Cassaniti v R

COUNSEL: P. Roberts SC - Crown Respondent B. Coles QC/P. Byrne SC/D. McGovern SC/S. Buchen - Appellant

SOLICITORS: Commonwealth D.P.P - Crown Respondent Kiki Kyriacou Lawyers - Appellant

IN THE COURT OF CRIMINAL APPEAL 2006/1860

SULLY J HOWIE J LATHAM J 16 March 2007 Salvatore Peter CASSANITI v REGINA Judgment

Introduction 1 Between 25 July 2005 and 30 September the appellant, Mr. Cassaniti, stood trial in the District Court at Sydney before his Honour Judge Norrish QC and a jury. 2 The appellant was so tried upon an indictment containing 24 counts. Each count, except count 21, charged the appellant with having defrauded the Commonwealth of Australia of a sum certain in money. The amount of the largest defrauding thus charged was $38,323.00 (count 15); that of the smallest such defrauding was $4,266.57 (count 20). Various dates were laid in the various counts; the earliest date being 15 August 1997, (count 1), and the latest date being 30 March 2001, (counts 19 and 20). 3 Count 21 charged the appellant with having attempted to defraud the Commonwealth of Australia of a sum certain in money. The date laid was 15 March 2001. The relevant amount was $2,680.77. 4 Each of the 24 counts alleged a contravention of section 29D of the Crimes Act 1914 (C'th). Any such contravention attracts upon conviction a statutory maximum penalty of, relevantly, imprisonment for 10 years. 5 The jury found the appellant not guilty on count 1 and guilty on each of the remaining 23 counts. The appellant was in due course formally convicted and sentenced to various terms of imprisonment. There is no present challenge to any of these sentences and nothing more need be said about them. 6 The appellant challenges all twenty-three of his convictions. Three grounds of appeal, as follows, were notified and argued: "1. The Learned Trial Judge misdirected the jury about the consequences of company deregistration. 2. The Learned Trial Judge misdirected the jury about the consequences of company liquidation. 3. The Learned Trial Judge misdirected the jury on the issue of Joseph Paragalli's bankruptcy." 7 The appellant gave, on 7 November 2005, notice of his intention to appeal. The requisite notice of appeal and accompanying statement of the grounds of appeal were not filed until 9 August 2006. It is necessary, therefore, that the appellant obtain from this Court an extension of time for the filing of the latter documents. An application for such an extension was filed on 9 August 2006. It explains in detail the reasons for the delay in the filing of the formal notice and statement of grounds of appeal. The explanation thus given is not controversial. In my opinion the necessary extension should be granted. I will propose in due course an appropriate formal order in that behalf. 8 The written submissions of the Crown contain what is described as a "Synopsis of Crown case". Because of the contained issue which is raised by each of the grounds of appeal, it is convenient to use this summary in order to outline at this early point in the present reasons the general context of the particular charges brought against the appellant: "6. The appellant was the principal of an accountancy firm, Cassaniti and Associates, and a registered tax agent. 7. During the period covered by the counts in the indictment, August 1997 to March 2001, the appellant lodged income tax returns in the names of various of his clients or companies of his clients, knowing that the returns contained false information, and that on the basis of this false information, the Australian Taxation Office (ATO) would make refunds of purported income tax payments which were not properly refundable. In each case, the income tax returns claimed either Prescribed Payment System (PPS) tax instalments or Pay as You Earn (PAYE) taxation deductions had been made. In each case, to the appellant's knowledge, no such payments or deductions had occurred. Each of the income tax returns in question contained other false information, including the amount said to have been earned by the taxpayer for the particular financial year, and expenses incurred, such false information being included to generate and support a refund." 9 In the light of the discussion which is to follow, it is useful to stress at once that the gravamen of the Crown case as so defined was not some unlawful conduct on the part of the appellant in connection with what might be called corporate governance. Neither was the gravamen of the case an unlawful passing off, so to speak, by the appellant of himself as a person having a particular authority which in truth he did not have. The gravamen of the case was a course of conduct engaged in by the appellant with the deliberate intent of perpetrating thereby a fraud upon the Commonwealth. 10 Of the 24 counts included in the indictment, those numbered 1 to 15 inclusive related to taxation returns which had been filed on behalf of various companies of which a certain Mr. Paragalli had been initially a Director. Mr. Paragalli had instructed his previous accountant to set up the companies in order to allow him to carry on his business in the transport industry. Mr. Paragalli became, subsequently, both a client and a debtor of the appellant. On 1 April 1998 Mr. Paragalli, at the appellant's suggestion, became bankrupt. A central allegation of the Crown case against the appellant was that false taxation returns had been lodged as a means of recovering thereby significant sums of money which could be paid over to the appellant on account of large sums of money then owed by Mr. Paragalli to the appellant on account of both outstanding accountancy fees and outstanding loans. 11 Each of the counts numbered 1 to 15 inclusive in the indictment concerned a particular company taxation return. In each case the particular return was for a particular financial year; had been filed electronically on behalf of a particular company; and claimed, in the Crown case falsely to the knowledge of the appellant, refunds of previously paid taxation instalments. The appellant did not give evidence at his trial. His defence at trial was conducted upon the basis that there was a reasonable possibility that each of the relevant taxation returns represented, respectively, in fact the true trading position of the relevant company; and that there was, as well, a reasonable possibility that, insofar as the information contained in any of the returns was false, the appellant was unaware of that falsity. This two-fold defence strategy at trial raised essentially a common proposition, namely, that the jury at trial could not be satisfied beyond reasonable doubt that the appellant knew that the relevant companies were not in fact entitled to the refunds which they were respectively claiming in the relevant taxation returns. 12 The remaining 9 counts in the indictment were concerned, not with company taxation returns, but with personal income taxation returns. As will appear presently, the present appeal puts in issue alleged misdirections to the jury on the topic of the submission of company taxation returns; and with the related topic of the effect, if any, that Mr. Paragalli's bankruptcy had on his capacity to act as the public officer of a company for the purposes of signing the relevant company taxation returns. It follows, therefore, that if there were misdirections as now alleged by the appellant, then they could have had no relevant effect upon the deliberations of the jury in connection with counts 16 to 24 inclusive in the indictment.

