House v R (1936) 55 CLR 499

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House v R [1936] HCA 40; (1936) 55 CLR 499 (17 August 1936)
HIGH COURT OF AUSTRALIA

House Appellant; and The King Respondent.
H C of A
On appeal from the Court of Bankruptcy.
17 August 1936

Starke, Dixon, Evatt and McTiernan JJ.

A. R. Taylor, for the appellant.
O’Sullivan, for the respondent.
The following written judgments were delivered:—
Aug. 17
Starke J.

The appellant was charged under sec. 210 (3) (c) of the Bankruptcy Act 1924-1933 that he, being a person against whom a sequestration order was made, did within six months before the presentation of the petition on which the sequestration order was made, pawn, otherwise than in the ordinary way of his trade, property, namely two bath-heaters, which he obtained on credit from A. N. Thomson & Co. Ltd., and had not paid for. He was tried summarily, pursuant to sec. 217 of the Act. He pleaded guilty to the charge. It appeared that the petition for sequestration had been presented on 11th January 1935, that the sequestration order was made on 19th February 1935, that the bath-heaters had been obtained by the appellant on credit from A. N. Thomson & Co. Ltd., and were pawned within a few days of their delivery to him, but were never paid for by him. Judge Lukin sentenced him to imprisonment for three months, with hard labour, and recommended that such sentence be served on a prison farm. A motion for special leave to appeal against that sentence was made to this court, but it was treated without objection as an appeal.

There is no doubt, I think, that an appeal lies as of right against the sentence (See Constitution, sec. 73; Bankruptcy Act 1924-1933, sec. 26 (2)). But the sentence imposed upon an accused person for an offence is a matter peculiarly within the province of the judge who hears the charge: he has a discretion to exercise which is very wide, but it must be exercised judicially, according to rules of reason and justice, and not arbitrarily or capriciously or according to private opinion. In the present case, the appellant was guilty of a dishonest act, and I am quite unable to discover any reason whatever for interfering with the discretion exercised by the learned judge.

The appeal should be dismissed.

Dixon, Evatt and McTiernan JJ.

The appellant is a bankrupt whose estate was sequestrated on 19th February 1935. Twelve months later the Court of Bankruptcy ordered him to make an application for his discharge. When the application came on to be heard, the court, acting under sec. 217 of the Bankruptcy Act 1924-1933, proceeded to charge him with offences against the Act. In the result he was dealt with summarily upon a charge which he admitted and committed for trial upon charges which he denied. The offence admitted was that within six months before the presentation of the petition in bankruptcy he pawned, otherwise than in the ordinary way of his trade, property which he obtained on credit and for which he had not paid. His Honour Judge Lukin thereupon sentenced him to three months’ imprisonment. From that sentence he now appeals to this court. The grounds of his appeal are that the sentence is excessive and was fixed without taking account of material considerations.

The first question is whether the appeal lies as of right. In our opinion it does. Sec. 73 of the Constitution gives jurisdiction to hear and determine appeals from judgments, decrees, orders, or sentences, of a Federal court. Parliament has made no exceptions in the case of the Federal Court of Bankruptcy. On the contrary, by sec. 26 (2) of the Bankruptcy Act 1924-1933, it has enacted that, except where otherwise provided, an order of the court in a bankruptcy matter shall be subject to appeal to the High Court. In the earlier Bankruptcy Rules an attempt to impose some restrictions upon the right of appeal was made, but no such attempt appears in the present rules (Statutory Rules 1934, No. 77). Accordingly the appeal lies. No security is required (See sec. 35 of the High Court Procedure Act 1903-1933). The appeal is a full one on law and fact (Victorian Stevedoring and General Contracting Co. Pty. Ltd. and Meakes v. Dignan[1]; R. v. Hush; Ex parte Devanny[2]). But the judgment complained of, namely, sentence to a term of imprisonment, depends upon the exercise of a judicial discretion by the court imposing it. The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. Unlike courts of criminal appeal, this court has not been given a special or particular power to review sentences imposed upon convicted persons. Its authority to do so belongs to it only in virtue of its general appellate power. But even with respect to the particular jurisdiction conferred on courts of criminal appeal, limitations upon the manner in which it will be exercised have been formulated. Lord Alverstone L.C.J. said that it must appear that the judge imposing the sentence had proceeded upon wrong principles or given undue weight to some of the facts (R. v. Sidlow[3]). Lord Reading L.C.J. said the court will not interfere because its members would have given a less sentence, but only if the sentence appealed from is manifestly wrong (R. v. Wolff[4]). Lord Hewart L.C.J. has said that the court only interferes on matters of principle and on the ground of substantial miscarriage of justice (R. v. Dunbar[5]). See, further, Skinner v. The King[6] and Whittaker v. The King[7].

In the present case we think we are unable to interfere with the sentence imposed by his Honour Judge Lukin if we apply the principles we have stated.

The appellant, the bankrupt, pleaded guilty to an offence under sec. 210 (3) (c), which provides that any person against whom a sequestration order is made, who after or within six months before the presentation of the petition on which the order is made has pawned, pledged or disposed of, otherwise than in the ordinary way of his trade, any property which he has obtained on credit and has not paid for, shall be guilty of an offence for which the maximum penalty shall be one year’s imprisonment. If an offence is dealt with summarily, as this was, not more than six months’ imprisonment can be imposed.

