Bennett v R

Court of Criminal Appeal (NSW)|2015-03-20|Before: Simpson J, Rothman J, Adamson J

Solicitors: Legal Aid New South Wales (Appellant) Commonwealth Director of Public Prosecutions (Respondent) File Number(s): 2009/2756562009/275671 Decision under appeal Court or tribunal: District Court of New South Wales Jurisdiction: Criminal Date of Decision: 9 October 2013 Before: Jeffreys DCJ File Number(s): 2009/275656 2009/275671

The appeal against conviction

The sole ground of appeal against conviction is: "The trial judge's directions in relation to the requirement of the jury to return consistent verdicts have given rise to a miscarriage of justice in respect of count one."
In order to understand the context in which the trial judge gave the direction which the appellant seeks to impugn it is necessary to set out the indictment and the relevant legislative provisions as well as to recount in some detail the course which the trial took. This is particularly the case as the direction was given to the jury in response to a question it asked after it had retired to consider its verdict.

The indictment

On 19 August 2011 the appellant and his co-accused, Mr Pritchard, were charged on indictment with the following two counts: "1. Between about 5 July 2000 and about 23 May 2001 at Sydney, New South Wales and elsewhere did conspire with each other, Geoffrey Clive DALEY, Robert Francis AGIUS, Owen Trevor DANIEL, Kevin ZERAFA and divers other persons to defraud the Commonwealth. Contrary to section 86(1) and section 29D of the Crimes Act 1914 (Cth). (Law Part Code 11102). 2. Between about 24 May 2001 and about 20 March 2006 at Sydney, New South Wales and elsewhere did conspire with each other, Geoffrey Clive DALEY, Robert Francis AGIUS, Owen Trevor DANIEL, Kevin ZERAFA and divers other persons with the intention of dishonestly causing a loss to a third person, namely the Commonwealth. Contrary to section 135.4(3) of the Criminal Code Act 1995 (Cth). (Law Part Code 41505)."
Although, in substance, there was only one conspiracy alleged the need for two counts on the indictment arose from the statutory provisions set out below: Agius v The Queen [2013] HCA 27; 248 CLR 601

The relevant legislation

As at 1 January 1997 until immediately prior to 24 May 2001, s 29D of the Crimes Act relevantly provided: "A person who defrauds the Commonwealth … is guilty of an indictable offence. Penalty: 1,000 penalty units or imprisonment for 10 years, or both."
During the same period, s 86 of the Crimes Act relevantly provided: "(1) A person who conspires with another person to commit an offence against a law of the Commonwealth punishable by imprisonment for more than 12 months, or by a fine of 200 penalty units or more, is guilty of the offence of conspiracy to commit that offence and is punishable as if the offence to which the conspiracy relates had been committed. (2) Despite subsection (1), if the person conspires with another person to commit an offence against section 29D of this Act, the conspiracy is punishable by a fine not exceeding 2,000 penalty units, or imprisonment for a period not exceeding 20 years, or both."
From 24 May 2001, s 135.4 of the Criminal Code relevantly provided: "(5) A person is guilty of an offence if: (a) the person conspires with another person to dishonestly cause a loss, or to dishonestly cause a risk of loss, to a third person; and (b) the first-mentioned person knows or believes that the loss will occur or that there is a substantial risk of the loss occurring; and (c) the third person is a Commonwealth entity. Penalty: Imprisonment for 10 years. … (9) For a person to be guilty of an offence against this section: (a) the person must have entered into an agreement with one or more other persons; and (b) the person and at least one other party to the agreement must have intended to do the thing pursuant to the agreement; and (c) the person or at least one other party to the agreement must have committed an overt act pursuant to the agreement." …
As the wording of subs 135.4(5) of the Criminal Code is different from s 29D and s 86 of the Crimes Act the elements of the two offences are not identical. It was not suggested that any differences between the sections are presently material.

The trial: the Crown opening

The Crown opened its case against the appellant on the basis that he was a party to a conspiracy with Mr Pritchard and Mr Daley, a co-conspirator who was a Crown witness, both of whom were associated with Hunter Civil & Hire Pty Ltd (HCH) and three accountants: Messrs Daniel, the principal of Owen T Daniel & Co. (Owen T Daniel); Mr Zerafa, an employee of Owen T Daniel; and Mr Agius, an accountant who practised in Vanuatu and who devised the scheme from which the charges arose. The Crown case was that the agreement that constituted the conspiracy was the "same from the beginning through to the end". The Crown explained that the reason for the separate counts was the change in the legislation (set out above).
The Crown case was that the parties had agreed to implement a scheme whereby certain companies, relevantly HCH, would send money overseas to Uniton Ltd (Uniton), a company registered in the United Kingdom. The money would then ultimately be transferred to Edgecumbe Finance Limited (Edgecumbe), a company registered in Ireland, before being paid back to Australian bank accounts in the guise of a loan. The outgoing monies would be claimed as expenses, although they were not, and deducted from the gross income of the company to reduce its taxable income. The company tax return would then be submitted in which declarations were made that the amounts had been paid for expenses incurred by the company and that the loan monies were not actually income.
It was not in issue that the monies that were paid to Uniton were recorded as expenses in the financial statements of HCH and claimed as such in the company's tax returns. Nor was it in issue that the monies, with some relatively insignificant deductions, were remitted back to Australia. The principal issue was intention. Accordingly, the Crown needed to prove that Mr Bennett knew that the sending of the monies overseas and the receiving of the monies back in Australia were dishonest and that these payments did not entitle HCH to lodge income tax returns in which they were claimed as expenses. The Crown case against the appellant (and Mr Pritchard) was that they knew that the relevant income tax returns contained false statements and that they were submitted pursuant to an agreement to which they were party to defraud the Commonwealth or dishonestly cause loss to the Commonwealth.

The defence

Following the conclusion of the Crown's opening Ms Francis, who appeared for the appellant both at trial and on the appeal, told the jury that the issue in the case was the knowledge and intent with which the appellant participated in the scheme. She said that, to the extent to which the appellant was apprised of the scheme, he believed it to be a legitimate loophole. She described Mr Daley to the jury as a liar whose evidence would be redolent with inconsistencies.