13 The Crown sought to prove in various ways relevant knowledge in the appellant. In some of the individual matters, for example those encompassed by counts 13 and 14 in the indictment, the Crown relied upon representations implicitly made in the relevant taxation returns that the particular corporation "existed as a legal entity" during the relevant tax year. In other cases, for example that encompassed by count 4 in the indictment, the Crown relied upon representations implicitly made in the relevant taxation return that the relevant corporation had "actually traded during the relevant period". The Crown tendered as part of its case at trial various documents which had been seized from the appellant's premises; and which supported, in the contention of the Crown, the Crown allegation that the appellant knew during which periods the various companies had in fact been trading; and when liquidators had been appointed or when de-registration had been effected; and that this knowledge was inconsistent with representations clearly contained within the particular relevant returns. The Crown case on the charges numbered 1 to 15 inclusive in the indictment relied also upon evidence from Mr. Paragalli himself. He gave evidence that he had been asked repeatedly by the appellant to sign documents; that he had done so without question; and that he had not himself represented to anybody that any of his companies had incomes of the order claimed in the relevant returns; and that he had not represented to anyone that any of his relevant companies was entitled to the refund of previously paid taxation instalments as claimed in the relevant company returns. 14 The summing-up was extensive and careful. It directed the jury that "……in relation to each charge the Crown must establish beyond reasonable doubt that the accused had knowledge that the information was false in the relevant way …… [and] ….. the Crown must prove that the accused had an intention to act dishonestly". (SU 23-24) 15 In that context the learned trial Judge gave, at SU 23-24, the following more particular directions: "By law a company ceases to exist on deregistration. When deregistered, the company's property at the time of deregistration vests in the Australian Securities and Investment Commission ………. . The directors of a company or the director of a company existing immediately before deregistration are required to keep the company's books for three years after deregistration where property of the corporation is vested in ………. ASIC. ASIC may continue to act as trustee, if it so desires, and may dispose (of) or deal with the property as it sees fit. ………… If a corporation earns income before deregistration, then after deregistration a director has no legal power to lodge a tax return in respect of a year arising before deregistration . Here of course, one of the issues you will need to consider in respect of the relevant corporation you are considering is whether the accused knew the company was deregistered at the relevant time. When a liquidator is appointed …… the powers of the directors vest in the liquidator. The directors of the corporation, once a liquidator is appointed, have no power to lodge tax returns after the appointment of a liquidator . The liquidator performs the function of the officers of the company, from the time of his appointment." [emphasis added] 16 The highlighted parts of the direction quoted in the immediately preceding paragraph and relating to deregistration were only relevant to counts 3, 6, 7, 10 and 11. Counts 3, 6 and 7 related to the lodgement of a return after deregistration on 3 July 1998 for the taxation years 1996-1997 and 1997-1998. Refunds of, respectively, $19,000, $11,000 and $13,000 were claimed. Counts 10 and 11 related to the lodgement of a return after deregistration on 3 July 1998 for the tax year 1998-1999. Thus, those two returns only accounted for 3 days of trading in that financial year, yet refunds of, respectively, $16,000 and $15,000 were claimed. Count 4 related to, and was the only count which related to, the lodgement of a return after liquidation. 17 Having given the directions earlier herein mentioned, the learned trial Judge proceeded to summarise the evidence of a number of important Crown witnesses before dealing with the basis of the Crown case on counts 1 to 15 inclusive by making particular reference to the relevant taxation return, to other documentary evidence, and to the evidence of Mr. Paragalli. No application was made at the end of the summing-up for redirections upon those matters. 18 The particular grounds upon which the appellant now relies must be considered against the background previously outlined. Before turning in a particular way to the individual grounds of appeal, it is useful to observe that the relevant questions asked by the jury can be related back quite specifically to the directions that have been quoted in paragraph 15.

