholly in a foreign country' within the meaning of those expressions in Part 2.7, for example for the purposes of the defences in proposed sections 14.1(3), 15.1(2), 15.2(2) or 15.3(2).

39. Proposed subsection 16.2(3) has a corresponding effect to subsection 16.2(2) where what is sent or caused to be sent is an electronic communication. An 'electronic communication' is not defined, but is intended to describe any communication by electronic means, for example by telephone, fax, or telegram, by wire, cable or radio, or through the Internet or a closed computer network. However, an electronic communication is only within the subsection if it is sent or caused to be sent 'from a point outside Australia to a point in Australia' or 'from a point in Australia to a point outside Australia'. That limitation could exclude some broadcast transmissions, although an email to multiple recipients, for example, would be a number of communications sent to a number of points. Proposed subsection 16.2(3) gives an inclusive definition of 'point'.

Proposed section 16.3 - Meaning of 'Australia'

40. The purpose of this section is to bring the operation of the jurisdiction provisions in this Part into line with the scope of particular offence provisions. 'Australia' when used in a geographical sense may be given different meanings in different statutes. For example, sometimes it will include some or all of the external Territories, sometimes it will not. For the purpose of this Part, the meaning of 'Australia' will depend on the meaning it would have if used in the relevant offence provision.

Proposed section 16.4 Result of conduct

41. This section makes it clear that, in this Part, a reference to a result of conduct is a reference to a result in the sense of a physical element of an offence as provided in proposed section 4.1(1). Therefore 'result' is not to be interpreted as meaning a consequence or effect following from or caused by an offence but not forming an element of the offence. The destruction of an aircraft is a result and an element of the offence of destroying an aircraft. However, a consequence of that offence in the form of collateral damage to other property or a loss to an insurance company would not be an element of the offence and hence would not be a relevant 'result'.

Item 13 of Schedule 1 - definition of 'foreign country' at section 70.1

42. Section 70.1 provides for a definition of 'foreign country' in Division 70 of Chapter 4 of the Criminal Code ('The integrity and security of the international community and foreign governments') which it is proposed should be repealed and moved by item 33 of this Bill to the Dictionary at the end of the legislation. The definition is to be used more generally, so it is more appropriate to place it in the Dictionary. Division 70 of Chapter 4 was inserted into the Criminal Code by the Criminal Code Amendment (Bribery of Foreign Public Officials) Act 1999 which contains offences which prohibit the bribery of foreign public officials.

Item 14 of Schedule 1 - definitions aircraft and ships at subsection 70.5(4)

43. This is another amendment to Division 70. It repeals the definitions of 'Australian aircraft', 'Australian ship', 'defence aircraft' and 'defence ship'. These definitions are moved by Items 18, 19, 29 and 30 of this Bill to the Dictionary. The definitions are unchanged.

Item 15 of Schedule 1 - Chapter 7 - The proper administration of Government

44. The bulk of the proposed new theft, fraud, bribery and related offences are in Chapter 7. It is proposed that this chapter will eventually include a range of other offences relevant to the protection of the proper administration of Government, such as damage and computer offences. However, effective theft, fraud and corruption offences are a very important component of the Criminal Code. Fraud against the Commonwealth is considerable and corruption is something about which no society can be complacent.

Proposed Part 7.1, Division 130 - Preliminary

45. This deals with the definitions and interpretative clauses which it is proposed should apply throughout the chapter. Some of these are likely to be relevant to the damage offences which it is proposed will be inserted later.

Proposed section 130.1 - Definitions

46. The first word to be defined is 'duty'. 'Duty' is used in many of the offences, ranging from general dishonesty (proposed section 135.1), to corruption offences such as bribery (proposed section 141.1), and forgery (proposed section 144.1).

47. Paragraph (a) of the definition ensures 'duty' is given its widest meaning and appropriately covers those duties which the 'Commonwealth public official' may not technically have but is able to hold himself or herself out as having. The community cannot be expected to know what the exact duties of an official are, so it would not be unreasonable to expect some dishonest officials will try to seek favours by promises to do things that have nothing to do with their duties.

48. Paragraph (b) of the definition of 'duty' provides for a similar definition in relation to 'public officials'. This is necessary, because many of the offences only require the prosecution to prove that the person relevant to the offence is a 'public official', not that they are a Commonwealth public official (see the bribery offence, proposed section 141.1). Many in the community are not precisely aware of what public officials are State public officials, as opposed to Commonwealth public officials.

49. 'Commonwealth public official' and 'public official' is defined in the proposed Dictionary to the Criminal Code at items 27 and 36 of the Bill. 'Commonwealth public official' includes a broad group of people including Commonwealth employees and officers, Members of Parliament, judges, police, contractors, military personnel and those employed by Commonwealth authorities. 'Public official' covers the same categories but includes State and Territory officials as well as those with Commonwealth functions.

50. 'Gain' is defined in terms of a gain in property, whether temporary or permanent, or by way of the supply of services, and includes keeping something that one has. This is much the same as subsection 14.3(1)(a) of the Model Criminal Code but also mentions services in recognition of the context of the Commonwealth Criminal Code which is concerned with the protection of the Commonwealth. The Model Criminal Code offences reflect the State and Territory Government responsibility for criminal offences that apply more generally. Services are often very valuable and costly, and therefore the protection of the proposed offences need to specifically cover them as well. Dishonestly obtaining a gain is an important element of many dishonesty offences such as conspiracy to defraud (proposed section 135.4) and the unwarranted demands offences (proposed sections 139.1 and 139.2).

51. 'Loss' covers temporary or permanent losses and includes not getting what one might get. It follows the Model Criminal Code definition and is usually used in the same offences as gain' to cover the 'flip-side' consequence of dishonest behaviour. While there will invariably be a loss to someone whenever there is a gain for another, in some cases it is more appropriate to the facts of the case to prove the defendant dishonestly caused a loss rather than a gain. Either way there is a victim and the culprit should be penalised.

52. 'Obtaining' is defined to include obtaining for another. This is an important part of the proposed dishonesty offences. Often the defendant will be motivated to assist a relative or friend. Whether it is for himself, herself or another - there will be a victim of dishonesty. In the Commonwealth jurisdiction it will invariably be the taxpayer. This is based on subsection 14.3(2)(a) of the Model Criminal Code.

53. 'Property' is defined widely. Like section 14.4 of the Model Criminal Code, it covers real and personal property, money, intangible property such as the right to recover funds, electricity and even wild creatures. Even in the Commonwealth context, it could include a captive wild creature. There may be very valuable Commonwealth assets which are captive wild creatures (for example, where an outback station is forfeited to the Commonwealth as a proceed of crime).

54. 'Services' is defined broadly in recognition of the range of services provided by the Commonwealth . The definition is included in recognition of the special definition of 'gain' in the Criminal Code which is not found in the 'State-based' Model Criminal Code.

55. 'Supply' is also included in support of the definitions of 'services' and 'gain' for the same reasons.

Proposed section 130.2 - When property belongs to a person

56. This definition is of critical importance to the theft, theft related and property fraud offences (such as proposed sections 131.1, 132.1 and 134.1). The basic definition at subsection 130.2(1) provides that property belongs to any person who owns it, or has any other proprietary right or interest in it, or who has possession or control of the property. One effect of the section is that co-owners or people with different rights to a piece of property can be guilty of theft from one another. For example, one owner of property can be guilty of theft from another owner (eg theft by one business partner from another), or an owner can be guilty of theft by taking his or her property away from someone who has possession or control of it (eg an owner who dishonestly took back his or her own goods from a pawnbroker). The owner cannot deny appropriation by relying on his or her own consent to the appropriation. Proposed sections 131.3(1) and 131.9 requires the consent of all those to whom it belongs. In the example, the owner of the pawn shop has not consented to the appropriation of his or her right to possession. The Commonwealth can co-own property with someone else - so this interpretative provision is as relevant to it as the Model Criminal Code provision upon which it is based (section 14.5).

57. The definition in proposed subsection 130.2(1) also provides that property also belongs to people who have any proprietary right or interest (not being an equitable interest arising either from an agreement to transfer or grant an interest, or from a constructive trust). One example of the effect of this is that a trustee (who is the legal owner of the trust property) who dishonestly appropriates trust property will be guilty of theft from the beneficiaries (who do not own the trust property but do have an equitable proprietary interest in the trust property). Where there is no specific beneficiary (eg in the case of a trust for general public purposes), proposed subsection 131.5(1) makes this theft (subsection 15.5(1) of the Model Criminal Code).