Mr Daley's evidence

Mr Daley was the principal Crown witness. He had pleaded guilty to two charges brought against him in an indictment in terms which corresponded to the indictment presented against the appellant. By his plea he admitted that he had conspired with Mr Agius, Mr Zerafa, Mr Pritchard and the appellant to defraud the Commonwealth, in the period covered by both counts.
In the early 1990's Mr Daley's business, Geoff Daley Engineering Services, was contracted to provide engineering services to Gardner Perrott, which in turn provided cleaning and maintenance services to large businesses engaged in dirty industrial work, such as BHP. Through this work, Mr Daley met Mr Pritchard, who was then the Newcastle manager for Gardner Perrott and worked out of an office in Carrington, a suburb of Newcastle. Mr Pritchard introduced Mr Daley to Mr Britton, the Sydney Operations Manager for Gardner Perrott. Subsequently, after Mr Pritchard had become the State Manager of Gardner Perrott, Mr Daley met the appellant who also worked for Gardner Perrott.
In 1998 Gardner Perrott won the tender to provide maintenance services to OneSteel which operated the business BHP had previously operated in Mayfield, a suburb of Newcastle. The appellant, who was responsible for managing services provided by Gardner Perrott to OneSteel, engaged Mr Daley as Occupational Health & Safety officer.
Within a month of Gardner Perrott winning the OneSteel contract, the appellant, Mr Pritchard, Mr Britton and Mr Daley discussed forming a company to perform some of the work which was covered by the OneSteel contract. The appellant, Mr Pritchard and Mr Britton were reluctant to become directors of the new company as they were both long-standing employees of Gardner Perrott. Ultimately it was agreed that only Mr Daley would be registered as a director and shareholder of the new company, HCH, although all four would be involved in the business.
HCH was registered on 27 September 1999. Each of the four (the appellant, Mr Pritchard, Mr Britton and himself) put $5,000 into a bank account which was opened in HCH's name. In the same month, Mr Daley resigned from his employment with Gardner Perrott. According to Mr Daley, decisions regarding HCH were made by the four at management meetings which were held at least once a month.
In early 2000, Mr Britton suggested to Mr Daley, the appellant and Mr Pritchard that they should engage Owen T Daniel as HCH's accountants. In the latter part of 2000, the four went to the offices of Owen T Daniel at Five Dock. Mr Daniel told them about a scheme which was designed to reduce company tax, which he described as an "Around the World Trading Scheme". He explained that it involved money being sent out of Australia to New Zealand and other countries before being sent back to its sender in Australia. Mr Daniel told them that it would be hard for the Australian Taxation Office (ATO) to find fault with the scheme. He explained that a deduction, by way of service fee, would be made in Vanuatu where Mr Agius (the progenitor of the scheme) was based. Mr Zerafa, who worked for Owen T Daniel, was introduced as the point of contact. Mr Daniel told those present that they should keep their "mouths shut" and not let it be known that they were using the scheme.
Mr Daley had reservations about the legitimacy of the scheme from the time it was first discussed. His concerns were not assuaged when Mr Daniel told them that he had up to 500 people in Australia engaged in the scheme, including police and other influential people.
The day after the meeting, the four met and decided to engage Owen T Daniel as HCH's tax accountants. Mr Daley did not recall any of the participants raising any concern that the scheme was either illegal or dishonest or any discussion as to whether it was.
After this meeting Mr Daley engaged Owen T Daniel as HCH's accountants and became HCH's contact person. Mr Daley obtained details from Mr Zerafa of where to send the money and how much should be sent. He accepted that he continued as HCH's contact person at least until Ian Shute began as the new book-keeper in March 2002.
Mr Daley kept documents connected with the "Around the World Trading Scheme" in a separate file box in the offices of HCH.
At the first monthly meeting between the four after Owen T Daniel's engagement, a report for September 2000 was tabled which recorded under the heading "Financial Issues": "Dianne Allen & Associates initial contact has been made regarding the transfer of our financial matters to another accountancy firm. Owen T Daniel to be formally engaged. 1999-2000 Tax issues A policy for Vanuatu to be formalised so the BAS can be completed. Business Activity Statement to be addressed. Letters of comfort no progress as yet."
On 12 December 2000 Owen T Daniel sent a facsimile to Mr Daley which contained the bank account details of Uniton, to which the monies would be paid. Mr Daley noted in handwriting the sum of $112,000 to be sent to Uniton pursuant to the scheme. The figure had been recommended by Mr Zerafa, who had seen the balance sheets and profit and loss statements for HCH and had decided that HCH could afford to send $112,000.
Mr Daley discussed the figure of $112,000 with the other three either in person at a management meeting or over the telephone before sending a facsimile to Owen T Daniel on 12 December 2000 confirming the bank account details of the HCH account into which the money should be paid on its return to Australia.
On 13 December 2000 Mr Daley filled in an international money transfer application for money to be transferred from HCH's account to an account in Auckland which Owen T Daniel had nominated for Uniton. He appreciated when he did so that his name would be associated with the transfer.
On 15 December 2000 Mr Daley received a facsimile from Mr Zerafa in the following terms: ". . . I have confirmed that the funds have been received o'seas and that they are being sent back today. (should be here on Monday) Could you please complete the form attached to this fax and fax back to me. Any correspondence of transfers o'seas should be clearly marked with your client number 7313. This will allow them to distinguish who you are. . . ."
Mr Daley filled in the attached form, which was entitled "Company Application and Trust Account Opening Authority" which he understood would authorise the money to be sent around the world. He wrote in the space provided for "Special Instructions": "Please phone before fax. All postal correspondence to be marked private attention Geoff Daley."
Mr Daley explained that he gave this instruction because his daughter worked in the office sometimes and he did not want her to tell his wife that he was involved in "round the world" trading.
The HCH cheque account from which the $112,000 was withdrawn showed that it was processed on 13 December 2000 and that $103,585 was deposited into the same account on 15 December 2000 by "INTERNATIONAL FINANC". Mr Daley explained that, although he did not understand it at the time, he later learned that "INTERNATIONAL FINANC" was a reference to International Finance Trust Corporation, the entity through which the funds were sent back to Australia. Mr Daley's evidence was that he discussed each of these documents with the appellant and Mr Pritchard, as well as Mr Britton, if the latter was present.
Mr Daley gave evidence that every fortnight, after the first "around the world" transaction, he would cash a cheque for $8,000 drawn on HCH's bank account, which was initially the account from which the monies had been withdrawn to pay Uniton. Of the $8,000, he would retain $2,000 for himself and pay $2,000 each to the appellant, Mr Pritchard and Mr Britton at the management meetings. It was the appellant who coined the expression "the eagle" for the distribution of cash at management meetings. The expression, which became a useful shorthand code among the four, was both a reference to the bird on the United States currency and an allusion to the phrase, "the eagle has landed".
By letter dated 23 January 2001, Owen T Daniel wrote to HCH purporting to convey an offer from Edgecumbe of a $1m loan facility. Mr Daley regarded the purpose of the document as being to complete the paper trail of "around the world" transactions, rather than as creating a true loan facility. Although Mr Daley said that he would have discussed the letter with Mr Pritchard and Mr Bennett, he accepted that he did not have any diary notes of meetings with them that took place between January and June 2001.
A further cheque in the sum of $112,000 was sent to Uniton on 21 February 2001. A corresponding cheque requisition, which was filled in by Jason Hart, HCH's book-keeper, represented that the sum was referable to an account rendered for "consultancy fees". Mr Daley said that no attempt was made to hide from Mr Hart that $112,000 was being sent to Uniton. HCH's bank statement showed this withdrawal and a deposit on 27 February 2001 of $111,885 by "INTERNATIONAL FINANC".
As HCH had commenced trading in September 1999, it was obliged to lodge a tax return for the year ended 30 June 2000. At some time prior to the lodgement of HCH's income tax return for 2000, Mr Zerafa sent Mr Daley four documents which purported to be invoices dated 30 September 1999, 31 December 1999, 31 March 2000 and 30 June 2000, each in the sum of $28,000, apparently issued by Uniton for "marketing and consulting services". No such services had ever been provided. Mr Daley identified, in the profit and loss statement included in HCH's tax return, a line item in the sum of $112,000 said to be for "management and consulting fees". This amount had the effect of increasing the line item "all other expenses" by $112,000 and reducing HCH's operating profit to $5,452.
Owen T Daniel forwarded the draft tax return for the 2000 financial year to the "directors" of HCH (although Mr Daley was, at that time, the sole director) under cover of letter dated 27 March 2001. Mr Daley's evidence was that, before signing HCH's 2000 income tax return on 29 March 2001, he tabled the draft tax return and discussed it with the other three, either at one of their management meetings or on the telephone. He denied the proposition put to him by Mr Johnston (counsel for Mr Pritchard at trial) in cross-examination that he just signed the document without speaking to Mr Pritchard or the appellant.
On 18 May 2001 Mr Daley opened an account in his own name into which the "around the world" cheques were deposited when they were returned to Australia. The purpose of this account was to create a paper trail for the loan account. Mr Daley explained that the account had to be in his name as he was HCH's only registered director.
By the end of the period which was the subject of the first count, 23 May 2001, the diagram provided to the jury showed that the following amounts had been transmitted "around the world" by HCH: Date sent Amount Date returned Amount 13 Dec 2000 $112,000 15 Dec 2000 $103,600 21 Feb 2001 $112,000 27 Feb 2001 $111,900 7 May 2001 $56,000 16 May 2001 $55,900 29 May 2001 $56,000 5 June 2001 $55,900