Grounds 1 and 2 19 Shortly after the jury had retired to consider its verdicts, the jury sent to the presiding Judge these two questions: "Your Honour, (1) Can a Tax Agent legally submit a tax return for a de-registered company for a period prior to its de-registration? (2) Can a Tax Agent legally submit a tax return for a company subsequent to it being liquidated for a period prior to its liquidation?" 20 Ground 1 challenges the directions given in response to Question (1). Ground 2 challenges the directions given in respect to Question (2). 21 Immediately following the receipt of these questions the presiding Judge heard lengthy submissions from the Crown Prosecutor and from Senior Counsel then appearing for the present appellant. At the conclusion of those submissions, and before answering the questions, his Honour, with the agreement of counsel, clarified with the jury that the words "being liquidated" which formed part of question (2) would be taken "…… to in effect mean the appointment of a liquidator". 22 Before turning in a particular way to the manner in which the learned trial Judge dealt with the questions from the jury, it is useful to consider the structure of the competing submissions that were put to his Honour in connection with the answering of the questions. 23 For the appellant it was submitted that both questions should be answered, simply: yes. Counsel submitted that section 252 of the Income Tax Assessment Act provided for the representation of a company by a public officer who was appointed either by the company itself or by an authorised agent of the company. It was submitted that the only evidence in the trial concerning the appointment of a public officer of the relevant companies was evidence that Mr. Paragalli's signature as public officer appeared on the relevant tax returns and that the obligation to lodge tax returns after either liquidation or deregistration was a continuing obligation with which the relevant public officer was fixed. It followed, so the submissions proceeded, that the public officer could engage a tax agent such as the appellant to lodge the relevant taxation returns. 24 One observation that can be made at once about those submissions is that they appear to overlook the fact that two of the returns, namely those with which counts 6 and 11 were concerned, were not in fact signed by Mr. Paragalli. The count 6 return was signed by a Mr. Willox who held no position with the relevant company, although he was one of the appellant's clients. The return with which count 11 was concerned was signed, not by Mr. Paragalli, but by the appellant. 25 The Crown Prosecutor submitted that there was no evidence of any appointment of a public officer by those responsible for the relevant company's affairs after either liquidation or deregistration. It was submitted that the companies were, after liquidation or deregistration, in the hands either of the liquidator or of ASIC. It was submitted that section 252 of the Income Tax Assessment Act applied to companies carrying on business in Australia, and that deregistered companies were outside the ambit of the provision in that by definition they were not carrying on business in Australia. It was submitted that in any event the deregistration of a company brought to an end any antecedent authority of any agent to act on the company's behalf. It was submitted that so far as concerned a liquidator, the Income Tax Assessment Act required that the liquidator immediately notify the relevant taxation authority of the liquidator's appointment; and that thereafter the statute required the Commissioner to notify the liquidator of the company's taxation liability. The Crown submitted that whether a particular case was one of the appointment of a liquidator or one involving company deregistration, the appellant could not have been appointed as the relevant company's tax agent. 26 The Crown's submissions pointed up what was said by the Crown to be a more fundamental flaw in the defence submissions. The flaw, put simply, was that the defence submissions confused powers with liabilities. Powers, the Crown submitted, were terminated in the event of either deregistration or liquidation; whereas liabilities continued to exist after either of those two occurrences. It was submitted that the Income Tax Assessment Act did not confer powers or authorities on company officers. The Act, it was submitted, dealt with, and only with, the very different topics of the creation and the regulation of taxation liabilities. 27 The learned trial Judge, having heard the submissions which had been previously summarised, said that his Honour had: "…….. a feeling in a sense that what the jury has to decide in this matter, in any event, doesn't turn upon the legal issues". The Crown responded that "….. ultimately, the question of fraud is a different question from the question of authority to put in tax returns. ……….. If it be a fact that Mr. Cassaniti was not authorised to - or did not have the legal authority to put in tax returns, does not necessarily answer the question whether he acted fraudulently". It was submitted, further, that if the appellant had been authorised to submit tax returns, that fact of itself could say nothing about whether or not he had exercised that authority dishonestly and therefore fraudulently. The conclusion to which the competing submissions drew the learned trial Judge was expressed by his Honour thus: "I'm inclined to try and not answer these questions with a yes and no answer ….. but to go back to tors (sic) …….". 