Money, mistakes, and criminal liability: does the old board game notion of "Bank error in your favour" actually lead to "Go directly to jail. Do not pass go"?

The recent case of Moore v R [2016] NSWCCA 260 provides clarity of when one is accountable in criminal law when they are erroneously lent money by a bank as a result of an error on the bank's part.

• Facts of Moore v R

Mr Luke Moore opened a bank account with St George in 2010. Ironically, the name of the account was "Complete Freedom". This 'liberty' was seized upon by Mr Moore. An error in the account allowed Mr Moore to withdraw deficit amounts with the only repercussion being a $9 'Payment Honour Fee' for each withdrawal.

By December 2011, Mr Moore's account had a negative balance of $229,000. By August 2012, withdrawals exponentially grew in quantum, and the negative balance then exceeded $2.1 million.

Mr Moore's lavish spending included such items as an Aston Martin DB7 Vantage, a 6.1m boat, and a signed Led Zeppelin picture.

A search warrant was obtained by Police, and Mr Moore was arrested on 12 December 2012.

Westpac (on behalf of St George) confirmed they were able to recover $1.2m.

• Was Mr Moore criminally liable?

In the District Court, Mr Moore, pleaded not guilty to one count of dishonestly obtaining a financial advantage by deception, contrary to s 192E(1)(b) of the Crimes Act 1900 (NSW), and one count of dealing with the proceeds of crime, contrary to s 193B(2) of the Crimes Act.

A jury of 12 found him guilty on both counts, and Mr Moore was sentenced to 4 years 3 months prison, with the non-parole period set at 2 years 3 months.

Mr Moore appealed to the NSWCCA not only on sentence, but also on whether he was criminally liable for those two crimes at all.

According to the lead judgment of His Honour Dr Mark Leeming JA:

"It is perfectly plain that there was a mistake of some kind within the Bank. As a matter of civil law, a mistaken payment gives rise to a right to recovery. To be quite clear about it, the notion sourced in board games of a windfall “Bank error in your favour” is a very poor guide to the position at law." [emphasis added].

However, His Honour then went on to say "But whether his conduct amounted to the crime with which he was charged is quite different from Mr Moore’s undoubted civil liability".

Section 192E(1) provided:

“(1) A person who, by any deception, dishonestly:

(a) obtains property belonging to another, or

(b) obtains any financial advantage or causes any financial disadvantage,

is guilty of the offence of fraud.”

Critical to the prosecution's case is the issue of 'deception'.

As the NSWCCA noted, whilst 'Mr Moore's behaved not only extremely foolishly but also dishonestly" there was nothing "covert" about Mr Moore's behaviour at all.

Emphasis was placed by the Crown on a particular part of the definition of deception for that particular offence as being "conduct by a person that causes a computer, a machine or any electronic device to make a response that the person is not authorised to cause it to make".

The problem the crown faced was that Mr Moore was actually authorised by the bank to request the funds under the Terms and Conditions of the bank account. More specifically, the "terms expressly made provision for withdrawals in excess of available balance" with cl 13.6 reading "if you withdraw an amount in excess of the Available Balance your Account may be overdrawn." Whilst there was no overdraft facility attached to the account at the time it was opened, the terms expressly provided the discretionary allowance of the lending of funds from the bank. Mr Moore requested the funds, and the bank gave him those funds.

The Crown sought to rely on the precedent of R v Evenett (1987) 24 A Crim R 330, wherein a charge of theft was deemed open against Mr Evenett as he withdrew funds from an ATM in excess of the $500 limit as the machine was 'off-line'. His Honour Leeming JA, held that R v Evenett was distinguished because Mr Evenett was not permitted to make the withdrawals under the terms of his contract with the bank while Mr Moore to the contrary was permitted to make the withdrawals (with the bank's discretion) under the terms of his contract with the bank. Indeed, instead of assisting the Crown case, the reasoning in R v Evenett was held to support an acquittal for Mr Moore.

Fagan J expanded on the reasons of Leeming JA, with a further analysis concluding that it could not be held that Mr Moore mislead or deceived the bank, and intended to do so. Her Honour Natalie Adams J further added that the Second Reading Speech in Parliament confirmed the Parliamentary intention to "ensure ... that only people that have been deceptive and dishonest will be prosecuted".

• Larceny

Leeming JA briefly looked at the alternative charge of larceny, and while noting it was not taken up by the Crown, concluded that larceny at common law only relates to property capable of physical possession. The second issue of course is that the bank, in Moore v R, was lending the money.

To stray somewhat slightly, it should be noted that the 'rule' of 'finders keepers' is one suitable to a playground only. Indeed, if you are given goods by mistake, or find goods, and have a guilty conscience in retaining the goods when the person believes the owner could reasonably be found, then that person is guilty of 'larceny as a result of a mistake' or 'larceny by finding' respectively. If all reasonable enquiries are made of the location of the true owner, and the true owner cannot be located, then the possessor will then not only be absolved of any criminal liability, but also may retain the goods [see Chairman, National Crime Authority v Flack (1988) 156 ALR 501.]

• Conclusion

Mr Moore's case is one demonstrative of a narrow escape. To be described as 'foolish' and 'dishonest', but not 'deceitful', recognises that the conduct was cutting it fine. But this case is also demonstrative of how careful the criminal justice system must be when construing a statute. This case is welcome then in not only clarifying the legal analysis of obtaining a financial benefit by deception, but also as a reminder that thorough legal scrutiny is always required.

If you have a criminal matter, please contact Maclarens Lawyers on 9682 3777.