The last of these amounts, received on 5 June 2001 was paid into the account in Mr Daley's name, rather than into HCH's cheque account. Mr Daley denied the proposition put to him by Mr Johnston that he was content that for the payment received on 5 June 2001 to be paid into an account in his name because he did not consider that he was participating in a scheme that was illegal. He said that he had concerns about the legitimacy of the scheme. Evidence which Mr Daley had given at committal proceedings was put to him by Mr Johnston but Mr Daley reiterated his earlier answer and said that he had "reservations about its [the scheme's] legality". Mr Daley accepted that it was possible that he had kept his reservations to himself at that stage.
The tax return for the year ended 30 June 2001 indicated that $560,000 was referable to "management and consulting fees". This sum represented a fivefold increase in the amount for the previous financial year of $112,000. A gross income from sales in the order of $2.2m was recorded in HCH's profit and loss statement for the 2001 financial year.
The appellant and Mr Pritchard, who were still working for Gardner Perrott, often visited HCH's office to see how the contract between HCH and Gardner Perrott was going and to talk to Mr Daley.
On 15 June 2001, following discussions with the appellant and Mr Pritchard, Mr Daley registered a company called Hydro-Magda Pty Ltd (HM). HM was established to process some of the waste and heavy contamination from the old BHP site that was being demolished. Gardner Perrot was party to a contract with BHP to remove the sludge. Mr Pritchard and the appellant arranged for the work to be done by HM and determined, without consulting Mr Daley, that the profits of HM would be divided between the appellant's son, Adam, and Mr Pritchard's son, Andrew, as to 50% and the remaining 50% would be split equally between Mr Daley, the appellant and Mr Pritchard. Mr Pritchard justified the split to Mr Daley on the basis that Adam Bennett and Andrew Pritchard would be doing the work and the appellant and Mr Pritchard would be retaining management of the project. According to Mr Daley, Mr Pritchard and the appellant controlled what was happening with the business of HM in which their sons worked.
At some stage, shortly after the formation of HM, the appellant suggested that HM should obtain an insurance policy to demonstrate "good faith" and that the job was being done correctly. It was proposed that the premium be sent "around the world". Mr Pritchard also suggested that the profits of HM could be sent "around the world". According to Mr Daley, the appellant said, "That's a good idea".
Mr Daley's evidence was that, in about June 2001, the appellant and Mr Pritchard suggested forming a company which would operate as a labour hire company for HCH, HM, Gardner Perrott and any other client on the OneSteel site. Daley Labour Pty Ltd (DL) was registered on 20 July 2001 and Mr Daley was its sole director. DL did not participate in the "around the world" scheme. In July 2001 the four participants (Mr Daley, Mr Pritchard, Mr Britton and the appellant) decided to pay themselves $10,000 a quarter as a dividend.
Mr Daley gave evidence that he, the appellant and Mr Pritchard met Robert Agius in August 2001 at the office of Owen T Daniel at Burwood. In the course of the meeting, Mr Agius explained to those present how the "around the world" transactions worked. He drew a diagram which showed that the money would go to New Zealand and then to Vanuatu, where a service fee would be deducted and then it would return via several other countries and come back to Australia through Ireland. Mr Daley admitted in cross-examination by Mr Johnston that Mr Agius did not provide any assurances about the legitimacy of the "round the world" trading scheme at the meeting; nor had Mr Daley raised with him any concerns he had about the legitimacy of the scheme.
Mr Daley gave evidence of further transactions involving "round the world" routes as well as the monies being made available to him, Mr Bennett and Mr Pritchard as loans.
Towards the end of 2001, Mr Hart, who had been the book keeper for HCH and HM, told Mr Daley of his concern that there was an inadequate paper trail.
Mr Daley raised Mr Hart's concerns with Mr Zerafa, who suggested they come up with wording for the invoices for "around the world" payments that indicated that services, such as "intellectual knowledge" and "technical assistance", rather than goods, were being supplied.
Mr Hart's services were terminated in March 2002 and Mr Shute was engaged to replace him as book keeper. Mr Shute was authorised to sign cheques on behalf of HCH, HM and DL. He also prepared the agenda, financial statements and any additional documents required for the monthly meetings. Some time later Mr Shute told Mr Daley that he thought that Mr Daley, Mr Pritchard and the appellant were "in a fair amount of trouble" with respect to the "around the world" transactions. Mr Daley relayed Mr Shute's comment to Mr Pritchard and the appellant.
In 2002, Mr Britton left the group and no longer participated in these transactions.
In 2002, as a result of the appellant's suggestion referred to above, HM purported to obtain an insurance policy from "Southern Hemisphere Insurance" for HM's work for OneSteel. The appellant, Mr Pritchard and Mr Daley agreed that the so-called "insurance premiums", which amounted to three payments of $200,000 would be sent "around the world". One such payment of $200,000 was made on 24 June 2002. It was known and discussed among the three participants (the appellant, Mr Pritchard and Mr Daley) that the insurance policy was, as the appellant put it, a "smoke and mirrors" policy in that it was merely a cover for payments to be sent "around the world".
Towards the end of November 2002, Mr Pritchard and the appellant attended the premises of HCH regularly, and sometimes daily. The appellant suggested describing the intellectual knowledge on the invoices in respect of funds that were sent "around the world" as "spent pot linings". Spent pot linings were a waste product of an aluminium smelter.
In about November 2002, the appellant finished working for Gardner Perrott. On 20 November 2002 he and Mr Pritchard were registered as directors of HCH. At around this time, Mr Daley told the appellant and Mr Pritchard that he was concerned about being the only person who had his name on any "around the world" documents and felt that he was being left in the lurch. He told them that, unless they were prepared to put their names on documents, he would go to the ATO to expose the "around the world" scheme. According to Mr Daley, the appellant said that someone had to stay clean and that he was not going to put his name to anything since he did not want any problems that would affect the payments he was making for child support.
Mr Daley told the appellant and Mr Pritchard that he was also concerned that, as a result of what occurred on 11 September 2001 (the destruction of the Twin Towers in New York), the Australian Government was scrutinising monies that were being sent overseas. Ms Francis, on behalf of the appellant, cross-examined Mr Daley about when he first realised that the scheme was illegal. She put to him that it was only after the media's scrutiny about international transactions after that date that he started turning his mind to the illegality, he rejected the proposition and said: "I probably always had a thought in the back of my mind that it was not a legitimate operation but I never went and paid due diligence and checked it out. I accepted what I was told and what I was involved in was borderline and that it was okay."
The last occasion on which Mr Daley sent money "around the world" for HCH or HM was 13 December 2002. However the payments continued to be made. Although Mr Shute was concerned about the legitimacy of these payments, he was prepared to create the requisite documents subject to the directions from the directors.
On 1 October 2003 HM was deregistered once the work it had been contracted to do had been completed.
Towards the end of 2005 Mr Daley decided to leave the businesses. Mr Pritchard and the appellant asked him to close down the "around the world" transactions before his departure.
Mr Daley proposed that Mr Pritchard and the appellant would buy out his share in the businesses. At about this time, Mr Daley decided to go to the ATO in Newcastle with the documents he had retained from the "around the world" transactions. Mr Daley also met with Mr Agius who told him that there was a balance due to him of $192,000, being money that had not yet returned from its trip "around the world". Mr Agius confirmed the amount by writing on a paper bag, which Mr Daley photocopied. Mr Agius set out how the $192,000 was to be invested for Mr Daley and gave the document to him. Mr Daley did not follow up what happened to this sum or any proceeds from the investment. Nonetheless he retained the document in case he died so that his beneficiaries could get the benefit of the money.
In about 2008 or 2009 Mr Daley was approached by officers of the Australian Federal Police. He provided them with documents associated with the "around the world" transactions.