58. However, equitable interests arising from agreements to transfer or grant an interest (eg to sell land or shares) are excluded. These equitable interests arise by the operation of legal rules but only in relation to contracts which are specifically enforceable. For example, the defendant agrees to sell a valuable painting to the victim. Before the sale goes ahead and the painting is transferred, the defendant gets a better offer and sells it to X. In general, contracts agreeing to sell goods are not specifically enforceable but they are when the goods have special qualities. Hence, a contract like the one in the example would be specifically enforceable and the victim would have an equitable interest in the painting. However, the framers of the Theft Act judged that this conduct should not be theft and that civil remedies were sufficient. The qualification in proposed subsection 131.5(1) will mean that this is not property belonging to another and therefore not theft.

59. Similar considerations arise in relation to constructive trusts. In an English case, the proprietor of a tied pub operated it on the basis that he would only sell the brewery's beer. In fact he also sold some of his own home brew. He was charged with theft on the basis of an argument that he was a constructive trustee of the proceeds of the sale of the home brew and that the brewery had an equitable proprietary interest in the proceeds. The Court of Appeal found that no constructive trust arose in these circumstances and, in any event, rejected the notion that a person should be guilty of theft based on the operation of such intricate legal concepts which strayed so far from ordinary conceptions of theft. The same point applies to constructive trusts generally, such as have been found to arise in the case of mistaken overpayment. Hence, proposed subsection 131.5(1) extends the qualification contained in the Theft Act so that equitable interests arising from constructive trusts do not fall within the definition of property belonging to another. Constructive trusts - based on equitable notions of unconscionability - may be appropriate for recovery in civil actions, but they stray too far from the common conception of theft and the much more culpable sort of dishonesty involved in theft to form part of the definition of the offence of theft. Their ambit is uncertain and likely to expand. To attach the boundaries of theft to such an uncertain concept would offend the important principle that the criminal law should be knowable in advance. No doubt that principle calls for judgements of degree on occasion. On this occasion in relation to constructive trusts and the law of theft, the better view is to agree with what the Court of Appeal said in Attorney-General's Reference (No 1 of 1985)
[1986] 1 QB 491 , 503:

"... the court should not be astute to find that a theft has taken place where it would be straining the language so to hold, or where the ordinary person would not regard the defendant's acts, though possibly morally reprehensible, as theft."

60. The general definition of property belonging to another contained in proposed subsection 131.5(1) is supplemented for the purposes of the offence of theft by proposed sections 131.5 to 131.9 (section 15.5 of the Model Criminal Code).

61. Proposed subsection 131.5(2) makes it clear that the same rules also apply to money transfers under the property fraud offence (proposed subsections 134.1(9) and (10)). The Model Criminal Code does not have a special provision covering money transfers.

Proposed section 130.3 - Dishonesty

62. An important concept in the Model Criminal Code offences is the fault element of 'dishonesty' (subsection 14.2(1) which has a straight-forward definition which was developed by the courts and is known as the Ghosh test. The Ghosh test is a familiar concept in Australia because until February 1998, it had been used in all jurisdictions, both common law and Code, in relation to conspiracy to defraud and in most jurisdictions, including the Commonwealth, in relation to the main fraud offences (s.29D and s71(1) of the Crimes Act 1914 which use the fault elements of 'defraud' and 'fraudulent'.) In Peters v R (1998)
151 ALR 51 the High Court held that the Ghosh test was no longer appropriate and developed a new test which does not include a subjective component.

63. The approach in Peters is not favoured because it is necessary for offences like theft to retain a broad concept of dishonesty to reflect the characteristic of moral wrongdoing.

64. Paragraph (a) of the definition of 'dishonest' seeks to achieve this by linking the definition of dishonesty to community standards (this is not novel, whether a person is negligent is assessed by a jury on the basis of what the reasonable person would have done in the circumstances).

65. Paragraph (b) of the definition requires knowledge on the part of the defendant that he or she is being dishonest according to the standards of ordinary people. This is crucial if the Criminal Code is to be true to the principle that for serious offences a person should not be convicted without a guilty mind. It reflects a preference for the law which existed prior to the 1998 decision of the High Court in Peters and is particularly important to the Criminal Code because it has additional offences which rely on 'dishonesty' even more so than the Model Criminal Code offences (see proposed sections 132.8, 135.1 and 135.2). The proposed definition was preferred over the Peters approach by the Standing Committee of Attorneys-General at its April 1998 meeting.

Proposed section 130.4 - Determination of dishonesty to be for the trier of fact

66. Consistent with subsection 14.2(2) of the Model Criminal Code, it is proposed that the question of whether a person is 'dishonest' is only appropriate for the jury (or court, if there is no jury) as the trier of the facts to determine. It is the jury which is best able to judge community standards.

Proposed Part 7.2 - Theft and other property offences

67. These offences include theft itself, receiving, robbery and aggravated robbery, burglary and aggravated burglary, making off without payment, going equipped for theft and dishonest taking or retention of property. The enactment of these offences would give the Commonwealth a comprehensive array of offences to replace a very outdated and vague 'stealing' offence (section 71 of the Crimes Act 1914 ) and reliance on varying State and Territory offences which have no similarity to the stealing offence for more serious theft related conduct such as a robbery or burglary.

Division 131 - Theft

68. The proposed Division on theft begins with the offence of theft which is followed up by a number of interpretative provisions which are important to the proper operation of the offence. They are necessary because under Australian civil law concepts of property ownership are by no means simple. Being a transparent law, the Criminal Code provides an explanation of how those concepts interact with the offence of theft.

Proposed section 131.1 - Theft

69. Proposed subsection 131.1(1) contains the elements of the offence of theft. A person is guilty if the person dishonestly appropriates property belonging to another with the intention of permanently depriving the other of the property.

70. The elements of the theft offence at subsection 15.1(1) of the Model Criminal Code have been faithfully followed in this Bill notwithstanding the different nature of the Commonwealth jurisdiction. This is in recognition that theft is sufficiently complex as it is without restructuring it just for the purpose of providing the Commonwealth jurisdictional connection, but also because it is convenient and transparent to place the connection in a separate paragraph.

71. Referring to the property belonging to the 'Commonwealth entity' at paragraph 131.1(1)(b), which is defined as the Commonwealth or a Commonwealth authority in the Dictionary to the Criminal Code (item 25 of the Bill), also has the advantage of isolating that precise element of the offence so that the prosecution is not required to prove the person knew the person /organisation who owned the property was a Commonwealth entity. Under the existing law the prosecution is not required to prove the defendant knew it was the Commonwealth that he or she was stealing from for the person to be found guilty but under the Criminal Code this must be made clear in the legislation. The Criminal Code requires laws that create offences to be very clear about anything that does not need to be proved, otherwise fault must be proved in accordance with section 5.6. It is therefore appropriate that the offence should make it clear that proof the person knew the victim was a 'Commonwealth entity' is not required. This is achieved in subsection 131.1(3) which provides that absolute liability applies to the 'property belongs to a Commonwealth entity' element of the offence.

72. Subsection 6.2(2) provides that if a law that creates an offence provides that absolute liability applies to a particular physical element of the offence (in this case property belonging to the Commonwealth entity), then a fault element (for example, knowledge) does not have to be proved and there is no defence of mistake of fact.

73. This method of preserving the status quo with respect to proof of the Commonwealth jurisdictional connection is transparent, precise and preserves the structure of the offence. It is used throughout the Bill.

74. The penalty for theft is a maximum of 10 years imprisonment The current stealing offence has a maximum penalty of 7 years. The proposed penalty is consistent with that for State and Territory offences and the Model Criminal Code. A single theft can involve millions of dollars worth of property. The Commonwealth can be a victim just like any other organisation. There is no reason why the penalty should be less than that for State theft offences.

75. Proposed subsection 131.1(4) nominates extended geographical jurisdiction category D for the purpose of Part 2.7 (applying whether or not any part of the offence occurs in Australia). The reasons for that approach are as follows.

76. Australia, as a country following the common law system of criminal justice, has not, traditionally and as a general rule, sought to bring within its criminal laws conduct occurring beyond Australia. It has been, and is, accepted that general law offences such as theft by one individual from another, should not be given extended reach unless there is a particular reason to do so, for example a need to fill a law enforcement vacuum.

77. However, an offence, such as theft, against the national government is of a different character, as signified by the placing of these offences in a chapter of the Criminal Code entitled 'The proper administration of Government' Moreover, offences that have been contained in the Crimes Act 1914, which for the most part are offences against the Commonwealth government or government services, have for a long time been given extended reach. (See section 3A of the Crimes Act 1914. )

78. The offences under consideration are all ones where the victim will be, by definition, not merely an Australian victim but an Australian government entity. The offences exist to protect Australian government property, other Australian government interests or both (protection of a 'Commonwealth entity'). It is inevitable that, in the course of performance of necessary government functions, that property and those interests will be exposed to criminal activity outside Australia. Action by way of Commonwealth prosecution will generally be justifiable to protect national interests, and will sometimes be necessary, for example if no foreign authority is able and willing to take such action. Conversely, if a foreign authority is able and willing to take such action there will be no need for the Commonwealth to do so.