The materials from which the facts of the case can be gathered are the bankrupt’s statement of affairs, the report of the official receiver, and the depositions of the bankrupt on his public examination. From these it appears that he acted as a builders’ hardware agent. His wife conducted a business of her own and thus relieved him of some of the burden of maintaining the home in which they and their one child, a boy of seventeen, resided. For some time he did not pursue any settled occupation. No doubt he had been affected by the condition of the building trade. But, about ten months before the commencement of his bankruptcy, he made an arrangement with a manufacturing company to sell its goods at a commission of ten per cent with an allowance for expenses of £1 a week. He was at liberty to sell or deal in merchandise produced by other concerns and for some time he carried on some kind of a builders’ hardware agency from his home. For the most part he did not buy goods except to fulfil orders or prospective orders. He carried no regular stock. The bankrupt estimated that the proceeds of his sales during the ten months amounted to about £900. Of the goods he bought to make the sales he failed to pay for about £290 to £300 worth. He also borrowed about £165 which he did not repay. He said that to attend race meetings and to bet had always been his practice and that a great part of the deficiency was to be attributed to wagering. On 25th June 1934 he obtained from the petitioning creditors three articles for which he received orders. They were two hot water systems and a hot water unit. The total net price was about £31. He was paid by his customers but he did not pay the petitioning creditors, who supplied them. On 18th July 1934 his second transaction with the petitioning creditors took place. He says that when he was at their establishment he was shown some bath-heaters which were said to be new on the market and, although he did not want them, he was induced to give an order for six. The total net price of the bath-heaters also was a little over £31. They were delivered at his house within a week and on 24th, 25th and 26th July he proceeded to pawn them. He took them two at a time in his car to a pawnbroker with whom he had had dealings. He obtained about £34 upon the six bath-heaters. He did not pay the petitioning creditors for them. How he applied the money did not definitely appear. When the bankrupt was asked whether he lost it at the races or used it to pay other debts, he answered that he could not exactly tell. He has been sentenced upon a charge laid with respect to the two bath-heaters pawned on 25th July 1934. The date is just six days within the period of six months preceding his bankruptcy, which the section provides as a limitation to the offence. It is certain, however, that he was then impecunious and must have known that his capacity to pay for the heaters in the future depended on his success in betting and in selling other goods he might obtain on credit. He is forty-five years of age and nothing is said against his previous character. All the considerations which these facts disclose in favour of the bankrupt and against sending him to gaol were urged upon the Bankruptcy Court. The learned judge of that court said that he must sentence him to imprisonment on the charge in question and the Crown could decide whether on the others it would proceed.

In the circumstances we have stated we do not think that we can say that the sentence, although severe, was unreasonable or clearly unjust, and there is no other ground for saying that it arose from error of fact or of law, or failure to take into account any material consideration, or from giving undue weight to any circumstance or matter. But the order as drawn up does not give express effect to his Honour’s statement that the Crown should decide as to further proceedings. It contains an unqualified direction that the bankrupt should be prosecuted on indictment on charges under secs. 210 (1) (g), 210 (2) (d) and 214 (1). The alleged offence under sec. 214 (1) cannot be regarded as unconnected with that for which he has been sentenced. It would be harsh, we think, to punish him for contributing to his bankruptcy by gambling without taking fully into consideration the fact that he has received a sentence of some severity for a transaction forming a very substantial step in the alleged causation.
It does not appear whether the Court of Bankruptcy has committed the bankrupt for trial or whether the order for prosecution is intended to have effect under sec. 214 (2) only. But in view of sec. 222 and to make it clear that it is for the Crown law officers to consider whether it is necessary to proceed further against the bankrupt, we think the order should be varied by inserting the words “unless the Attorney-General thinks fit to proceed no further” after the words “and it is hereby ordered and directed that” and before the words “the said Everard Henry House the bankrupt be prosecuted.”

In our opinion the appeal should be dismissed.

Order of Court of Bankruptcy varied by inserting the words “unless the Attorney-General thinks fit to proceed no further” after the words “and it is hereby ordered and directed that” and before the words “the said Everard Henry House the bankrupt be prosecuted.” Otherwise appeal dismissed.

Solicitors for the appellant, Manning, Riddle & Co.
Solicitor for the respondent, W. H. Sharwood, Commonwealth Crown Solicitor.

[1] [1931] HCA 34; (1931) 46 C.L.R. 73, at p. 107.
[2] [1932] HCA 64; (1932) 48 C.L.R. 487, at p. 506.
[3] (1908) 1 Cr. App. R. 28, at p. 29.
[4] (1914) 10 Cr. App. R. 107.
[5] (1928) 21 Cr. App. R. 19, at p. 20.
[6] (1913) 16 C.L.R. 336, at p. 340, per Barton J., and at p. 342, per Isaacs J.
[7] [1928] HCA 28; (1928) 41 C.L.R., 230 at pp. 244-250.

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