The balance of the Crown case

The Crown also adduced evidence from Mr Shute. It is not necessary to detail his evidence since it solely concerned the second charge. Federal agent Needham gave evidence as did James Walton, Manager of the High Wealth Individuals Task Force of the ATO.
Neither the appellant nor Mr Pritchard gave or adduced evidence.

Crown's closing address

The Crown, in its closing address, contended that there was a single conspiracy and that there were two counts only because of the change in the law. The Crown anticipated the submission that it might be suggested to the jury that the appellant and Mr Pritchard were not participating in a conspiracy prior to 23 May 2001 and referred to the cross-examination of Mr Daley to the effect that he did not really believe that the scheme was unlawful prior to 23 May 2001. The Crown submitted that the jury would be satisfied that the conspiracy was on foot, if not by the time of the initial meeting at Owen R Daniel in which the "round the world" scheme was explained, then certainly by the time the first $112,000 was sent overseas.

The closing address on behalf of the appellant

Ms Francis submitted that the Crown had failed to prove that Mr Bennett acted with a dishonest state of mind. She emphasised that there was no evidence of conversations between Mr Daley and the appellant about the illegality of the scheme as follows: "What we do now at this point is that Mr Daley has been communicating with the offices of Owen T Daniel and he hasn't as a consequence of those meetings given any evidence of communicating to the accused any concerns that he had or that arose from his ongoing discussions and exposure to the scheme as it was represented by Owen T Daniel. He gives evidence of not one conversation to the effect of I've been on the phone to these guys, this all seems a bit on the nose, it's a bit dodgy, what do you think? It's a bit concerning, what do you think Mr Bennett? Not one conversation and why is that? Because those conversations didn't happen. So between the date of this meeting with Owen T Daniel in the middle of 2000 and the first of the transactions in December of 2000, there is not one conversation which assists you between Mr Daley and Mr Bennett in determining Mr Bennett's guilty state of mind. Not one admission made by him as to this scheme being rort with dishonest means. This is the Crown case. It's for the Crown to prove beyond a reasonable doubt, that Mr Bennett was possessed of this state of mind and you have not one piece of evidence that would assist you in coming to that conclusion emanating from Mr Daley and his conversations with the accused."
Ms Francis also highlighted Mr Daley's evidence about the relevance of 11 September 2001 for the purposes of impugning his credibility. She told the jury, in substance, that they would not believe that Mr Daley's concerns arose only after 11 September 2001 because he knew that the scheme was dishonest from the outset. She said: "As we know from what my learned friend read to you today, of Mr Daley's evidence at the Committal hearing, you can be comforted in the conclusion that here was no such conversation between Mr Daley and the accused because on his own account of himself, it was possibly 12 months after the events of September 11 until he came to a realisation that this scheme was illegal. And may well he might have come to that realisation by September of 2002, that is 12 months after September 11. May well he have come to that conclusion. But you might ask why did it take until 12 months when he had been involved in the Southern Hemisphere Insurance scam. What, it took him a year? He didn't realise when he entered into that fraudulent insurance scam and you know what the defence case is about that. It was not Mr Bennett's idea. Indeed it didn't flow on from Mr Daley's evidence as to when he first said Mr Bennett brought up this idea of approaching Owen T Daniel. You know what the defence case is. Mr Bennet has absolutely nothing to do with that scheme. But Mr Daley gives evidence, 'I didn't realise until 12 months after September 11 2001 that this scheme was a fraud.' But he has been personally, effecting quite a significant fraud you might think in respect of Southern Hemisphere Insurances. What the Crown case wants to import is a particular state of mind resting in Mr Bennett said to arise from various representations made by Owen T Daniel back in the middle of 2000. When I say Owen T Daniel I mean the representatives of the office. But the critical issue for you is what was in agreement into which Mr Bennett entered at such time as he participated in this scheme. That's the critical issue for you and the evidence of Mr Daley does not assist you in coming to any reliable conclusions about that." [Emphasis added.]
The highlighted passage does not accurately summarise Mr Daley's evidence, which is set out in more detail above. However, it indicates the purpose for which Ms Francis was relying on the evidence, which was solely to impugn Mr Daley's credit. Its purpose was not to make out a case that the appellant was not guilty on the first count on the basis that his knowledge at that stage would not have been greater than Mr Daley's and Mr Daley did not know that the scheme was dishonest until after 23 May 2001.
Ms Francis did not distinguish between the periods covered by the separate charges. The appellant's case was put in the following extract from her final address: "…The critical issue for you is with what state of mind did Mr Bennett enter into these transactions. If you cannot exclude the reasonable possibility that he was acting honestly on the advice of his accountants that you would return a verdict of not guilty. That is some of the context in which the agreement was forged between these men at some point after the meeting in the middle of 2000 and the first of the transactions in December 2000. But there is also some relevant context which you can draw from what was said and the evidence which attaches to the period when in November 2005 when the accused voluntarily shut down their involvement in the scheme. This is at a time when Mr Shute indicated to them that the scheme might fall foul of a particular provision of the tax provision which concerned itself with fraud, but a provision which was directed towards schemes which had at their heart the object of minimising tax and I won't try and outline for you what the terms of that provision is. I'm sure his Honour will do that for you and you've already heard his Honour give you some directions in that regard. But at such time as Mr Bennett and Mr Pritchard were advised in a certain way by the company accountant to remove themselves form the scheme they did. They accede to the advice of their company accountant and they went to the offices of Owen T Daniel with a view of withdrawing from the scheme."

The summing up

The trial judge reminded the jury of the reasons for there being two counts in the indictment as follows: "…And the only reason that you have got two counts in the indictment is because it used to be before May 2001, the conspiracy to defraud the Commonwealth. And then the parliament, remember I told you that parliament can change the law, they changed the law and now it is not a conspiracy to defraud the Commonwealth, it is a conspiracy to cause the Commonwealth financial loss. And I have told you that effectively the same thing it is just a different way of describing it because to defraud is to cause somebody financial loss."
The Crown case was summarised by the trial judge as amounting to a single conspiracy in the following terms: "So he said it is one conspiracy. He said that the conspiracy was entered into well before 2001. He said that it started when the men went to Owen T Daniel and certain things were discussed. He said that the following day the men agreed to go and participate in the round the world trading. He told you that by 23 December 2000 when the $112,000 was the first lot of money that went out that the conspiracy must have taken place. That is the agreement must have been formed, the meeting of the minds in relation to it must have been formed before that. He said that you would be satisfied that by that time the first lot of money had gone overseas, the conspiracy was under way."
In an adjournment in the course of the summing up the trial judge sought counsel's comments on a draft document to be provided to the jury that set out the elements of each of the two charges. The following exchange then ensued: "CROWN PROSECUTOR: The last thing, your Honour, is just a reference - I haven't thought whereabouts in the document this should go, but that conspiracy is a continuing offence and that an accused may join the conspiracy at any time. HIS HONOUR: That was never put to the jury. CROWN PROSECUTOR: No. HIS HONOUR: I don't propose to put it. CROWN PROSECUTOR: Certainly, your Honour. HIS HONOUR: And the difficulty with saying things like that is the Crown case, as I understand it, is it is one conspiracy and that it effectively started with Owen T Daniel et al in July/August 2001. CROWN PROSECUTOR: 2000. HIS HONOUR: 2000, sorry. Once you start talking about the continuance and once you start talking about joining at any time that's fraught with all sorts of difficulties, because you are then importing into things that these people may have found out in May of 2001 sort of thing, that's my concern. I am not going to do that unless somebody wants me to. Mr Johnston? FRANCIS: No, your Honour."