79. It should be noted that in Australian law and practice the creation of an offence does not signify an intention that all conduct capable, legally, of prosecution will be prosecuted. At the Commonwealth level prosecutions by the Director of Public Prosecutions are subject to discretions guided by the Director's published policy, and all prosecutions are subject to the over-riding powers of the Director and the Attorney-General.

80. Moreover, proposed section 16.1 requires the Attorney-General's consent where a prosecution is to be brought in reliance on Part 2.7 and the conduct constituting the alleged offence occurs wholly in a foreign country and the person charged or to be charged is not of Australian nationality. It is intended that, in deciding in his discretion whether to give consent, the Attorney-General will have regard to considerations of international law, comity and practice, any prosecution action that is being or might be taken in another country, and other public interest considerations bearing on the particular case.

Proposed section 131.2 - Special rules about the meaning of dishonesty

81. As mentioned above, there are a number of interpretative rules that go with the offence of theft. The first concerns the meaning of dishonesty. The general meaning is defined at proposed section 130.3.

82. The first of the special rules for theft are that a person's appropriation of property belonging to another is taken not to be dishonest if done in the belief the other cannot be discovered (proposed subsection 131.2(1)). This is a longstanding rule that is operates well in relation to abandoned property. If it did not exist others would not even be able to remove junk dumped near their land. There is no reason why the rule should not operate in relation to property owned or co-owned by the Commonwealth. However, subsection 131.2(2) provides an exception to the rule in relation to trustees or personal representatives. There should be no incentive for them to benefit from losing the person to whom the property belongs. The rule is the same as that provided in subsections 15.2(1) and (2) of the Model Criminal Code.

83. Another special rule is that a person's appropriation of property belonging to another may be dishonest even if the person or another is willing to pay for the property (proposed subsection 131.2(3)). To do otherwise would undermine the offence.

84. It should also be noted that there is a general claim of right defence at secton 9.5 of the Criminal Code. The defence will apply in relation to any property offence if at the time of the conduct constituting the offence the person is under a mistaken belief about a proprietary or possessory right and the existence of that right would have negated any fault element.

Proposed section 131.3 - Appropriation of property

85. This is a critical interpretative provision for the theft offence and closely follows section 15.3 of the Model Criminal Code. The UK Theft Act (which is the inspiration for the Model Criminal Code theft provisions) has a definition of appropriation which treats "any assumption of the rights of the owner" as an appropriation. By contrast, the common law equivalent of this element of theft required a taking and carrying away without the consent of the owner. The Theft Act term is more abstract on its face than the common law. It is possible to assume the rights of an owner in relation to goods without touching them: to point to someone else's car and offer to sell it would amount to an appropriation. The true breadth of the term has been the subject of considerable controversy.

86. The first view is that "appropriates" is the equivalent of the old term "convert" and has as its natural meaning a one-sided transaction which is adverse to the owner. This was the view expressed by the House of Lords in Morris in 1984
[1984] AC 320 . But Morris conflicted with the second view expressed in 1972 in another House of Lords case, Lawrence
[1972] AC 626 . The majority held that an appropriation could occur even if the owner consented. In 1992 in Gomez
[1992] 3 WLR 1067 , the majority of the House of Lords resolved the conflict in favour of the second view. It overturned the Morris view and held that appropriation is neutral and not to be read as importing the common law concept of "without the consent of the owner" ( a phrase which the majority found to have been deliberately omitted from the new definition of theft). There was a powerful dissent from Lord Lowry. Gomez has been subjected to strong criticism. For example, the leading commentator on the law of theft, (Smith, The Law of Theft (7th ed, 1993), paragraphs 2-08 and 2-12, pages 12-13) has commented:

"The majority gave scant consideration to the merits of the two views [ie Lawrence versus Morris ]. The proposition in Lawrence was ratio decidendi, that in Morris obiter dictum, and that was good enough for the majority. They thought it would serve no useful purpose to seek to construe the Act by reference to the CLRC Report. Lord Lowry who did refer to the Report, demonstrated convincingly in his dissenting speech that it was the dictum in Morris which truly represented the intention of the CLRC and therefore that of the Parliament which enacted the CLRC's proposals with no material change. . . Sadly only Lord Lowry was prepared to give these words their ordinary meaning and the decision of the majority excludes it."

87. The consequences of the distinction can be demonstrated in an example based on Lawrence. Say a taxi driver deceives a foreign traveller by telling her that the fare for a journey is $50.00. In fact it is $20. The customer hands the driver her purse and allows the driver to take whatever money is necessary. The driver takes $50.00. On the neutral view of appropriation, the driver could be convicted of either theft (despite the fact that the victim consented to the defendant taking the money) or obtaining property by deception. On the "adverse interference" approach, the defendant could only be convicted of obtaining property by deception: because of the victim's consent, the taking would not amount to an appropriation.

88. Those developing the Model Criminal Code faced a choice between these views. The choice has conceptual and practical consequences. First, if virtually any dealing with goods counts as an appropriation, the more work dishonesty has to do to distinguish theft from innocent transactions. Although considerable reliance is placed on the concept of dishonesty - especially for the difficult cases - it is obviously preferable to rely on more clear-cut criteria where possible. Second, there was strong support in consultation for retaining the distinction between theft and fraud. The effect of Gomez is to collapse the distinction between theft and fraud because all obtaining by deception cases will also be theft. This is because under Gomez, consent is not relevant to appropriation. The Model Criminal Code Officers Committee concluded that this strays too far from the central and commonly-understood meaning of theft as involving non-consensual takings. So far as possible, the law should reflect common understandings of offences as basic as theft and fraud.

89. The practical consequences of maintaining the distinction between theft and fraud in cases like Lawrence and Gomez are not great whichever way it is resolved. The penalty for both offences is the same. If all deception cases are charged as obtaining by deception, there will be no difficulty in obtaining a conviction. The difficulty in Lawrence and Gomez arose because the prosecution made a mistake and charged the defendant with theft instead of fraud and there were no provisions for obtaining alternative verdicts. If the defendant had been charged with obtaining by deception there would have been no difficulty in obtaining a conviction. Under proposed subsection 131.3(1), if the defendant were charged with theft in a case where the property had been obtained by deception, the result would be not guilty of theft because the victim consented to the appropriation. This consent is not vitiated by fraud. This difficulty is cured by making obtaining by deception an alternative verdict to theft. The consultation on the Model Criminal Code favoured this solution but suggested that it should also work in reverse so that if fraud was wrongly charged it would also be possible to convict of theft (as in proposed subsections 134.1(15) and (16)).

90. The issue of consent in cases where there are multiple owners is also important. Proposed subsection 131.3(1) provides that anyone to whom the property belongs consents to having their rights assumed ("...without the consent of a person to whom it belongs..."). Thus in cases where an object belongs to a number of people - as can be the case under the proposed provisions - if the consent of any one of them is missing at the time of the assumption of their rights, an appropriation may occur. That does not mean that the defendant is automatically guilty of theft. For example, if the defendant did not know of the other owner's interest, then the defendant lacks the fault element for an appropriation (knowledge about the lack of consent) and is not dishonest. On the other hand, a defendant who knows full well of the other owner's interest and dishonestly proceeds to assume those rights cannot rely on the consent of another co-owner to deny the appropriation. Assuming the presence of the other elements, such a defendant will be guilty of theft. So where one co-owner of a painting sells it to the defendant, and the defendant knows that the other co-owner does not and would not consent to the sale, the defendant cannot rely on the consent of the one co-owner to deny appropriation.

91. Subsection 131.1(1) also addresses the nature of the rights of the owner which are protected - ownership, possession or control of property. It is important that it should not be too vague.

92. Proposed subsection 131.1(2) deals with bona fide purchasers and recipients. It covers cases where a person innocently acquires property (eg goods) and subsequently discovers that the person from whom he or she received the goods did not have the right to dispose of them, usually because the goods were stolen. For example, a person sells a car to the defendant who was acting in good faith. Later the defendant finds out that the first person had stolen the car, but the defendant decides to keep it. Despite the fact of payment, this is either dishonest or liable to be regarded as dishonest and the other elements of the offence of theft are present. The defendant could not rely on the consent of the thief because he or she does not have the consent of the owner as required by proposed subsections 131.1(1) and 131.10(1). Proposed subsection 131.1(2) prevents this from being theft by providing it is not an appropriation. This also closely follows the relevant provisions of the Model Criminal Code (subsections 15.3(2)).