28 When his Honour actually addressed with the jury the substance of the two questions, he began by reminding the jury, correctly, that the first question was relevant only to the counts numbered 3, 6, 7, 10 and 11. His Honour then gave to the jury these directions: "When a company is de-registered it ceases to exist as a legal entity, it is dissolved. Dissolution of a company means that the authority of any agent to act on its behalf is forthwith terminated. Anything that is required to be done in relation to the affairs of a de-registered company, can only be done by the Australian Securities and Investments Commission, that is ASIC, or its predecessor, the Australian Securities Commission. The Crown case against the accused and what the Crown seeks to prove, however, is a different issue than the accused's legal authority to lodge income tax returns for a relevant corporation for a relevant year. Here, a factual issue, or factual issues, you will need to consider in relation to what the Crown has to prove is whether the accused knew that the relevant corporation was de-registered at the relevant time that the income tax returns were lodged and whether the accused knew that the relevant public officer signing the income tax return had authority to sign that particular income tax return at that time, either by reason of the de-registration of the corporation and in the relevant case, by reason of Mr. Joseph Paragalli's bankruptcy. Mr. Joseph Paragalli being bankrupt, he had no legal capacity to conduct his affairs whilst bankrupt, other than through his Trustee in Bankruptcy. These matters are not decisive of course, they are some of the matters that the Crown asks you to take into account. The Crown case is that in combination with other matters arising from the evidence, the only reasonable inference to be drawn, which is what the Crown must establish, that this was the only reasonable inference that can be drawn, is that the accused knew that the relevant claims, in respect of the respective counts, were false and that the accused intended and in fact did defraud the Commonwealth, as I have explained in my other directions, by lodging the relevant tax return that relates to each count and by receiving and depositing the refunds that were issued by the Australian Taxation Office." 29 His Honour then progressed to the second question. He reminded the jury, correctly, that this question was relevant only to the count numbered 4. His Honour then gave to the jury these directions: "In relation to the second question it reads, "Can a tax agent legally submit a tax return for a company, subsequent to the appointment of a liquidator for a period prior to the appointment of that liquidator?". In relation to this matter; firstly, when a liquidator is appointed the powers of the directors vest in the liquidator. Directors of a corporation have no power to lodge tax returns after the appointment of a liquidator. At the time of the appointment of a liquidator the directors of the company cease to have powers to control the company. Only the liquidator has power to appoint an agent to act on behalf of the corporation. Again, the Crown's case is not dependent upon proving that the accused had no legal authority to lodge the tax returns, that is a different matter and a different issue from what you have to consider in determining whether the Crown has proved that the accused is guilty. Here the Crown seeks to prove, on the part of the accused, knowledge of the appointment of the liquidator and knowledge of Mr. Paragalli's bankruptcy as matters relevant to, in conjunction with other matters, establishing that the accused relevantly defrauded the Commonwealth in the way in which it has explained, as it relates to this matter." 30 As to the deregistration question, the appellant submits that the jury question should have been answered simply: yes. The structure of the supporting argument depends, essentially, upon the drawing of what are put as being substantive legal distinctions between, on the one hand, the standing of a director or other agent of a company after the company has been deregistered; and, on the other hand, the standing after deregistration of a person who was, as at the date of deregistration, the "public officer" of the company for the purpose of compliance with the company's taxation obligations. The suggested distinctions, putting them into a different form, depend upon contrasting provisions of, on the one hand, the Corporations Law as set out in the Corporations Act 1989 (C'th); and, on the other hand, the Income Tax Assessment Act 1997 (C'th). 