The jury question

The jury was sent out to consider its verdict at 11.44am on 23 March 2012. Later that day the jury send a note which read: "Can you have a different verdict for each count for each of the accused, i.e does count 1 need to be consistent with [count] 2?"
The Crown's initial response was that it was possible for the jury to bring in different verdicts on each count if they found that there was relevantly a change in circumstances. The Crown suggested that Mr Daley's concern following 11 September 2001 could amount to a change in circumstances. The trial judge raised with the Crown that the Crown had not presented its case that way and reminded him of the submission of one single conspiracy. Nonetheless the Crown maintained its position that different verdicts could be returned and, by implication, that the jury ought be directed accordingly. The following exchange ensued between the trial judge, Mr Johnston and Mr Reinoso, the appellant's solicitor, who was called upon to answer in Ms Francis' absence: JOHNSTON: Your Honour I agree, the Crown never ran a case that the accused joined the conspiracy to date after December 2000 in effect that the conspiracy was complete by that time and it's just a continuing offence, we didn't come to meet that case, and the jury need to be directed. HIS HONOUR: I propose to tell the jury that the way that the case has been conducted that there is one conspiracy and that the conspiracy was underway by 13 December 2000 which is the first payment and the only reason that they got two counts is because there was a change in the legislation so that if they bring in a verdict of guilty on the first count then that is a matter which they would deal with in relation to the second count and vice versa, do you have a problem with that? JOHNSTON: No your Honour. HIS HONOUR: All right we'll have the jury please. I'm sorry I didn't Mr, is your position -- REINOSO: I echo the position from Mr Johnston, no your Honour."
The jury was brought back into Court and the trial judge directed the jury as follows: "HIS HONOUR: Well first of all, there are separate trials here. That is, a trial between the Crown and Mr Pritchard, and a trial between the Crown and Mr Bennett. So, so far as those separate trials are concerned you can certainly bring in different verdicts between Mr Pritchard and Mr Bennett. The way the Crown has run its case, you will remember the Crown has said to you that there is one conspiracy, and the Crown has said to you that the conspiracy was underway by the latest, the first payment that goes overseas which is on 13 December 2000. And that effectively the reason why you have two counts in the indictment rather than one is because of the change in the legislation which made it no longer a conspiracy to defraud - which means to cause loss anyway, dishonestly cause loss - to conspiracy to dishonestly cause loss. So it is the same conspiracy, but because of the change in the legislation, that is why you have the two counts. What that means is, because it is the same conspiracy and it is underway at the latest by 13 December 2000, then it means that so far as the individuals are concerned - that is, Mr Pritchard or Mr Bennett - the verdict that you bring in, in relation to the first count for that accused, whether it is guilty or not guilty, is it would be wrong for you to bring in a different verdict on the second count. In other words, it would be wrong to bring in a verdict of guilty on the first count, not guilty on the second count; or not guilty on the first count and guilty on the second count. Does that answer your question?"