93. Under the UK Theft Act, where the defendant was given the car, the analogous section to subsection 131.1(2) does not operate because it only protects transactions which were "for value". Both are situations where the defendant was honest at the point he or she acquired the goods and the culpability derives from failure to return the goods. As in other situations where the defendant discovers that goods belong to another subsequent to acquiring them (where there is a mistake), the fact that the defendant did not initiate a dishonest transaction distinguishes him or her from the thief or the fraudster. Although the fact that the defendant paid for the goods in the one case but not the other makes some difference to the assessment, payment is not enough of a difference to warrant conviction for theft in one case but not the other. They are also substantially different from the case of a person in possession of goods on some basis of trust (eg an employee or a bailee) who makes off with the goods. In both these cases, the defendant initially believed he or she had become the owner of the goods. It was concluded that as a matter of consistency, the section should be widened slightly to include the bona fide recipient of a gift.

94. However, the proposed exemption is limited. If the defendant sold the car to another, he or she would be guilty of obtaining the purchase price by deception (see the proposed fraud offences at sections 134.1 and 134.2. This is because the defendant does not obtain ownership of the car and the real owner could claim it back from the defendant or anyone to whom the defendant sold it.

Proposed section 131.4 - Theft of land or things forming part of land

95. Proposed section 131.4 is much the same as section 15.4 of the Model Criminal Code and follows the traditional approach on the question of theft of land. The one difference is that the proposed provision does not refer directly to tenancy but it is covered by subparagraph 131.4(1)(b)(ii) which is more general but reflects the same principle. Generally, under the existing law it is not possible to commit theft in relation to land or things forming part of the land and severed from it by the person.

The exceptions are where:

(a)

a trustee appropriates land by dealing with it in breach of trust;

(b)

a person who is not in possession of the land severs something forming part of it;

(c)

a tenant steals a fixture.

96. These restrictions appear to be based on the concept of theft as involving things that can be taken and carried away. Land can be the subject of the separate fraud offence and that is generally the more appropriate way of dealing with dishonesty in relation to land. The Model Criminal Code Officers Committee canvassed in consultation as to whether land should be the subject of theft, for example where a person moves a fence in order to appropriate another person's land. While many favoured extending the provisions to include land, to do so may trespass on areas better dealt with by the civil land laws. Indeed if the defendant adversely possessed the land for 15 years, he or she would become its owner. It would seem inconsistent if the defendant could also be guilty of theft for the same conduct. There are no demonstrated problems justifying the proposed extension. The Committee concluded that although including land may appeal to logic, there were uncertainties and the benefits were hard to identify.

Proposed section 131.5 - Trust property

97. Proposed section 131.5 is the equivalent of subsection 15.5(1) of the Model Criminal Code. It has been placed in a separate section to improve reader awareness of the provision.

98. Proposed subsection 131.5(1) provides that property also belongs to people who have any proprietary right or interest (not being an equitable interest arising either from an agreement to transfer or grant an interest, or from a constructive trust). One example of the effect of this is that a trustee (who is the legal owner of the trust property) who dishonestly appropriates trust property will be guilty of theft from the beneficiaries (who do not own the trust property but do have an equitable proprietary interest in the trust property). Where there is no specific beneficiary (eg in the case of a trust for general public purposes), proposed subsection 131.5(1) makes this theft.

99. However, equitable interests arising from agreements to transfer or grant an interest (eg to sell land or shares) are excluded because of the definitions of 'property' and what is meant by 'property belonging to a person' (proposed sections 130.1 and 130.2). These equitable interests arise by the operation of legal rules but only in relation to contracts which are specifically enforceable. For example, the defendant agrees to sell a valuable painting to the victim. Before the sale goes ahead and the painting is transferred, the defendant gets a better offer and sells it to X. In general, contracts agreeing to sell goods are not specifically enforceable but they are when the goods have special qualities. Hence, a contract like the one in the example would be specifically enforceable and the victim would have an equitable interest in the painting. However, the framers of the UK Theft Act judged that this conduct should not be theft and that civil remedies were sufficient. The qualification in proposed section 131.2 means that this is not property belonging to another and therefore not theft.

100. Similar considerations arise in relation to constructive trusts which are also excluded by proposed section 131.2. In an English case, the proprietor of a tied pub operated it on the basis that he would only sell the brewery's beer. In fact he also sold some of his own home brew. He was charged with theft on the basis of an argument that he was a constructive trustee of the proceeds of the sale of the home brew and that the brewery had an equitable proprietary interest in the proceeds. The Court of Appeal found that no constructive trust arose in these circumstances and, in any event, rejected the notion that a person should be guilty of theft based on the operation of such intricate legal concepts which strayed so far from ordinary conceptions of theft. The same point applies to constructive trusts generally, such as have been found to arise in the case of mistaken overpayment. Hence, proposed section 131.2 extends the qualification contained in the UK Theft Act so that equitable interests arising from constructive trusts do not fall within the definition of property belonging to another. Constructive trusts - based on equitable notions of unconscionability - may be appropriate for recovery in civil actions, but they stray too far from the common conception of theft and the much more culpable sort of dishonesty involved in theft to form part of the definition of the offence of theft. Their ambit is uncertain and likely to expand. To attach the boundaries of theft to such an uncertain concept would offend the important principle that the criminal law should be knowable in advance. It would also strain the common understanding of what is meant by theft.

101. Proposed subsection 131.5(2) makes it clear that an intention to defeat a trust is an intention to permanently deprive for the purposes of the offence. This also follows subsection 15.5(1) of the Model Criminal Code.

Proposed section 131.6 - Obligation to deal with property in a particular way

102. Proposed section 131.6 follows subsection 15.5(2) of the Model Criminal Code. The general definition of property belonging to another contained in proposed section 130.2 is supplemented for the purposes of the offence of theft by proposed section 131.6. So, for example, if the defendant receives money from another person and is under an obligation (this must be a legal obligation) to retain and deal with that money in a particular way but the defendant deals with it another way, the money is said to belong to the victim. The cases have held that the obligation must be legal rather than moral. This is made explicit in proposed section 131.6. The application of this provision will depend very much on the facts of the transaction. The most difficult cases involve cash deposits. The section only applies if the particular cash is to be used, for example for the purchase of tickets. If the cash is to be mixed with the general cash of the organisation and there is a liability to provide tickets or a refund at a later time, then the cash ceases to belong to another. There is a debt to the depositor and the situation is dealt with on the normal principles relating to debtors and creditors.

Proposed section 131.7 - Property obtained because of fundamental mistake

103. Proposed section 131.7 follows subsections 15.5(3) and (4) of the Model Criminal Code. It also includes an additional provision that makes it clear money includes cheques, negotiable instruments and electronic funds transfers.

104. Proposed section 131.7 deals with the problem when the victim makes a fundamental mistake and gives the defendant some property; the defendant does nothing to induce the mistake. Fundamental mistakes are mistakes about the identity of the defendant, the essential nature of the property, or the quantity of the goods (but not the amount of money). The problem is whether the victim's mistake is so fundamental that it vitiates the consent to the defendant appropriating the property and the victim's intention to transfer ownership of the property to the defendant. Other sorts of non-fundamental mistakes (eg the year of manufacture of a car) do not give rise to this problem. These mistakes do not vitiate consent or intent to pass ownership and the defendant does not incur any criminal liability. However, in the case of fundamental mistakes, if the defendant decides to keep the goods the question is whether he or she should be guilty of theft.

105. There are two situations relating to fundamental mistakes: (i) where the defendant knows of the mistake at the time ("T1") of transfer and decides to keep the goods; and (ii) where the defendant does not know of the mistake at T1 but discovers it later ("T2") and then decides to keep the goods. At common law in England, the defendant was guilty of theft in both T1 and T2 situations ( Middleton (1873) LR 2 CCR 38.

106. The more difficult cases arise when the defendant only finds out about the mistake later at T2 and then the defendant decides to keep the property. This came up in the case of Ashwell (1885)
16 QBD 190 . The prevailing view was that the taking did not occur at T1 when a valuable coin was handed over. Their view was that the appropriation did not occur until T2, when the defendant discovered what the coin really was, namely a sovereign. At T2, on the authority of Middleton , the mistake as to the nature of the subject matter meant that there was no consent to the taking and that ownership had not passed (ie it was still property belonging to another). The opposing view was as follows. The taking occurred at T1, was with consent and occurred at a time when the defendant lacked fraudulent intent. At T2, when the intent became fraudulent, there was no taking without consent and ownership of the property had passed to the defendant.

107. In Australia, the majority judges in the High Court case of Ilich (1987)
162 CLR 110 expressed their disapproval of the reasoning in Middleton and Ashwell . Ilich was a decision on the WA Code but in the course of the decision, the majority indicated its agreement with the reasoning in Potisk (1973)
6 SASR 389 (a SA Full Court decision on common law larceny which had also rejected the English cases). In Ilich , the High Court ruled that cases where property passes because of a non-fundamental mistake are not theft under the Codes because at the time of the conversion (ie T2) the property belongs to the defendant. The reasoning of the High Court was that at T1, the owner knew the identity of the payee and the nature of what he was transferring, namely money. The normal presumption with money is that ownership passes with possession. Consent to the taking is not required under the WA Code, so that issue did not arise. At T2, the time of the "conversion", ownership of the $500 in question had passed to Ilich and therefore it was not property belonging to another.

