Criminal law and procedure - Knowingly making improper use of position as officer of a company - Corporations Law of Western Australia, s 232(6) - Evidence - Admissibility of acts and declarations of others - Criminal enterprise - Whether evidence that appellants had joined such an enterprise - Whether admission of evidence of criminal enterprise a miscarriage of justice - Whether verdict of jury could be supported having regard to evidence - Adequacy of trial Judge's directions - Whether jury properly directed as to the use to which evidence of criminal enterprise appellant said to have joined could be put - Whether sufficient direction as to the particular knowledge, belief or intent alleged to have made the actions of the appellants dishonest - Whether evidence sufficiently separated and singled out in relation to each accused person

Criminal law - Sentence - Whether sentences manifestly excessive - Whether sentence of imprisonment only disposition open in each case

Corporations Act 2001 (Cth), s 1401(2)

Corporations Law of Western Australia, s 232(6), s 1317FA(1)

Applications for leave to appeal against sentence refused

Respondent : Commonwealth Director of Public Prosecutions

Appellant : Mr M T Trowell QC, Mr J A Davies & Mr S D Freitag

Respondent : Commonwealth Director of Public Prosecutions

Ahern v R [1988] HCA 39; (1988) 165 CLR 87

Chew v R [1992] HCA 18; (1992) 173 CLR 626

Festa v R [2001] HCA 72; (2001) 208 CLR 593

He Kaw Teh v R [1985] HCA 43; (1985) 157 CLR 523

Hoy & Ors v R [2002] WASCA 275

Krakouer v R (1998) 194 CLR 20

Lowndes v R [1999] HCA 29; (1999) 195 CLR 665

M v R [1994] HCA 63; (1994) 181 CLR 487

Mraz v R [1955] HCA 59; (1955) 93 CLR 493

Peters v R [1998] HCA 7; (1998) 192 CLR 493

R and Attorney-General (Cth) v Associated Northern Collieries [1911] HCA 73; (1911) 14 CLR 387

R v Bilick & Starke (1984) 36 SASR 321

R v Byrnes & Hopwood (1995) 183 CLR 500

R v Byrnes [1995] HCA 1; (1995) 183 CLR 501

R v Davidovic (1990) 51 A Crim R 197

R v Dinh [2000] NSWCCA 536; (2000) 120 A Crim R 42

R v Gouroff (1979) 1 A Crim R 367

R v Masters (1992) 26 NSWLR 450

R v Minuzzo & Williams [1984] VicRp 34; [1984] VR 417

R v Pektas [1989] VicRp 21; [1989] VR 239

R v Romeo & Ors (1987) 25 A Crim R 80

R v Zorad (1990) 19 NSWLR 91

Tripodi v R [1961] HCA 22; (1961) 104 CLR 1

1 MURRAY J: In this matter I have had the advantage of reading in draft the judgment prepared by Miller J. It is a comprehensive document which deals thoroughly with the issues raised in these appeals and applications for leave. I wish only to add a few comments to make clear my reasoning in coming to the conclusions, as Miller J did, that the appeals against conviction should be dismissed and leave to appeal against the sentences should, in each case, be refused.

2 As to the appeals against the convictions, I wish to start by noting briefly the nature of the offences with which the appellants were charged. The counts on the indictment have been dealt with in detail by Miller J. They related to different factual matters and transactions, but they were in common form, alleging the commission of an offence against the Corporations Law of WA, s 1317FA(1), included, with other provisions of that Law, into its successor, the Corporations Act 2001 (Cth), by s 1401(2) of that Act.