Ground 1: direction to return consistent verdicts

Ms Francis submitted that there was a factual basis for the jury to distinguish between the first and second counts and that the trial judge had answered the jury's question incorrectly.
The basis of the appellant's appeal against conviction was contrary to the course taken on his behalf at the trial, contrary to the submissions made on his behalf when the written directions were being settled by the judge in consultation with counsel and contrary to the submissions made when the judge consulted the parties' legal representatives before answering the question. Accordingly the appellant requires this Court's leave under rule 4 of the Criminal Appeal Rules 1952 (NSW) before he is permitted to rely on the sole ground of his conviction appeal. As the merits of the ground are a factor to be taken into account in whether leave ought be granted, it is necessary to address them.
Ms Francis relied on the fact that Mr Daley had been the sole contact for the accountants for the whole of the period of the first charge and that, although Mr Daley had given evidence of management meetings at which the appellant and Mr Pritchard had been present, he had been unable to recall the detail of such meetings. She contended that there was no discussion to which the appellant was a party during the period encompassed by the first charge in the course of which the dishonesty or illegality of the scheme had been discussed.
Ms Francis placed substantial reliance on Mr Daley's evidence. I understood it to be her submission that it could reasonably be inferred that the appellant did not appreciate that the transactions were dishonest until at least the point at which Mr Daley did. She contended: "Mr Daley's evidence was that it was not until September 2002 that he appreciated the illegality of the scheme."
The substance of Mr Daley's evidence can be dealt with first. I do not consider that Ms Francis has accurately summarised his evidence. As I read his evidence, Mr Daley had reservations about the legality of the scheme from the outset. He appreciated that the purpose of the scheme was to make it look as if money was being lawfully expended by the issue of fake invoices for intangibles so that they could not be readily identified as fake. He appreciated that the reason the money had to go through so many different accounts was so that it would be difficult to trace.
In addition, the jury had been told that Mr Daley had pleaded guilty to both counts, which carried with it an admission that he had had the requisite intent to defraud the Commonwealth in the period covered by the first count, which was well before 11 September 2001, as well as the later period.
The relevance of 11 September 2001 was that the Commonwealth was, after that date, tracing large sums of money that were sent overseas, which increased the risk that the scheme would be detected. Mr Daley was concerned because he, as sole director of HCH until March 2002, whose name was on relevant documents, was the most obvious culprit amongst his co-conspirators, the appellant and Mr Pritchard. Further, there was a premise in Ms Francis' analysis which was, in my view, missing: that the appellant's state of mind or knowledge of the dishonesty of the transactions ought be judged by Mr Daley's state of mind or knowledge of the dishonesty of the transactions.
There is, in my view, a more fundamental reason why the appellant cannot make out the ground of appeal on conviction. Ms Francis, on his behalf, ran the case in a particular way. She did not distinguish between the first and second counts either in the way in which she cross-examined the witnesses, or the way in which she addressed the jury. Her conduct of the trial is relevant to more than just the question whether leave ought be granted under rule 4 of the Criminal Appeal Rules since it informs the content of the trial judge's obligations.
Although Ms Francis referred the jury to Mr Daley's evidence about the illegality of the scheme and the connection with September 11 2001, the purpose of the submission was not to distinguish between his knowledge of the dishonesty of the transactions during the period covered by the first count as distinct from the second count. Rather, it was to challenge his credibility and his reliability and invite the jury to disbelieve him because he was prepared to dissemble about his earlier appreciation of the illegality of the scheme. In substance, she submitted to the jury that they could not believe that he did not appreciate its illegality until September 2002 because he was well aware of it from the outset. The appellant's case was that Mr Daley had not deposed to any conversation the appellant in which they had discussed the illegality of the scheme with or Mr Daley's reservations about it. As the appellant had not given evidence, his state of mind was necessarily a matter of inference.
Ms Francis also relied on the increasing magnitude of the sums sent "around the world" in the period covered by the second charge as compared with the first. She submitted that the jury might not have been satisfied of the dishonest intent at the outset (during the period of the first charge) but might have been satisfied of it later when the sums became more substantial. I regard this submission as purely speculative as no submission was made to the jury to that effect. Moreover, the sums covered by the first charge were still significant. The first payment of $112,000 had the effect of reducing the net profit of HCH for the 2001 financial year to a negligible figure.
The trial judge heard from the parties as to how the jury's question ought be answered. The Crown wanted the question to be answered "yes" and both accused wanted the question to be answered "no". The trial judge acceded to the co-accuseds' preference, which accorded with his Honour's preliminary view.
The weight to be given to the forensic decisions of counsel in a trial was considered in James v The Queen [2014] HCA 6 in the context of alternative verdicts. The appellant, James, was convicted of intentionally causing serious injury. There was a second, alternative, count on the indictment of recklessly causing serious injury. The Crown case was that James' conduct was deliberate. The defence case was that it was accidental. The addresses and summing up did not address the alternative count. The jury asked a question, during its retirement, about the distinction between an intention to cause serious injury (the mental element of the first count) and awareness that the accused's acts would probably cause serious injury (the mental element of the alternative count).
The Crown raised, for the first time, whether the jury should be instructed of the availability of a further alternative verdict: that James had intentionally caused injury, but not serious injury. The trial judge responded that the Crown case had not been put on that basis and expressed the view that to leave a further alternative verdict at that stage of the trial would deprive James of the chance of an acquittal. James' counsel was taken to have acceded to that proposition. The jury was neither instructed of the availability of the alternative verdict of recklessly causing injury, nor of intentionally causing injury. James was convicted of intentionally causing serious injury.
The High Court in James v The Queen posed the relevant question at [6]: ". . . whether, on a trial on indictment, it is the duty of the judge to leave any lesser alternative verdict that is realistically open on the evidence regardless of the forensic decisions of counsel."
In answering the question in the negative, the plurality (French CJ, Hayne, Crennan, Kiefel, Bell and Keane JJ) considered the balance to be struck between, on the one hand, the obligation of the trial judge to secure for the accused a fair trial according to law (Pemble v The Queen [1971] HCA 20; 124 CLR 107 at 117-118 per Barwick CJ) and, on the other, the forensic decisions of trial counsel made for tactical reasons in what are perceived by them to be the best interests of the accused.
The importance of the principle that an accused person is bound by the way his or her counsel ran the trial is not to be underestimated. It would be a serious matter for this Court to authorise, much less require, trial judges to undo the forensic decisions made by counsel (which are taken to be in the best interests of the accused) to the possible detriment of the accused, where the interests of justice did not require it. Had the trial judge rejected the submissions of Mr Johnston and the appellant's solicitor and directed the jury in the way for which the Crown contended and the appellant been acquitted of the first count and convicted on the second, the appellant might have had a legitimate sense of grievance. In that event the appellant might well have appealed to this Court for an order quashing the conviction on the second count on the grounds of inconsistent verdicts, having regard to the way in which the trial was conducted.
Moreover, it is to be assumed that counsel make forensic decisions, particularly ones of such significance, on instructions. A trial judge, who is not privy to those instructions, is entitled to assume that counsel's positions reflect them.
At trial, the appellant had a choice: he could either have defended the charges on the basis that the Crown had not proved that he was party to a conspiracy at all because he did not have the dishonest intent; or he could, through his counsel, could invite the jury to differentiate between his intention prior to 23 May 2001 and after that date. However, the foundation for a defence on this basis would require some foundation in the cross-examination of Mr Daley and the submissions made on behalf of the appellant. Had he chosen the latter option, the risk of conviction on the second count would have been higher, although the risk of conviction on the first count may well have been lower. The former option had the benefit of preserving the chance of outright acquittal. This was a choice that the appellant was entitled to have his counsel make. Although it did not turn out to be the better choice, as he was convicted on both counts, the merit of a strategy ought not be judged in hindsight.
In my view, the appellant ought be bound by the way his counsel conducted the trial, which was not to differentiate between the periods in the two counts, as far as the appellant's intention was concerned. To allow the appeal against conviction in the present appeal would tend to undermine the importance of the role of defence counsel in a trial. As Gleeson CJ said in R v Birks (1990) 19 NSWLR 677 at 683 - 684: "In our system of criminal justice a trial of an accused person is conductedin the manner of a contest between the Crown and the accused, and that trialhas many (although not all) of the features which attend civil litigationconducted in accordance with what is sometimes described as the adversarysystem of justice. To a large extent the parties to such proceedings are boundby the manner in which they conduct them. . . . As a general rule, a party is bound by the conduct of his or her counsel,and counsel have a wide discretion as to the manner in which proceedingsare conducted. Decisions as to what witnesses to call, what questions to askor not to ask, what lines of argument to pursue and what points to abandon,are all matters within the discretion of counsel and frequently involvedifficult problems of judgment, including judgment as to tactics. Theauthorities concerning the rights and duties of counsel are replete withemphatic statements which stress both the independent role of the barristerand the binding consequences for the client of decisions taken by a barristerin the course of running a case. . . . The principles as to the role of counsel, and thecapacity of counsel to bind the client, are fundamental to the operation ofthe adversary system, and form part of the practical content of our notions ofjustice."
There are occasions where the conduct of counsel will not absolve the trial judge from the obligation of intervening, contrary to the parties' submissions, as part of the obligation to ensure a fair trial, or, as in R v Birks, a conviction will be quashed because there has been found to be a substantial miscarriage of justice.
For example, a trial judge might be obliged to leave manslaughter to the jury as an alternative count to murder when neither the Crown nor the accused wants it to be put, although it is open on the evidence: see the discussion in Lane v R [2013] NSWCCA 317 at [35]- [42] about the duties on trial judges. Further, there is, as the High Court said in James v The Queen at [33], almost always an obligation on the trial judge to direct a jury that it is incumbent on the prosecution to negative a defence or partial defence. Thus where there is evidence to support a defence or partial defence, the trial judge is generally obliged to give the direction, irrespective of the views of counsel.
The present case involved neither alternative verdicts, nor defences or partial defences, but two separate counts. The sole reason for the separate counts was that s 29D of the Crimes Act had been repealed and replaced by subs 135.4(5) in the Criminal Code. This exceptional circumstance, while it did not alter the requirement for the jury to be satisfied of each count beyond reasonable doubt, had the potential to create a distraction from the real issues in the case, which had been defined by the way it had been conducted.
In my view, the trial judge's answer to the jury's question indicated a justifiable concern that the jury not be distracted by the fact of the two counts, when the trial had been conducted as if there were one (and would have been but for the change in the law).
However, the legally correct and complete answer to the question would have been to direct the jury that, although as a matter of law they could bring in different verdicts, there was nothing in the evidence or in the way the trial was run that would warrant the jury differentiating between the two counts. It would not have been sufficient for the judge merely to have answered the question by telling the jury that, as a matter of law, it was open to them to return different verdicts on the two counts. The duty of the judge is also to direct on the evidence. Had he given the legally correct answer, it would also have been necessary to have directed the jury on the evidence, inter alia, pointing to the dishonesty of the transactions (and that pointing to the knowledge of the appellant) with respect to each count. This would have entailed reference to the circumstances and the nature of each transaction (all of which which were plainly dishonest). Such directions could only have highlighted matters relevant to the appellant's state of mind and could not have assisted his defence on either count.
In my view, the trial judge's failure to give what I consider to be the legally correct and complete answer to the jury's question amounts to an error of law although neither the appellant's legal representative, nor Mr Johnston, sought that the trial judge remind the jury of the legal requirement that they consider each count separately. I am persuaded that leave under rule 4 ought be granted but I would dismiss the appeal against conviction for the reasons given above.