108. Under the UK Theft Act, fundamental and non-fundamental mistakes can count as theft, even at T2. The Theft Act approach in this type of case is to say that the appropriation occurs at the time the defendant dishonestly decides to keep the money. The question is whether the property belongs to another at this point. There are a variety of routes to the conclusion that it does. This is because the UK Theft Act has such a wide definition of property belonging to another: it includes any case where the victim has a proprietary right or interest or is under a legal obligation to return the property.

109. First, in cases of fundamental mistakes as to the identity of the transferee, the nature of the subject matter or the quantity of the goods, the intent to pass ownership is vitiated by the mistake and hence the property still belongs to the victim. If the defendant is aware of the mistake at either T1 or T2 and dishonestly decides to appropriate the property, he or she will be guilty of theft.

110. Second, English cases have held that where certain sorts of mistakes are made, although legal ownership of the property passes, there is a constructive trust and the transferor retains an equitable proprietary interest in the property transferred. Thus, the property still belongs to another under s5(1) of the UK Theft Act because the person has a "proprietary right or interest" in it. The type of mistake here is not so fundamental as to prevent ownership passing but must be serious enough that it would be unconscionable for the defendant to retain the property; hence he or she becomes a constructive trustee for the victim who, as beneficiary, has an equitable proprietary interest in the property. Exactly when this is so will vary according to the essentials of the transaction, but it is wider than mistakes as to the identity of the transferee or the nature of the subject matter. In England, the Court of Appeal has cast doubt on the notion of using constructive trusts as a basis for the law of theft. For the reasons outlined above, proposed section 131.2 specifically excludes constructive trusts from the ambit of property belonging to another and hence from the ambit of theft. Hence, this route to a conviction for theft is not open under the proposed provisions.

111. The third category of cases produces the most difficult problem. These are cases of non-fundamental mistake where the ownership does pass - such as in a case where a $200 debt is mistakenly paid twice. Under the Theft Act, this will be theft if the defendant is under a legal obligation to repay the money. This is because s5(4) of the UK Theft Act deems the property to belong to the victim if the defendant receives the money by another's mistake and is under a legal obligation to make restoration in whole or in part of the property or its proceeds.

112. Whether the defendant is under such an obligation is a matter of civil law and may include, among other things, decisions about the law of quasi-contract and whether a contract is void or voidable. If the contract is voidable, it may be argued that the defendant is not under a legal obligation to return the property until the contract is avoided. In many of these cases, the intricacies of the civil law are such that the defendant may be able to argue that he or she is not dishonest because he or she did not know that keeping the property was dishonest. However, defendants who take advantage of other's mistakes or who make secret profits may be regarded as dishonest. But that does not necessarily mean that such people are guilty of theft. Dishonesty is an important element of the law of theft and fraud but it is not the only element. Leaving such cases to be determined solely by reference to the concept of dishonesty avoids the basic question about whether the intricacies of the civil law appropriately mark out the boundary of the physical elements of theft.

113. Proposed section 131.7 is therefore a rejection of the uncertain ambit of constructive trusts for the purpose of extending the boundaries of when property belongs to another for the purposes of the law of theft.

114. There are strong arguments that the mistake cases - particularly the T2 cases - should not be treated as theft but as matters involving civil liability. The victim has brought about his or her own misfortune and it is unduly harsh to cast the onus of rectifying the situation onto the defendant on pain of committing theft. Thus, while the victim in Ilich is certainly entitled to sue to recover his money, he should not be able to have the other person arrested and prosecuted for theft, any more than any other creditor could if the debtor spent money on a holiday rather than paying the creditor's account. In some cases these overpayments will arise because the victim has chosen to set up business arrangements which are prone to error because this is cheaper than setting up a less error-prone system. Although the defendant may be under an obligation to return the property, the culpability is of a much less serious sort than theft or fraud where the defendant initiates a dishonest transaction. In these cases, the defendant has had temptation thrust upon him or her. To make a defendant like Ilich , or the recipient of a social security overpayment, guilty of theft in these T2 cases is to cast a duty to act in relation to innocently acquired property on pain of committing theft.

115. The potential width of this sort of liability is also of concern. In theory, it turns civil obligations into criminal ones where hitherto that has not been the case. It may be that all sorts of business transactions involving mistakes would now carry potential criminal liability. The 1995 Model Criminal Code report mentions the following examples of cases which now would be brought within the law of theft. (1) A purchaser pays a vendor for goods; neither realised that the purchaser already owned them. The vendor refuses to repay the money. (2) An insurer pays money to an insured for goods that both believed to have been destroyed by fire. Subsequently the defendant finds the goods but does not tell the victim. (3) An employer pays a manager a lump sum to terminate her contract. It turns out that breaches of the contract would have entitled the employer to terminate the contract without payment. Neither knew of the breaches at the time of the contract. They subsequently discover this but the employee refuses to repay. The House of Lords and the Court of Appeal in England differed on whether the defendant was under an obligation to repay in the employment case. In all these cases (save the last), the defendant would be civilly liable to give back the money or goods mistakenly given to him or her. The question is whether it is justifiable to impose criminal liability for the offence of theft as well.

116. While the consultation on the Model Criminal Code revealed that opinion was divided on this issue, for the reasons advanced in relation to constructive trusts, it has been concluded that the civil law distinctions - while appropriate to the context of determining civil recovery - are too obscure on the whole to define the boundaries of an offence as serious as theft. It is therefore proposed that it is appropriate to limit the use of the law of mistake to the existing Australian law as stated by the High Court in Ilich , subject to the qualifications outlined below. This involves the following rules:

(a)

Mistakes as to the nature of the subject matter or the identity of the transferee will continue to negate the intent to confer ownership (subsections 131.7(1) and (3)). If the defendant knows of this sort of mistake either at T1 or T2, the property still belongs to the victim and the victim will be deemed not to have consented to its appropriation and the defendant will commit theft. (Mistakes as to quantity are not included on the basis that they are not sufficiently fundamental: the person intends to hand over goods of that sort and there is no mistake about the identity of the transferee).

(b)

Other mistakes do not vitiate either the consent to the appropriation or the intention to pass ownership. The defendant does not commit theft if he or she knows of the mistake either at T1 or T2 because the property no longer belongs to another.

(c)

Mistaken overpayments by cash, cheque or direct credit are a special case (subsections 131.7(1) and (3)(b)). Where the defendant is aware of the mistake at the point of transfer(T1), the absence of what may be termed the inertia factor makes this case sufficiently like the finding cases to warrant the offence of theft. This raises a question about when the relevant time is. In a supermarket if the defendant immediately knows the overpayment at the register, this is clearly a T1 situation. On the other hand, in a case like Ilich , where the defendant does not become aware of the mistake until some time after transfer, it is clearly a T2 situation. the defendant will not be guilty of theft but the victim would be able to recover the money civilly. Cases where the defendant receives a cheque in the mail are more difficult. In accordance with the reasoning of Kriewaldt J in Wauchope that this would not be theft because the defendant did not become aware of the mistake until some time after the drawer intended to convey ownership (ie it is a T2 situation). Mistaken direct credits to bank accounts are similar to cheques. If a bank customer saw the teller mistakenly credit his or her account with $2000 rather than $200, and said nothing, that would be theft. In practice, direct credits will overwhelmingly be T2 cases because the defendant will only find out about the mistake some time after the transfer. If there was a fundamental mistake (eg wrong account because of a mistaken identity), the defendant would be liable for theft at T2. If it was a non-fundamental mistake (eg the correct account but the wrong amount), the defendant would not be guilty of theft. The victim would have civil remedies to recover what is in effect a debt.

117. These are fair rules developed after consultation and a thorough review of the relevant case law by the Model Criminal Code Officers Committee.

Proposed section 131.8 - Property of a corporation sole

118. Proposed section 131.8 follows subsection 15.5(5) of the Model Criminal Code and preserves ownership for a corporation sole where there is a vacancy in the corporation.

Proposed section 131.9 - Property belonging to two or more persons

119. Proposed section 131.9 follows subsection 15.5(6) of the Model Criminal Code. It provides that the person to whom property belongs includes all the owners.

Proposed section 131.10 - Intention to permanently deprive

120. The proposed theft offence (section 131.1) retains the longstanding common law element of intention to permanently deprive. Proposed section 131.10 provides guidance as to the meaning of intention to permanently deprive and is based on section 15.6 of the Model Criminal Code. There was strong support for the retention of this element of the offence in consultation in recognition of the significant penalty for theft.