31 The following synthesis of paragraphs 36, 37 and 38 of the appellant's written submissions puts the essential reasoning upon which the appellant relies: "A business run by a deregistered corporation may continue to operate and derive income as if the corporation had not been deregistered. As such the business entity has an obligation to pay income tax and to lodge income tax returns. It would be extraordinary for an entity to escape paying tax because it was a deregistered corporation. ………………………. Deregistration has no effect on the obligation to lodge income tax returns and to pay income tax. By lodging an income tax return in these circumstances, a company and its public officer are fulfilling their legal obligations. It is submitted that his Honour erred by failing to refer to this aspect of the law. Integral to a complete direction was an explanation of the obligations and responsibilities of the public officer of a company. ……………. (references then made to section 252(1) of the Income Tax Assessment Act)………. . Despite the corporation being deregistered, if the business continued to trade and was considered to be a company under the Income Taxation Assessment Act 1936 it was obliged to have a public officer. The jury should have been told that if they found the company had continued to trade after deregistration, it continued to be a tax paying entity and as such, if it derived income, it had to have income tax returns lodged. Whilst ASIC and agents of the corporation were the proper parties to have this done under the Corporation Act, there is an obligation under the Income Taxation Assessment Act 1936 on the part of those actually conducting the business, in particular its public officer, to lodge income tax returns and to pay income tax. In these circumstances, it was legal for the public officer to engage the services of a tax agent to assist in preparing and lodging the tax returns. There was no evidence in the trial to suggest that the public officers of the relevant Paragalli companies were removed following company deregistration." 32 The essential response of the Crown is put succinctly in the following extract from paragraph 47 of the Crown's written submissions: "……………. Underlying the argument is the false premise that if a person trades or runs a business in the name of a company which is defunct, the defunct company attracts income tax liabilities rather than the person who is running the business. ………………... It would seem to be self evident that if an artificial entity, such a company, no longer legally exists (which is the position on deregistration), it cannot do anything including run a business. This does not have the extraordinary consequence that the Submissions suggest, since any income tax liability reposes in the person running the business whatever name(s) he chooses to call the business(s) which he is operating.……… " 33 In my opinion it cannot be conceptually correct to speak of a deregistered company as having any capacity, however notionally restricted, to carry on business after deregistration has been formally and lawfully effected. The company has thereupon "ceased to exist"; not provisionally or conditionally, but simply and comprehensively. 34 It is, no doubt, entirely possible that the business formerly carried on by a deregistered company will continue to be carried on post-deregistration, and whether by means of another lawfully constituted legal entity or by means of individual activity; but it will not continue to be carried out by the deregistered company. 35 In such a context, I agree with the Crown's submission that the lawful incidence of post-deregistration taxation liabilities and responsibilities will burden whoever or whatever actually takes over any post-deregistration carrying on of any pre-deregistration business activities of the deregistered company. 36 Given the foregoing propositions, the learned trial Judge had open to him two contrasted ways of dealing with the jury's particular deregistration question. One was to engage the question directly. The other was to give effect to his Honour's instinct that it was better not to attempt a simple yes or no answer but to re-focus the deliberations of the jury on the true issue for trial which was whether the appellant had defrauded, as alleged by the Crown, the Commonwealth. 37 His Honour elected to take the latter course. I see no basis upon which this Court would be entitled to say that his Honour was in error in making that choice. In my opinion, and all to the contrary, the way in which his Honour took up the jury question did in fact direct the attention of the jury away from a potentially misconceived and misleading emphasis upon mere matters of corporate governance and the authority of a taxation agent; and directed the attention of the jury, instead, back to the correct focus of the Crown case which was that of an allegation of fraud. 38 I am unpersuaded that his Honour erred in the way in which he dealt with the deregistration question. I should make plain that in so saying I leave aside for the moment what was put to the jury about Mr. Paragalli's bankruptcy. That topic will require later consideration in connection with Ground 3.