Appeal against sentence

The appellant relies on the following two grounds: 1. The sentences imposed upon the appellant give rise to a justifiable grievance when compared to the sentences imposed upon his co-conspirators, Agius and Zerafa. 2. An accumulation of one year's imprisonment for count one is manifestly excessive.

The Sentence hearing

The Crown tendered a pre-sentence report in respect of the appellant which recounted his personal circumstances. He is married and has fathered four children from three previous relationships or marriages, who were, as at 2 November 2012, aged between 12 and 30. He has a close relationship with his wife, with her children, and with his own. His two eldest children are employed by HCH Industrial Services, a company which he founded. John Murtas, the author of the pre-sentence report opined that the appellant did not appear to have any criminogenic needs or pose any particular risks which could be addressed by the Probation and Parole Service. Mr Murtas noted that the appellant presented as a hard-working, self-made individual who had achieved a substantial degree of business success.
The Crown also tendered an Agreed Statement of Facts, on the basis of which Mr Daley pleaded guilty to the two counts (with which the appellant was also charged) and a transcript of the sentence proceedings in respect of Mr Daley. The Crown provided materials on sentence to indicate the various sentences imposed on persons associated with the scheme.
Several references were tendered on behalf of the appellant. Their authors, who included both his wife and also the mother of one of his children, wrote of the appellant's honesty and integrity at a personal and professional level and his sense of responsibility towards his family and the employees of the company he founded. His present accountant wrote that the appellant's only assets consisted of his superannuation of approximately $90,000 and a motorcycle worth about $10,000.

Remarks on sentence

Jeffreys DCJ recounted the provisions that formed the basis of each of the two charges and noted that in respect of the first count there was a maximum penalty of imprisonment for twenty years and in respect of the second there was a maximum penalty of ten years. His Honour referred to R v Ronen [2006] NSWCCA 123 in which this Court upheld a finding that the diminution of the maximum indicated a change in attitude on the part of the legislature.
His Honour addressed the substance of the two counts and said: "In reality what was alleged against each offender by the Director of Public Prosecutions was a single continuous conspiracy that spanned the period from about 5 July 2000 to 20 March 2006. In my opinion, there is no difference between the two charges."
His Honour referred to Part 1B of the Crimes Act, the factors to be taken into account under s 16A(2), as well as general deterrence. His Honour took into account delay and referred to R v Agius; R v Zerafa [2012] NSWSC 978 at [125]-[126] per Simpson J.
His Honour found the following facts on the basis of which he sentenced the appellant.
The appellant and Mr Pritchard participated in a scheme set up and promoted by Mr Agius which enabled its participants to evade company tax and, in some cases, income tax. It was promoted through an accounting firm, Owen T Daniel, to its clients, who included Mr Daley, the appellant and Mr Pritchard, who were at various times directors and shareholders of HCH, DL and HM. Owen T Daniel prepared annual accounts and lodged income tax returns for the companies.
The scheme involved payments from the companies to Uniton in New Zealand. The monies were then transferred through various accounts before returning to Australia to be paid into accounts in the name of HCH, Mr Daley or Mr Pritchard. Monies were deducted in Vanuatu for the benefit of Mr Agius. The scheme required false documents to be prepared in the form of invoices in respect of which the monies sent would appear to be payments. False loan documentation was also prepared to make it look as if the monies being returned to Australia were loan monies. These transactions were recorded in the financial statements of the companies which were attached to their tax returns. The monies paid pursuant to "invoices" were claimed as expenses, thereby reducing the companies' taxable income.
Between 30 December 2000 and 13 June 2004, 35 outgoing payments totalling $2,401,767.30 were made from the companies' accounts to the New Zealand accounts of Uniton, International Finance Trust Company and Edgecumbe and Southern Hemisphere Insurance Ltd. These payments were variously disguised as management and consultancy expenses, false loan interest payments and insurance premiums.
Between 15 December 2000 and 18 August 2004, Edgecumbe and Southern Hemisphere Insurance Ltd made 26 incoming payments totalling $2,153,714 to the accounts of HCH, Mr Daley or Mr Pritchard, which were disguised as personal loans from Edgecumbe. The incoming payments were either retained by Mr Daley or Mr Pritchard and then distributed between Mr Daley, Mr Pritchard and the appellant, and also Mr Britten until 2002, or returned to the companies' bank accounts and credited to the directors' loan accounts.
His Honour found that, for the period up to 23 May 2001 (count 1), the false deductions amounted to $112,000 producing a tax shortfall of $40,320.
His Honour was not satisfied that the appellant or Mr Pritchard knew that the insurance certificate issued in respect of HM was false. Accordingly, his Honour disregarded the insurance aspect on sentence.
His Honour noted that, by reason of their convictions, the appellant and Mr Pritchard would be disqualified from managing corporations for five years. His Honour also took into account that the offenders ceased participating in the scheme some years before they were charged. The last payment was made in August 2004 and the HCH tax return for the 2004 financial year (which reflected the false transactions associated with the scheme) was lodged on 5 November 2005.
The sentencing judge took into account what his Honour described as the "considerable co-operation" by the appellant and Mr Pritchard in the conduct of the trial. His Honour recounted Mr Pritchard's personal circumstances and noted that he was 69 years old and in relatively poor health. His Honour recounted the appellant's personal circumstances in the following terms: "Mr Bennett is 51 years of age. He left school after he completed year 10. Since that time he has been in gainful employment and has involved himself in his industry and has had senior management positions. He is a person of good character. . . He lives with his wife of ten years. He is the father of four children born from three other relationships. The children are aged between 30 and 12."
His Honour said: "So far as questions of parity and proportionality are concerned the offenders were in fact co-offenders of Mr Daley and Mr Agius and Mr Zerafa."
His Honour referred to other sentences imposed on the co-offenders: Name of offender Count 1 Count 2 Total/ NPP Agius 4 yrs 5 mths 4 yrs 6 months 8 yrs 11 mths/ 6 yrs 8 mths Zerafa 500 hrs community service 3 yrs 6 mths (following Crown appeal) 3 yrs 6 mths/ NPP 2 yrs 3 mths Daley 2 weeks 3 yrs, 1 mth 3 yrs, 1 mth and 2 wks/ 19 mths

The starting point for Mr Daley's sentence (imposed by Knox DCJ) was 5 years and 9 months, which was then discounted by 45% to take account of the plea of guilty (20%) and assistance to authorities (20%).
His Honour noted that there were factors that distinguished the appellant and Mr Pritchard from the co-offenders. Mr Daley had also filed false personal tax returns. Mr Agius was the progenitor and promoter of the scheme; his offending conduct extended for about ten years and at all times the arrangements were under his control.
His Honour found that the appellant was unlikely to offend again and referred to his "previously effectively unblemished good character" and "excellent prospects of rehabilitation".
His Honour imposed sentences of four years and nine months on the appellant and Mr Pritchard. The non-parole period in respect of the appellant was two years and four months. It was two years in respect of Mr Pritchard because of his health problems.