3 Section 1317FA(1) is an offence-creating provision. The offences created are contraventions of civil penalty provisions of the Law. One such provision, the one relevant to these cases, is s 232(6). That provision imposes a duty upon an officer of a corporation, relative to this case, not to make improper use of his or her position as such, "to gain, directly or indirectly, an advantage for himself or for any other person or to cause detriment to the corporation." It will be observed that the way in which the duty is formulated requires no specific intention to be established to constitute a contravention of the subsection, but that mental element is imported into the definition of the offence by s 1317FA because the contravention must occur knowingly, intentionally or recklessly (as to which see generally He Kaw Teh v R [1985] HCA 43; (1985) 157 CLR 523) and, relative to the way in which these appellants were indicted, dishonestly and intending to gain, directly or indirectly, an advantage for any person, including, of course, another corporation.

4 So the conduct in question must be knowingly, in the context of this indictment, carried out, within the meaning of the law, and, in addition, as these appellants were indicted, their conduct was required to be established to be dishonest, within the meaning of Peters v R [1998] HCA 7; (1998) 192 CLR 493, where it was held that, in relation to the offence of conspiracy to defraud under the Crimes Act 1914 (Cth), the concept of dishonesty imported a judgment to be made by the jury that the conduct was to be so categorised by the standards of ordinary, decent people, in all the circumstances of the case as the jury found them to be. That was the concept relevant to the case of these appellants.

5 Further again, however, the Crown had to prove beyond reasonable doubt that each of the appellants intended that their conduct should gain an advantage, directly or indirectly, for some corporate person other than Hallmark Gold NL (Hallmark). The Crown's case against each appellant was circumstantial in character. As it was put before the jury, by both the prosecutor and the trial Judge, the Crown case was that the appellants were in breach of their duty as directors of Hallmark (de facto, if not entirely de jure) because they so conducted themselves, in respect of the decisions and transactions in question, knowingly and intentionally seeking to gain an advantage for the various corporate entities who were to be the beneficiaries of the decisions that were taken and transactions entered into.

6 Their behaviour was dishonest, so the prosecution argued, because they joined in an enterprise with others, Endresz, Cain and Muir, with the intention of benefiting corporations controlled by those persons, rather than that they acted as they ought to have behaved as directors, honestly with the intention of furthering the interests of and producing benefit for Hallmark. The thrust of the Crown case was not that the offence was committed because they intended to harm Hallmark, necessarily, although it was said the lack of discernible commercial benefit in the transactions had that effect, but because they acted dishonestly for an ulterior, extraneous purpose, with the intention of benefiting corporations other than Hallmark. This, it was put by the prosecution, was done not only knowingly and intentionally, but it was dishonest, according to the standards of ordinary decent people, because as directors they ought to have had Hallmark's interests as the sole guide of their conduct. It was because the enterprise in which they were said to have joined had those characteristics that, at the trial, and before us, it was loosely described as a criminal enterprise.

7 The approach taken was that authorised by the High Court in relation to the earlier state uniform Companies Codes, s 229(4): Chew v R [1992] HCA 18; (1992) 173 CLR 626, and R v Byrnes [1995] HCA 1; (1995) 183 CLR 501. In those cases it was made clear that the test of impropriety is objective. But as I have pointed out, in respect of the offence charged in these cases, a related intention had to be established. In relation to a case such as these, where the allegation is that the appellants abused their fiduciary positions as directors, it is important to bear in mind what was said by the majority of the High Court in Byrnes, at 514 - 5:

"Impropriety does not depend on an alleged offender's consciousness of impropriety. Impropriety consists in a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case. When impropriety is said to consist in an abuse of power, the state of mind of the alleged offender is important: the alleged offender's knowledge or means of knowledge of the circumstances in which the power is exercised and his purpose or intention in exercising the power are important factors in determining the question whether the power has been abused."

8 It was in such terms that the matter was left to the jury in this case and neither appellant makes any complaint about the directions of the trial Judge in that regard.