39 As to the liquidation question, the appellant again submits that the jury question should have been answered simply: yes. The essential argument is encapsulated in paragraph 40 of the appellant's written submissions: "As discussed in the context of the deregistration direction, the answer is incomplete. Following appointment of a liquidator, authority for a director to do any act may have continued, been given by the liquidator or been ratified by the liquidator. Further, a director who is the public officer is still obliged by reason of s 252 of the Income Taxation Assessment Act 1936 to see to the taxation affairs of the corporation. The public officer thereby has statutory authority to see to the taxation affairs of a corporation in liquidation and to engage the services of a Tax Agent to assist in preparing and lodging the tax returns." 40 The Crown response, also, is succinctly stated in paragraph 48 of the Crown's written submissions: "It is further submitted that the contents of paragraph 40 of the Submissions is both irrelevant to the directions given to the jury and legally incorrect. The role of a public officer of a company is a position required and created by statute …………. A company is required to appoint an agent, called a public officer, for income tax purposes. However s 215 of the Income Tax Assessment Act (1936) makes provision for what occurs on the appointment of a liquidator to a company in relation to the company's income tax affairs. It is apparent that a person who formerly held the position of public officer of a company has no role or powers in relation to the company after the appointment of a liquidator. However, such a person might incur liabilities (under Taxation legislation) as a consequence of his/her performance of the role of public officer for a company prior to the appointment of a liquidator." 41 The conclusions to which I have come in connection with the jury's deregistration question are, in my opinion, equally valid in connection with the jury's liquidation question. 42 I would not uphold either of grounds 1 and 2. Ground 3 43 It is, once again, convenient to begin by noting, in the words of the appellant's written submissions, the substance of the appellant's argument on this ground: "42. The jury's communication did not concern the issue of Joseph Paragalli's bankruptcy. During argument which preceded the redirection, the trial judge expressed the view that Paragalli's bankruptcy was relevant to the identity of the public officer/s of the relevant companies. His Honour appeared to assume that an undischarged bankrupt could not be a public officer. It is noted that the Crown made a qualified concession that "a person could be a bankrupt and be appointed a public officer". 43. It is submitted that the direction quoted above is erroneous. An undischarged bankrupt is a person liable to pay income tax for the years of the bankruptcy. There is no provision in the Bankruptcy Act 1966, Taxation Administration Act 1953 or any other taxation legislation which empowers or obliges a trustee in bankruptcy to file income tax returns for the undischarged bankrupt for any period. Bankruptcy is no longer a form of absolute legal disability. An undischarged bankrupt is expected to earn money and to abide by the concomitant taxation obligations." 44 In my opinion these submissions are in substance correct. The Bankruptcy Act (1966) (C'th) is itself concerned principally to ensure that an undischarged bankrupt's disposable property is fully identified, and then is administered independently of the bankrupt and for the benefit of the correctly identified creditors of the bankrupt. That latter task is entrusted to a Court-appointed Trustee in Bankruptcy. The basic powers of such a Trustee are enumerated in section 134 of the Bankruptcy Act; and they are powers enabling the Trustee to act with all practicable latitude in the gathering in of the bankrupt's property that is available for distribution among his creditors in the course of the due administration of his bankrupt estate. 45 The Bankruptcy Act does not forbid an undischarged bankrupt to earn income or to acquire lawfully other property; but it does require full and frank disclosure to the Trustee of all such after-acquired property, title to which property vests by statute in the Trustee immediately upon its acquisition: sections 58 and 77. 46 The Bankruptcy Act itself aside, other legislation imposes various personal disqualifications upon an undischarged bankrupt. Importantly in the present case, such a person cannot lawfully be a company director, or manage the affairs of a company. These personal disqualifications attached to Mr. Paragalli upon his becoming a bankrupt and for as long as he remained thereafter an undischarged bankrupt. 47 In an overall statutory context that is explained in paragraphs 27, 28 and 29 hereof, I am of the opinion that the bald proposition: "Mr. Joseph Paragalli being bankrupt, he had no legal capacity to conduct his affairs whilst bankrupt, other than through his Trustee in Bankruptcy."