121. Proposed subsection 131.10(1) expands the concept of permanent deprivation by including an intention to treat the property as one's own to dispose of regardless of the rights of the other person. This is a helpful crystallisation of the common law position and judicial interpretations seem to favour that view. "Disposals" and "borrowings" will need to have a quality of permanence about them before the section can be satisfied (eg the defendant melts down the victim's antique bracelet intending to give back the melted silver). Similar points apply to proposed subsection 131.10(2) relating to parting with property under conditions which the person may not be able to fulfil. This is treated as an example of disposing of property regardless of the other's rights in terms of proposed subsection 131.10(1).

Proposed section 131.11 - General deficiency

122. Proposed section 131.11 follows section 15.7 of the Model Criminal Code and replaces a similar provision at section 71A of the Crimes Act 1914. It is an evidentiary provision which allows the prosecution to prove the defendant guilty of theft even though the prosecution cannot identify the particular sums of money or property taken if the prosecution can prove a general deficiency in the victim's money or property referable to the defendant's conduct. A typical example is where the defendant is an employee and takes small amounts of money from the till over a period of time. This type of provision exists in many jurisdictions.

Proposed Division 132 - Other property offences

123. Division 132 contains the theft related offences of receiving, robbery, aggravated robbery, burglary and aggravated burglary, each of which link back to the offence of theft, or in the case of burglary other serious offences. The Division also contains the lesser offences of making off without payment going equipped for theft or other property offences, the dishonest taking and retention of property offence.

Proposed section 132.1 - Receiving

124. Proposed subsection 132.1(1) contains the elements of the offence of receiving. A person is guilty if the person dishonestly receives stolen property, knowing or believing the property to be stolen. Proposed section 132.1(2A) makes it clear that it is not necessary to prove knowledge or belief that the property belonged to a 'Commonwealth entity'. Proposed subsection 132.1(3) provides that property is stolen whether it is 'original stolen property', 'tainted property' or 'previously received property'. These terms are defined with reference to theft (proposed section 131.1) and property fraud (proposed section 134.1). The definition of 'previously received property' was inserted by a Government Amendment to make it clear that no matter how the property was received in the first place (whether by theft or fraud), subsequent receiving will also be caught by the offence.

125. The maximum penalty is the same as theft and property fraud - 10 years imprisonment. This is appropriate since it involves much the same type of activity.

126. The proposed offence is based on section 16.8 of the Model Criminal Code, although it is drafted slightly differently. Receiving property belonging to the Commonwealth is an offence under subsection 71(3) of the Crimes Act 1914. Like the existing offence of stealing Commonwealth property, the existing receiving offence has a lower penalty (7 years).

127. While both the Gibbs Committee and the Model Criminal Code Officers Committee thought there was scope for eliminating the offence of receiving and relying on theft, there was very strong support in consultation for having a separate offence of receiving. Most considered the 'receiving' label corresponded with community understanding of a form of criminality which is different from theft. It is important that where it is appropriate the language of the Criminal Code should reflect community understanding.

128. Apart from that reason, receiving is also relevant to the property fraud offence (proposed section 134.1) where the property is obtained by deception. Unlike fraud, theft does not cover property appropriated with the consent of the owner. There will also be situations where there was uncertainty about whether the property had been stolen or obtained by deception - but certainty that one or the other occurred. There are good reasons for having an offence of receiving.

129. Proposed section 132.1 is a much less complex form of the offence than that contained in the UK Theft Act. The Theft Act attempts to graft a variety of complicity provisions into the basic receiving offence. It produces a complex and unwieldy offence with overlaps into the law of complicity. Section 132.1 confines itself to receiving. The normal rules of complicity and accessory after the fact apply to those who assist a thief or a receiver.

130. The definition of 'original stolen property' in subsection 132.1(5) covers property, or part of property, appropriated in the course of theft and in the possession and custody of the person who appropriated it. Alternatively property in the possession of the person who obtained it in the course of property fraud (proposed section 134.1). This is the equivalent of paragraphs 16.8(2)(a) and (b) of the Model Criminal Code.

131. Proposed subsection 132.1(6) makes it clear that after the property is restored it ceases to be original stolen property for the purposes of the proposed offence. The same is also the case where the person who previously had it ceases to have a right to its restitution. This follows similar provisions in Victoria and the ACT. There is a public interest in encouraging people to return stolen property or to regularise ownership where there is a dispute over the property. This is similar to subsection 16.8(3) of the Model Criminal Code.

132. Proposed subsection 132.1(7) deals with 'tainted property'. The definition ensures that the offence of receiving still attaches to the receiver where stolen property is sold or exchanged. The 'proceeds' of the transaction is defined as 'tainted property' if the receiver still has possession or custody of them whether it derived from theft or property fraud. The aim here is not to make receiving an offence that can continue down a chain of people. To do so would make the offence too open ended. Although the drafting is different, this approach follows subsection 16.8(2)(c) of the Model Criminal Code.

133. Proposed subsection 132.1(8) extends the offence to make it clear that it covers the receipt of funds credited into an account. This additional provision is as a consequence of changes to the property fraud offence (proposed subsections 134.1(9) and (10)) which clarify the position with respect to money transfers. The money transfer provisions will be dealt with in more detail in the notes on proposed section 134.1. However it should be noted that paragraph 125(8)(b) is included to provide for an equivalent to subsection 132.1(6) in the context of money transfers.

134. Proposed subsections 132.1(9) and (10) includes alternative verdicts provisions which is quite different from subsection 16.8(4) of the Model Criminal Code. It enables the trier of fact (a court or jury) to conclude the person is guilty of theft or property fraud rather than receiving, or vice versa. There was concern that the subsection 16.8(4) could lead to an uncomfortable result because it does not require the jury to agree on which charge should prevail - if they believe the person is guilty of one of the offences but cannot agree on which, then the person is to be convicted of theft. This means that if the trier of fact is a jury and half of the members think the person has committed theft, the other half receiving, it suggests there is an unhealthy level of uncertainty. There really should be agreement as to whether the person committed one offence or the other. If the legislature agrees with this change, the Standing Committee of Attorneys-General can be asked to consider amending the Model Criminal Code to reflect proposed subsections 132.1(9) and (10).

135. Proposed subsection 132.1(11) is a transitional provision designed to ensure that property illegally appropriated or obtained contrary to Commonwealth law before the commencement of the legislation will be caught by the proposed offence. The amendment recognises that the existing offences vary from the proposed offences and is therefore carefully drafted to ensure there is no retrospectivity.

Proposed section 132.2 - Robbery

136. Proposed section 132.2 is relatively straight forward and follows section 16.1 of the Model Criminal Code. A person is guilty of the offence of robbery if the person commits theft (which is of course theft against a Commonwealth entity) and proximate to the theft the person uses or threatens to use force on another person with the intent to commit the theft or to escape. Proposed subsection 132.2(3) was inserted by a Government Amendment to make it clear that it will not be necessary for the prosecution to prove the person knew that the property belonged to a 'Commonwealth entity'.

137. The proposed maximum penalty is 15 years imprisonment. This is higher than the 12 1/2 year penalty proposed in the Model Criminal Code but reflects growing community concern about the prevalence of this type of crime and the fact it involves violent conduct.

138. There is currently no Commonwealth robbery offence. If there is a robbery involving the Commonwealth, it relies on State or Territory law. The Gibbs Committee favoured retaining Commonwealth theft and fraud offences because they are of "direct and real concern to the Commonwealth", noting that while the AFP has authority to investigate State and Territory offences, the prosecution decision and the priority given to these matters would remain with the State and Territory authorities. The aggravated offences like robbery and burglary should be of concern to the Commonwealth for the same reasons. Although robbery and burglary are not commonly committed against the Commonwealth entities, the same can be said in relation to many other offences that are covered by Commonwealth legislation.

139. To have the aggravated offences and the general offences under the law of different jurisdictions would be untidy and fragment what is an integrated system of offences. Robbery is intimately connected to the scope of theft - it is theft involving the use of force or a threat to use force. It would be clumsy and confusing to charge a person for a Commonwealth theft offence which has different concepts from an accompanying charge of robbery based on a completely different State theft offence. While it is possible to overcome some of the problems with this by providing for the concurrent operation of Commonwealth and State offences, it is desirable that the Commonwealth provide for its own complete scheme of offences. When the prosecution uses the Commonwealth law it will have a complete set of offences. There will be no further need for mixing the offences.

140. For the convenience of State and Territory authorities, proposed section 261.1 provides it is not intended to exclude or limit the operation of State or Territory laws. This will overcome potential operational difficulties in some circumstances (such as where the robbery is part of a series involving non-Commonwealth premises) and will be necessary to negative any inference that the Commonwealth offences are exhaustive and exclusive ( Queen v Loewenthal; ex parte Blacklock (1974)
131 CLR 338 ). This follows the approach at section 75 of the Trade Practices Act 1974 which was upheld in the High Court in The Queen v Credit Tribunal; ex parte General Motors Acceptance Corporation (1976)
137 CLR 545 at 563 and section 76F of the Crimes Act 1914 (which achieves a similar outcome in relation to computer offences).