First ground of appeal on sentence: justifiable grievance when compared with the sentences on Mr Agius and Mr Zerafa

Notwithstanding the general principles of parity and proportionality, care must be taken in drawing direct comparisons between sentences passed: see generally, Hili v The Queen; Jones v The Queen [2010] HCA 45; 242 CLR 520 at [53]- [56] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ. Sentencing involves the exercise of discretion. The factors that are germane to the exercise of the discretion include deterrence, both general and specific, rehabilitation and punishment. The exercise of the discretion requires consideration of objective circumstances (the seriousness of the offending conduct) as well as subjective circumstances pertinent to the offender. The number of factors to be taken into account provides an indication of the complexity of the task. Although parity is an important principle in sentencing, the sentencing task is not a matter of mathematics. What the plurality (Gaudron, Gummow and Hayne JJ) said in Wong v The Queen [2001] HCA 64; 207 CLR 584 at [65] about the utility of sentencing statistics is also applicable when considering parity and proportionality among co-offenders: "To focus on the result of the sentencing task, to the exclusion of the reasons which support the result, is to depart from fundamental principles of equal justice. Equal justice requires identity of outcome in cases that are relevantly identical. It requires different outcomes in cases that are different in some relevant respect. Publishing a table of predicted or intended outcomes masks the task of identifying what are relevant differences.
The sentence passed on Mr Agius by Simpson J reflected her Honour's findings of the length of the offending conduct (over 10 years) and its seriousness. Her Honour said at [60]: ". . . Mr Agius in particular was heavily involved in both promoting and implementing the scheme arrangements and in attempting to conceal the true nature of the arrangements after the ATO began its inquiries. . . I am satisfied beyond reasonable doubt that an accurate description of Mr Agius' role is that of "promoter". . . What Mr Agius did was to propose the fraudulent conduct to a number of company directors and provide them with the means of committing the frauds, safe (as they were led to believe) in the knowledge that the documentation would deflect any inquiry by the ATO."
Simpson J's approach to sentencing Mr Agius for the two counts appears from the following passage from her Honour's reasons at [119]: "[119] Since it is necessary to impose separate sentences in respect of each offence, and since the offences were consecutive, it seems to me to be appropriate to fix sentences relevant to the period over which each was committed, and make the sentences entirely cumulative. I will ensure that the resulting aggregate sentence is equivalent to that I would have imposed had there been a single offence committed over the total period. [120] Only two features of the offending mark out the first offence from the second. One is that the period covered by the first offence (4 years and 4 months) is a little less than that of the second (5 years and 5 months). The second is that, in my opinion, the gravity of the frauds escalated with repetition. Other than that, the offences call for approximately equal sentences. That is what I will impose."
Simpson J said at [123] that the aggregate sentence and the non-parole period equated to what her Honour would have imposed had the offender been liable to a single 10 year maximum.
In R v Zerafa [2013] NSWCCA 222, the Court of Criminal Appeal allowed an appeal against the sentence imposed by Simpson J in respect of the second count. Hoeben CJ at CL (Latham and Beech-Jones JJ agreeing) found that his offending conduct continued over seven years, that he actively implemented the scheme and that he was heavily involved with a number of the companies, the maintenance of their accounts and the preparation of fraudulent tax returns. Mr Zerafa also determined and advised the amounts of money which should be sent. After the ATO began inquiries into the scheme he arranged for false invoices to be prepared so as to mislead the ATO auditors and tutored directors in how to explain the invoices to the ATO. The Court of Appeal accepted that there were subjective circumstances that Mr Zerafa was entitled to have taken into account in his favour (his youth, the fact that he was influenced by Mr Daniel's moral bankruptcy, the fact that he had not gained financially, apart from the continuation of his employment with the firm, both as an employee and partner).
In respect of the first count, the sentence passed by Simpson J of 500 hours community service was confirmed. In respect of the second count, the Court of Criminal Appeal imposed a sentence of three years. The Court of Appeal's approach in this case was influenced by the circumstance that the 500 hours of community service had already been served and therefore any adjustment to the sentence needed to be made to the sentence that Simpson J had imposed for the second count (three years with immediate release on good behaviour).
It can be seen from the sentencing of Mr Agius and Mr Zerafa that, although separate sentences were required to be imposed for each offence, the only sensible way of approaching a comparison between sentences is to look at the total sentences imposed because of the relative artificiality of dividing the criminal conduct into two periods by reason of the change in the law on 23 May 2001. Furthermore, the approach taken by Simpson J to regard the ten-year maximum as being the effective maximum for the total sentence removed any anomaly that might otherwise have been caused by taking into account a higher maximum for the first count than was applicable for the second count.
In R v Green; R v Quinn [2011] HCA 49; 244 CLR 462 the plurality (French CJ, Crennan and Kiefel JJ) articulated the relevant principle for appellate intervention on the ground of disparity at [31]: "The sense of grievance necessary to attract appellate intervention with respect to disparate sentences is to be assessed by objective criteria. . . The court will refuse to intervene where disparity is justified by differences between co-offenders such as age, background, criminal history, general character and the part each has played in the relevant criminal conduct or enterprise." [Footnotes omitted]
Although the sentences imposed on Mr Agius and Mr Zerafa are relevant to those imposed on the appellant and Mr Pritchard in that they were alleged, and shown, to be parties to the same conspiracy, there are significant distinguishing features. Mr Agius was the mastermind of the scheme and his offending was over a greater period. Mr Zerafa implemented the scheme and while he may be taken to have obtained some financial benefit for his participation as an employee and partner of Owen T Daniel, the motive of personal gain was not as apparent in his case.
Mr Agius' sentence was close to the maximum sentence for the offence and reflected her Honour's assessment that his offending was close to the worst kind for that offence. I do not, in these circumstances, discern any basis for a justifiable grievance on the part of the appellant when the sentence imposed on him is compared with that imposed on Mr Agius. Although the term of Mr Zerafa's imprisonment was less than that imposed on the appellant, his subjective circumstances were very different: he was young and was, effectively, corrupted by Mr Agius and Mr Daniel. Although he was a willing participant in a dishonest scheme and can be taken to have been rewarded as an employee and partner of Owen T Daniel, his rewards were not shown to be either substantial or the result of greed.
The appellant's total sentence was slightly less than half the maximum of the offence charged in count 2. His offending conduct was perpetrated over five years and involved considerable deliberation and dishonesty. His moral culpability, while less than that of Mr Agius, was considerable. He was a successful business man with a good reputation who, in a calculated and deliberate fashion, engaged in a deception designed to deprive the ATO of funds which it was entitled to receive for the public good. He made no reparation for the substantial loss to the ATO. His reputation for honesty and integrity, to which his several referees attested, rested on a somewhat flawed foundation.
I am not satisfied that there is any disparity such as would give rise to a justifiable sense of grievance between the sentence imposed on the appellant and the sentences imposed on Mr Agius and Mr Zerafa. The first ground on sentence has not been made out.

Second ground of appeal on sentence: an accumulation of one year's imprisonment for count 1 is excessive

The approach taken by the sentencing judge was the same as that adopted by Simpson J in R v Agius: namely, to make the sentence for the second count wholly cumulative. Although other approaches may have been open, I do not consider that the approach could sensibly be criticised in circumstances where, although two counts were necessary as a matter of law, the conduct comprised a single conspiracy.
Nor do I regard the comparison (which is implicit in the second conviction ground) between the individual sentences imposed on different offenders for counts one and two to be a useful one. In my view, the only meaningful comparison is the one between the total sentences imposed for both counts. In circumstances where there is no disparity between the total sentences, I do not consider there to be any basis for any grievance based on a comparison between individual sentences. The second ground on sentence has not been made out.
The appellant does not allege as a separate ground, aside from questions of parity, that the total sentence was manifest excessive. Had such a ground been alleged, it would not have been made out for the reasons given above relating to the length and seriousness of the offending conduct and the maximum sentence.

Proposed orders

For the foregoing reasons I propose the following orders: 1. Grant leave under rule 4 of the Criminal Appeal Rules 1952 (NSW) in respect of the first ground of appeal against conviction. 2. Dismiss the appeal against conviction. 3. Refuse leave to appeal against sentence.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 April 2015

Criminal Appeal Rules 1952(NSW)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (23 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (11)

Cited By (1)