9 The first complaint, made by both appellants, concerns the admissibility of what may be generally described as evidence of the enterprise, the joinder in which is said to constitute the contravention of their duty as directors, the impropriety involved in their dishonestly, knowingly and intentionally seeking to have Hallmark enter into transactions, not for the benefit of Hallmark, but for the benefit of third parties. I join with Miller J in the view that this evidence was clearly admissible for the reasons given by his Honour. I include in that observation the background evidence, as it might be described, of McCartney and Yannopoulos, to which objection was taken at the trial, and to the more immediately relevant evidence of Corp, Bunting and Woodhouse, to which Miller J has referred, which evidence I consider to be admissible against both appellants as part of the body of evidence concerned to demonstrate the nature of the enterprise in question.

10 Shortly put, I consider that there was reasonable evidence of a circumstantial kind against each of the appellants that his relevant conduct was motivated and intended to produce the result which would constitute the offence so that it might be said, if the jury so concluded, that the appellant whose case they were considering joined in an enterprise of that kind. It was then open to lead the evidence, which I have generally described as evidence of the nature of the enterprise, to demonstrate and confirm what it was that the appellants became implicated in. In that way the evidence was admissible against both and tended to prove the commission of the offences with which they were charged.

11 It is necessary, of course, to bear in mind that it was for the trial Judge to consider whether or not there was reasonable evidence that the conduct of the appellants involved participation by them in the enterprise alleged. That was not a matter for the jury, but a matter upon which the admissibility of the evidence as to the full character of the enterprise, depended. There was, in my opinion, no necessity to direct the jury that they should first consider evidence of the conduct of the appellants and ask themselves whether that established to their satisfaction, beyond reasonable doubt, that they had each joined an enterprise of the kind alleged before going on to consider the probative value of the evidence demonstrating the nature of the enterprise in relation to the question whether each appellant was guilty of the alleged offences, or any of them, having regard to the nature of the enterprise more amply demonstrated by evidence of events generally preceding the involvement of each appellant. In my opinion, ground 9(a) and (b) in Clark's appeal, and ground 6 in Forge's appeal, are predicated upon that erroneous view.

12 It is useful, however, in considering what direction was or ought to have been given by the trial Judge in respect of the evidence against each appellant, to consider the evidence of their conduct which was available as part of the proof of their commission of the offences in question on 23 October 1998.

13 In the case of Forge, there was evidence that he was appointed a director of Hallmark in the knowledge that he was expected to have regard to the interests of Davis Samuel Pty Ltd (Davis Samuel) and, of course, with Endresz, he was a director of CTC Resources NL (CTC). It was Forge who tabled the proposed Davis Samuel management agreement at his first board meeting on 24 September 1998. He was aware of the concerns of Corp and Bunting about the commerciality of that agreement and about the value of the interest in Kanowna Lights NL (Kanowna), which it was proposed that Hallmark would acquire.

14 When Forge was absent from the board meeting on 23 October 1998, when the impugned decisions were taken, having declared an interest as a director of Kanowna, he organised the drawing of the necessary cheques so that Hallmark could pay the moneys which he anticipated the resolution would require, without delay. Forge did not disclose his interest in CTC as a shareholder and director. There was evidence that Forge benefited directly through CTC and a private company which he controlled, from the moneys which were paid, and there was evidence from which the jury might have inferred that Forge knew or ought to have known that Hallmark's acquisition of the shares and options in Kanowna were not necessarily at the best price then obtainable from the point of view of Hallmark. I do not suggest that that is a comprehensive review of evidence of this kind relating to the case against Forge.

15 So far as Clark was concerned, he was, of course, only recruited on 22 October 1998, but this could not possibly have escaped the notice of the jury. The jury might, however, find on the evidence that he accepted his appointment to the board of Hallmark to represent the interests of Davis Samuel and protect those of Endresz. He made no inquiries, before or at the meeting on 23 October, about the merits of the transactions and resolutions for which he voted, despite the large financial commitment which Hallmark was to make. He did not even see the proposed agreement with Davis Samuel and he professed no knowledge about the acquisition of the interest in Kanowna or in relation to the Pinnacles project, which underpinned the worth of that interest. Both Forge and Clark participated in the days following in the execution of documents and the completion of the transactions resolved upon on 23 October.