Proposed section 132.3 - Aggravated robbery

141. Proposed section 132.3 contains a separate more serious offence where a robbery is committed in the company of others or with an offensive weapon. This is similar to section 16.2 of the Model Criminal Code and has the same maximum penalty of 20 years imprisonment. Proposed subsection 132.3(2A) was inserted by a Government Amendment to make it clear that it will not be necessary for the prosecution to prove the person knew that the property belonged to a 'Commonwealth entity'.

142. Proposed subsection 132.3(3) provides for a definition of 'offensive weapon'. This term was not defined in the Model Criminal Code. It has been defined here to take into account the particularly frightening practice of threatening people with syringes.

Proposed section 132.4 - Burglary

143. Proposed section 132.4 contains the burglary offences. There is more to this provision than section 16.3 of the Model Criminal Code because of the peculiarities of Commonwealth jurisdiction. However, the substance of the offence is much the same.

144. The policy of the proposed amendments was considered by the House of Representatives Standing Committee on Constitutional and Legal Affairs and the subject of a recommendation in its 24 June 2000 advisory report (recommendation 5, paragraphs 3.22 - 3.26 at pages 17 and 18). The Standing Committee did not agree with the approach in the version of proposed subsection 132.4(1) introduced in the House of Representatives and observed that "People who would otherwise be guilty of burglary would escape conviction merely because they were unaware or did not care whether the property they intended to steal belonged to the Commonwealth or not."

145. However, the Standing Committee recommended the deletion of proposed subsection 132.4(11) because it disapplied a provision which removes the need to prove knowledge of the 'Commonwealth' connection in relation to the 'theft' element of the robbery offence.

146. A more comprehensive and clearer way of achieving the preferred approach of the Standing Committee was to redraft proposed subsection 132.4(1) to make it clear that where someone breaks in to steal a particular item of property, it is not necessary to prove the person knew that the property concerned belonged to a Commonwealth entity. Proposed subsections 132.4(2A), (3A) and (6A) were inserted by Government Amendments to deal with other problems concerning proof of knowledge of jurisdictional elements of the offence. These are:

(a)

whether the relevant harm or damage offences were Commonwealth, State or Territory offences;

(b)

whether the offence involved had a penalty of imprisonment for life or 5 or more years imprisonment.

147. The maximum penalty of 13 years imprisonment is less than robbery because the basic offence does not involve violent conduct, but it is more than theft because it involves trespassing in a building.

148. Subsection 132.4(3) provides a person is guilty of the offence of burglary if he or she enters, or remains in a building as a trespasser with intent to commit an offence in the building which is against the Commonwealth law and involves causing harm to another or damage to property. The offence must be one which is punishable by 5 or more years imprisonment .

149. Subsection 132.4(6) provides for a similar offence with the same penalty, but one where it is a building owned or occupied by a Commonwealth entity and the relevant offence is against the law of the Commonwealth, State or Territory. In this case subsection 132.4(7) provides it is not necessary to prove the person knew the offence was punishable by imprisonment for 5 or more years or due to subsection 132.4(8) that the building is owned or occupied by the Commonwealth. Many people do not have an appreciation of the differences between Commonwealth, State and Territory functions and legislative responsibilities.

150. Subsection 132.4(10) follows subsection 16.3(2) by providing that a person is not a trespasser just because the person is permitted to enter or remain in the building for a purpose that is not the persons intended purpose or because of deception. In those circumstances it would only be appropriate to charge the person with theft. Burglary is all about obtaining entry without permission. The person would of course be a trespasser if he or she gained entry for a specific period and then stayed on longer. A theft in those circumstances would be burglary.

151. Finally, proposed subsection 132.4(12) defines building to include part of a building, a mobile home or caravan or other structures adapted for residential purposes. This closely follows subsection 16.3(3) of the Model Criminal Code and is appropriate in the Commonwealth context. Commonwealth entities do have mobile and fixed residential accommodation for staff which requires the protection provided for by this Bill.

Proposed section 132.5 - Aggravated burglary

152. Proposed section 132.5 contains a separate more serious offence where a burglary is committed in the company of others or with an offensive weapon. This is similar to section 16.4 of the Model Criminal Code but has a slightly higher maximum penalty of 17 years imprisonment (rather than 15 years). The penalty is less than aggravated robbery (20 years) as it can be committed in the absence of other people, while robbery involves using or threatening force. If that occurs, the charge should be aggravated robbery. Proposed subsection 132.5(3) provides it is not necessary to prove the person knew that the property concerned belonged to a Commonwealth entity, subsection 132.5(4) that the offence involved was against a Commonwealth law and subsection 132.5(5) that the offence was punishable by imprisonment for 5 or more years (few people would know such details).

153. Proposed subsection 132.5(6) provides for a definition of 'offensive weapon'. This term was not defined in the Model Criminal Code. It has been defined here to take into account the particularly frightening practice of threatening people with syringes.

Proposed section 132.6 - Making off without payment

154. The offence in proposed section 132.6 is necessary where ownership of property passes to the defendant before he or she decides to dishonestly appropriate it (eg filling up a car with petrol and deciding to leave without paying). The defendant has not committed theft, as the dishonest intention was not formed until after the defendant has taken the property and ownership has passed. There is also no deception because the defendant merely leaves without paying and so the obtaining property or financial advantage by deception offences do not apply either. The offence also applies to services. The offences is based on section 16.6 of the Model Criminal Code. It has a place in Commonwealth law because Commonwealth entities now often have shop-front agencies which sell valuable items.

155. As with the UK and ACT, the penalty for making off is substantially lower than theft (2 years imprisonment) in recognition of the fact that it does not contain all the elements of theft and is less culpable conduct.

Proposed section 132.7 - Going equipped for theft or a property offence

156. Proposed section 132.7 contains another lesser theft related offence which, for completeness, should accompany theft, robbery, burglary and property fraud. It is a preparatory offence which can be committed well before it can be said that an attempted theft or burglary offence has occurred. Although it has been argued that the law should be restricted to attempt, this offence has a long history and where it can be proved from the nature of the article or admissions that the defendant had the article in order to commit theft then offence will be useful. As it is a preparatory offence the maximum penalty is lower than the other theft related offences - 3 years imprisonment. The offence closely follows section 16.7 of the Model Criminal Code.

157. As with the related offence of burglary, proposed subsections 132.7(2), (3) and (4) provide it is not necessary for the prosecution to prove knowledge that the property in question belonged to a Commonwealth entity, that the offence involved was an offence against a law of the Commonwealth or that it the maximum penalty was life or 5 or more years imprisonment.

Proposed section 132.8 - Dishonest taking or retention of property

158. Proposed section 132.8 contains the final theft related offence. It is based on section 16.5 of the Model Criminal Code which deals with the dishonest taking of motor vehicles. In the Commonwealth context the problem of people taking motor vehicles is probably not as much a problem as people taking equipment, computers and other such items because of the significant number of assets possessed by Commonwealth entities and the size of their work places.

159. Under proposed section 132.8 there is no need to prove intention to permanently deprive so the maximum penalty for this offence is significantly less than theft - 2 years imprisonment. The offence will provide for a replacement of section 30 of the Crimes Act 1914 which although favoured by the Gibbs Committee, is a very broad offence which could cover very minor infringements. It is proposed at paragraphs 132.8(1)(a) and (2)(b) that the offence should only cover items of significance.

160. Of course, improper disposal or misapplication of the property would amount to theft. Theft covers any person who dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it (proposed sections 131.1(1) and 131.1(3).

Proposed section 132.9 - Geographical jurisdiction

161. For the same reasons as indicated above with theft, these offences should have category D extended geographical jurisdiction.

Proposed Part 7.3 - Fraudulent Conduct

162. Proposed Part 7.3 contains the fraud and fraud related offences. These include two fraud offences: obtaining property by deception (property fraud) and obtaining a financial advantage by deception (financial fraud); a general dishonesty offence (which has a lower penalty); conspiracy to defraud and an obtaining financial advantage offence. The Bill no longer includes an organised fraud offence (proposed section 135.3 of what was introduced on 24 November 2000). The removal of the offence was recommended by the House of Representatives Standing Committee on Legal and Constitutional Affairs. The Standing Committee concluded that the offence was unnecessary, given that there are other fraud offences (proposed sections 134.1 and 134.2) which can be used to provide for appropriate sentences and the trigger for the operation of automatic forfeiture and special restraining order provisions of the Proceeds of Crime Act 1987 can be achieved by other means, (see recommendation 2, paragraphs 3.1 - 3.6 at pages 13 and 14 of the Standing Committee's advisory report which was tabled on 26 June 2000). The related amendments to the Act are Proceeds of Crime Act 1987 are explained in the clause notes on the amendments to that Act which are found in Schedule 2.