is incorrect. 48 What ought to follow from that conclusion must depend upon a fair reading of the bald proposition itself in the context of which it forms but a small part. 49 When that is done, then in my opinion it is fair to say that what is being put to the jury is the following series of connected propositions:

[1] that the fact that Mr. Paragalli was at material times an undischarged bankrupt was not decisive of the question whether the Crown had proved beyond reasonable doubt that the appellant had defrauded the Commonwealth as alleged; but

[2] that the fact was relevant to the consideration of that question;

[3] that the relevance was this: if the appellant knew, at the time he lodged a relevant return, that Mr. Paragalli was then an undischarged bankrupt, then that knowledge was one factor, albeit among others, from all of which factors and inference could properly be drawn that "….. the accused knew that the relevant claims …… were false and that the accused intended and in fact did defraud the Commonwealth ….." ;

[4] that the reason why that knowledge was such a factor was because knowledge of a current bankruptcy was knowledge of something capable of affecting Mr. Paragalli's standing and authority to be a director, or a manager, or a legitimate appointee in fact as public officer, of the company, the affairs of which were the subject of the particular tax return. 50 Had the bare proposition quoted in paragraph 32 hereof stood alone and unqualified, then ground 3 would have had substance. In my opinion, however, the proposition, when read fairly in context as conveying the connected propositions that I have summarised, cannot be thought sensibly to have caused a miscarriage of justice. 51 I would not uphold Ground 3.

(1) that the appellant have all such extensions of time as may be necessary in order to permit of his prosecution of the present appeal against conviction;

(2) that the appeal against conviction be dismissed.

53 HOWIE J: I agree with Sully J. 54 LATHAM J: I agree with Sully J. **********

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