16 As to the question whether the trial Judge misdirected the jury by failing to tell them clearly what was the evidence available to establish that each appellant joined the enterprise to which I have referred, it may be accepted that ordinarily a trial judge ought to remind the jury what was the evidence available against each of a number of accused persons. The reason why that should be done is to ensure that the jury do not, in their consideration of the case against a particular accused person, wrongly have regard to evidence which is not truly available to establish that case. If, as in this case, it is put that a failure to direct more expansively by collecting together for the jury, the evidence available in relation to each accused, has caused a miscarriage of justice, the question will be whether the jury might have been misled into misusing the evidence as it was presented to them.

17 Counsel for the defence made no such submission to the trial Judge in this case. And in my opinion, having regard to the nature of the evidence under consideration, no miscarriage of justice has been established by the failure of the trial Judge to direct the jury particularly as to the evidence available to establish that each of the appellants was a participant in the enterprise to which I have referred. I would, in that regard, be of the view expressed by the Court in the case of R v Masters (1992) 26 NSWLR 450 at 463, and in R v Gouroff (1979) 1 A Crim R 367 at 373.

18 The trial Judge told the jury how they might use the evidence which established the nature of the enterprise asserted by the prosecution. They

could not, in my view, have used that evidence as proof that each appellant joined in the enterprise, when it was abundantly clear that the evidence concerned events which occurred before the involvement of either appellant or without their participation.

19 To my mind, this is not a matter which involves the application of the proviso that the appeal may be dismissed if the Court is of the view that no substantial miscarriage of justice has occurred. In my opinion, more fundamentally, the appellants have not, in respect of the directions of the trial Judge, established any possibility of the occurrence of a miscarriage of justice in the manner of which they complain.

20 Finally in relation to conviction, the complaint is made that upon all the evidence the verdicts are unsafe and unsatisfactory because the evidence was incapable of sustaining the inference of guilt beyond reasonable doubt. Having had the advantage of reading the judgment of Miller J and his Honour's review of the evidence, I have nothing to add to his Honour's conclusion that the appeals may not be allowed upon these grounds. I would dismiss the appeal against conviction in each case.

21 As to the applications for leave to appeal against sentence, I could usefully add nothing to the reasons of Miller J. I too would refuse leave to appeal in each case.

22 MILLER J: The appellants were charged in the District Court at Perth on an indictment that contained 12 counts. Each alleged an offence committed at Perth on 23 October 1998.

23 The appellants were jointly indicted on counts 1, 11 and 12 with committing an offence against s 1317FA(1) of the Corporations Law of Western Australia ("Corporations Law") in that being officers of Hallmark Gold NL ("Hallmark"), the contravened the provisions of s 232(6) of the Corporations Law, in that they knowingly made improper use of their positions as such officers by:

(a) dishonestly and intending to gain, directly or indirectly, an advantage for Davis Samuel Pty Ltd ("Davis Samuel"), in that they improperly resolved that Hallmark execute a Corporate Advisory Services Retainer Agreement whereby Davis Samuel was retained as consultant to Hallmark (count 1);

(b) dishonestly and intending to gain, directly or indirectly, an advantage for Davis Samuel, in that they improperly caused the execution by or on behalf of Hallmark of a Corporate Advisory Services Retainer Agreement whereby Davis Samuel was retained as consultant to Hallmark (count 11); and

(c) dishonestly and intending to gain, directly or indirectly, an advantage for Kanowna Lights NL ("Kanowna"), in that they improperly caused the execution by or on behalf of Hallmark of an agreement with Kanowna for the exercise by Hallmark of 8,200,000 options in Kanowna at an exercise price of $0.20 per option for a total exercise price of $1,640,000 (count 12).