Proposed Division 133, section 133.1 - Preliminary - definitions

163. Proposed section 133.1 contains some definitions which are exclusive to Part 7.3:

164. The definition of account is included to provide assistance with the scope of the proposed provisions in relation to money transfers which are covered by the property fraud offence (proposed subsections 134.1(9) and (10)). These will be discussed further below.

165. The definition of deception is critical to the two fraud offences (proposed sections 134.1 and 134.2). The requirement to prove 'deception' distinguishes these two serious offences (with maximum penalties of 10 years imprisonment) from the less serious offences. The definition is very similar to the one at section 17.1 of the Model Criminal Code except that it makes the fault elements with respect to the deception more explicit. The deception may be intentional or reckless. This accords with the intentions of the Model Criminal Code Officers Committee as explained in their 1995 report on this topic and the existing UK Theft Act. The definition also brings the law on fraud up to date by taking into account the deception of computers, machines and electronic devices. This aspect has been drafted a little more broadly to make the Bill less dependent on existing technology. The existing Crimes Act 1914 fraud provisions were not developed with an eye to computer technology. This is particularly important now that Government does much of its business electronically.

Proposed Division 134 - Obtaining property or a financial advantage by deception

166. Proposed Division 134 contains the two central fraud offences based on the offences at sections 17.2 and 17.3 of the Model Criminal Code.

Proposed section 134.1 - Obtaining property by deception

167. Proposed section 134.1 is the property fraud offence. This offence is separate from obtaining a financial advantage by deception offence (proposed section 134.2) because it shares concepts with the theft offence (proposed section 131.1). A person is guilty if the person, by a deception, dishonestly obtains property belonging to another with the intention of permanently depriving the other of the property. Some of these concepts have been explained in the context of the theft offence and will not be repeated again here (for example, dishonestly). The maximum penalty of 10 years imprisonment is the same as theft and the obtaining a financial advantage offence, and is consistent with existing State and Territory offences. This is appropriate as it includes similar conduct. The offence is based on section 17.2 of the Model Criminal Code.

168. There is no equivalent proposed section 134.1 in the Crimes Act 1914. The main existing offence, section 29D, has the same penalty but is an unacceptably broad in its coverage. It is proposed that section 29D be replaced by the two fraud offences for more serious conduct involving a deception, and a lesser general dishonesty offence with a lower penalty of 5 years imprisonment. This merely reflects the reality of how courts are likely to sentence under section 29D. Where deception is not proven, the sentence will invariably be lower.

169. Like the other offences, proposed subsection 134.1(2) makes it clear the prosecution does not have to prove the defendant knew he or she obtaining property from a Commonwealth entity.

170. The word "by" in the phrase, "by any deception", requires that there be a causal link between the deception and the obtaining. The fact that the defendant practised a deception will not be enough if that deception was not the cause of the obtaining. If the defendant falsely represented he or she was starving in order to obtain food from another person but, unbeknown to the defendant, that person was giving food away to anyone as part of a sales promotion, the defendant's deception would not have been the cause of obtaining the food. However, the person may be guilty of attempting the offence (under section 11.1 of the Criminal Code ).

171. A causation issue arises in cases involving credit cards where the merchant is presented with a credit card with authorisation. Apart from cases in which the merchant and the person using the card are partners in fraud, presentation of the card is always an implied representation that the person is an authorised user. Cases on the corresponding UK Theft Act provision accept that unauthorised use of a credit card is an implied deception which induces the other person to part with the goods or services. It has been objected that the deception does not induce the transaction in these cases, since the merchant is assured of payment in any event. But English courts have taken a more robust view of the law, holding that the implied deception does induce the transfer because the transaction will not proceed if the merchant knew for certain that use of the card was authorised. This has been accepted as a sufficient causal connection by English courts ( Charles
[1977] AC 177 and Lambie
[1982] AC 449 ). Australian courts can adopt the same course.

172. The definition of obtaining at proposed subsection 134.1(3) is wider than the definition of appropriation adopted in proposed section 131.3 in that it does not involve any absence of consent. The deception causes the defendant to consent to the transfer. This offence is wider than the common law offence of obtaining by false pretences which only applied to obtaining ownership. Proposed subsection 134.1(3) applies to obtaining ownership, possession or control of property. It includes obtaining for another or enabling another to obtain or retain. So where the defendant deceives the victim into giving goods to another person, the defendant is guilty. The definition also takes into account money transfers. Subsection 134.1(4) is included to make it clear that the general definition of obtaining in proposed section 130.1 does not apply. Subsection 134.1(5) makes it clear that willingness to pay is irrelevant to this offence.

173. Proposed subsection 134.1(6) provides that intention to permanently deprive is an element for this offence as it is for theft. The extended meanings of intent to permanently deprive set out proposed section 131.10 are for the convenience of readers repeated again in this offence at proposed subsections 134.1(6), (7) and (8). The requirement is met if the defendant intends to treat the property as his or her own to deal with, or keeps it in circumstances equivalent to a permanent deprivation, or parts with it on conditions he or she may not be able to comply with. An intention to return the equivalent quantity of a fungible (an interchangeable commodity) is a sufficient fault element for the offence. A fraudster who obtains money by deception with the intention of repaying an equivalent amount at a later date will be convicted of the offence so long as the court is satisfied that the money was obtained dishonestly. The intention to return an equivalent sum is no answer to the charge.

174. Proposed subsections 134.1(9) to (11) extend the offence of obtaining property by deception to cover fraudulently induced electronic money transfers. In these cases, a deception by the offender induces an electronic transfer of funds from the victim's account to an account held by the defendant or another person. The proposed provisions are intended to outflank the decision of the House of Lords in Preddy
[1996] 3 WLR 255 , which held that fraudulent inducement of an electronic money transfer did not fall within the scope of the equivalent to this offence.

175. The problem which concerned the House of Lords arises when A, a fraudster, deceives in order to induce an electronic transfer of funds from the account of B to an account held by A or a third person. Though most people speak of 'having money in the bank', the money has no tangible existence. If the account is in credit, the bank is merely a debtor and the bank customer B is a creditor who has no more than a 'chose in action' (an enforceable legal right) against the bank. In Preddy , the House of Lords held that the fraudster does not obtain or appropriate property belonging to another when funds are transferred electronically from the victim's account. The effect of the transfer is to extinguish, in part or whole, B's claim against the bank by the fraudster A or the third person. The House of Lords declined to take the view that customer B's rights had been transferred from B to A.

176. The analysis in Preddy is remote from community understanding of bank transactions and it is possible that the High Court might decline to follow that case. However, in view of the rapid growth of electronic transactions and the corresponding decline in transactions involving tangible tokens of monetary value, a cautious approach is warranted. The proposed provisions accordingly extend the scope of the offence of obtaining property by deception to include electronic money transfers.

177. It should be noted that the need to rely on the new provisions only arises when the money transfer does not involve the use of a cheque or other tangible token of value. The High Court has recently held in Parsons that the unmodified offence of obtaining property by deception applies if the transfer is effected by means of a cheque or other valuable security.

178. The Model Criminal Code Officers Committee made the point in its May 1997 Conspiracy to Defraud Report, that fraudulently induced money transfers will be covered by the obtaining a financial advantage by deception fraud offence (proposed section 134.2). It is nevertheless desirable to maintain the existing structure of liability in which the offence of obtaining property by deception extends to cover fraudulent inducement of a money transfer. The offence of obtaining property by deception is linked to the offence of receiving (proposed section 132.1). The new provisions, which treat an electronic transfer of funds as a transfer of property, ensure that a person who receives the benefit of the transfer, knowing that it was a product of fraud, will be guilty of the offence of receiving.

179. Turning to the new provisions, proposed subsection 134.1(9) makes it clear that the offence covers money transfers by providing that such amounts are taken to be property belonging to the victim and that the other person arranging the transfer is taken to have obtained the property with the intention of permanently depriving the victim. Proposed subsection 134.1(1O) stipulates that the amount transferred should be taken to be the property of the victim and that there was an intention to permanently deprive the person of it. Proposed subsection 134.1(11) stipulates that a debit to one account debits which is causally related to a credit in another account is taken as the transfer of the amount of credit from the debited account to the credited account.

180. As with theft, proposed subsections 134.1(13) and (14) contains general deficiency provisions because just like theft, property fraud can take place over a period of time in small hard to identify sums.

181. Proposed subsections 134.1(15) and (16) contain alternative verdict provisions in recognition that theft and property fraud are similar offences and that it is not always easy to identify the most appropriate charge from the outset. The penalties for each offence are of course the same (a maximum of 10 years) and the provision makes reference to the need for procedural fairness. It is critical that when the alternative verdict becomes a more realistic proposition than the original charge, the defendant is provided with adequate opportunity to address the elements of the alternative offence.