24 The appellant Clark ("Clark") was charged in counts 2, 4 and 6 on the indictment that he committed an offence against s 1317FA(1) of the Corporations Law in that being an officer of Hallmark, he contravened the provisions of s 232(6) of the Corporations Law by knowingly making improper use of his position as such an officer by:

(a) dishonestly and intending to gain, directly, an advantage for Kamanga Holdings Pty Ltd ("Kamanga") and Quancorp Pty Ltd ("Quancorp"), in that he improperly resolved that Hallmark execute transfer forms for the purchase by Hallmark of 8,200,000 options in Kanowna at a purchase price of $0.08 per option for a total consideration of $656,000 (count 2);

(b) dishonestly and intending to gain, directly or indirectly, an advantage for CTC Resources NL ("CTC"), in that he improperly resolved that Hallmark execute a transfer form for the purchase by Hallmark of 3,600,000 shares in Kanowna at a purchase price of $0.20 per share for a total consideration of $720,000 (count 4); and

(c) dishonestly and intending to gain, directly or indirectly, an advantage for Kanowna in that he improperly resolved that Hallmark execute an agreement with Kanowna for the exercise by Hallmark of 8,200,000 options in Kanowna at an exercise price of $0.20 per option for a total exercise price of $1,640,000 (count 6).

25 The appellant Forge ("Forge") was charged on counts 3, 5 and 7 of the indictment that he was knowingly concerned in an offence by David John Muir ("Muir") in that, on or about the same date at Perth, Muir committed an offence against s 1317FA(1) of the Corporations Law in that being an officer of Hallmark he contravened the provisions of s 232(6) of the Corporations Law by knowingly making improper use of his position by:

(a) dishonestly and intending to gain, directly or indirectly, an advantage for Kamanga and Quancorp in that he improperly resolved that Hallmark execute transfer forms for the purchase of Hallmark of 8,200,000 options in Kanowna at a purchase price of $0.08 per option for a total consideration of $656,000 (count 3);

(b) dishonestly and intending to gain, directly or indirectly, an advantage for CTC in that he improperly resolved that Hallmark execute a transfer form for the purchase by Hallmark of 3,600,000 shares in Kanowna at a purchase price of $0.20 per share for a total consideration of $720,000 (count 5);

(c) dishonestly and intending to gain, directly or indirectly, an advantage for Kanowna, in that he improperly resolved that Hallmark execute an agreement with Kanowna for the exercise by Hallmark of 8,200,000 options in Kanowna at an exercise price of $0.20 per option for a total exercise price of $1,640,000 (count 7).

Forge was also charged in counts 8, 9 and 10 on the indictment that he committed an offence against s 1317FA(1) of the Corporations Law in that being an officer of Hallmark he contravened the provisions of s 232(6) of the Corporations Law by knowingly making improper use of his position by:

(d) dishonestly and intending to gain, directly or indirectly, an advantage for Kamanga and Quancorp, in that he improperly caused Hallmark to execute a transfer form for the purchase by Hallmark of 4,200,000 options in Kanowna at a purchase price of $0.08 per option for a total consideration of $336,000 (count 8);

(e) dishonestly and intending to gain, directly or indirectly, an advantage for Kamanga, in that he improperly caused Hallmark to execute a transfer form for the purchase by Hallmark of 4,000,000 options in Kanowna at a purchase price of $0.08 per option for a total consideration of $320,000; and

(f) dishonestly and intending to gain, directly or indirectly, an advantage for CTC, in that he improperly caused Hallmark to execute a transfer form for the purchase by Hallmark of 3,600,000 shares in Kanowna at a purchase price of $0.20 per share for a total consideration of $720,000 (count 10).

26 The terminology of each of the counts on the indictment was convoluted, caused by the interaction of the Corporations Act 2001 (Cth) with the Corporations Law. Count 1 on the indictment, the terms of which are reflected in each of the other counts, illustrates how the offence of knowingly making improper use of one's position as an officer of a company was charged. It read:

"On or about 23 October 1998 at Perth in the State of Western Australia WILLIAM ARTHUR FORGE and PETER JOHN CLARK did commit an offence against sub-section 1317FA(1) of the Corporations Law of Western Australia as taken to be included in the Corporations Act 2001 (Cth) by section 1401 of that Act in that, being officers of Hallmark Gold NL, they contravened the provisions of section 232(6) of the Corporations Law of Western Australia as taken to be included in the Corporations Act 2001 (Cth) by section 1401 of that Act by knowingly making improper use of their positions as such officers, dishonestly and intending to gain, directly or indirectly, an advantage for Davis Samuel Pty Ltd, in that they improperly resolved that Hallmark Gold NL execute a Corporate Advisory Services Retainer Agreement whereby Davis Samuel Pty Ltd was retained as consultant to Hallmark Gold NL."

27 The provisions of s 1317FA(1) and 232(6) of the Corporations Law are incorporated into the Corporations Act 2001 (Cth) by reason of the provision of s 1401(2) of that Act, which is in the following terms:

"1401(2) [New corporations legislation taken to include provisions of old corporations law] For the purposes of subsections (3) and (4), the new corporations legislation is taken to include:

(a) the provision of the old corporations legislation (with such modifications (if any) as are necessary) under which the pre-commencement right or liability was acquired, accrued or incurred; and

(b) the other provisions of the old corporations legislation (with such modifications (if any) as are necessary) that applied in relation to the pre-commencement right or liability."

28 Sections 1317FA(1) and 232(6) of the Corporations Law read:

"1317FA(1) [When contravention an offence] A person is guilty of an offence if the person contravenes a civil penalty provision:

(a) knowingly, intentionally or recklessly; and

(b) either:

(i) dishonestly and intending to gain, whether directly or indirectly, an advantage for that or any other person; or

(ii) intending to deceive or defraud someone.

232(6) [No gain by improper use of position] An officer or employee of a corporation must not, in relevant circumstances, make improper use of his or her position as such an officer or employee, to gain, directly or indirectly, an advantage for himself or herself or for any other person or to cause detriment to the corporation."

29 The appellants were tried before Martino DCJ and a jury between 8 and 25 March 2004. At the conclusion of the trial they were each convicted of all counts that they jointly and separately faced on the indictment. They were sentenced by Martino DCJ on 25 March 2004. Clark was sentenced to 18 months' imprisonment on each count, to be served concurrently. An order was made that he be released after 9 months, upon entering into a recognisance release order in the sum of $10,000. The recognisance release order was for a period of 12 months. Forge was sentenced to 2 1/2 years' imprisonment on each count, to be served concurrently. An order was made that he be released after 12 months upon entering into a recognisance release order in the sum of $10,000. This order was for a period of 12 months.

30 Clark's grounds of appeal against conviction as amended and after abandonment of some grounds, are:

"1. The learned Trial Judge erred in law in admitting evidence of an enterprise ('enterprise') between Allan Endresz, David Muir and Peter Cain when there was no evidence to connect the Appellant to the enterprise whereby there was a miscarriage of justice at trial.

2. In the alternative to ground 1, having admitted the evidence of the enterprise into evidence the learned Trial Judge erred in not withdrawing that evidence from the jury at the close of the Crown case whereby there was a miscarriage of justice at trial.

3. ...

4. The conviction was unsafe and unsatisfactory by reason that there was no evidence or any inference available against the Appellant that he was a member of the enterprise and no other evidence capable of supporting a conviction.

5. The Crown case being entirely based on circumstantial evidence, the verdict of the jury could not be supported having regard to the evidence.

6. ...

7. ...

8. In the alternative, if evidence of a criminal enterprise was admissible, the Trial Judge erred in admitting:

(a) the evidence of McCartney and Yannopoulos (and associated exhibits), because their evidence related to a different enterprise - namely, the enterprise pertaining to the borrowing of funds to acquire shares in Hallmark;

(b) the evidence of Corp, Bunting and Woodhouse (and associated exhibits) as to their opposition to the transactions, because such evidence was not evidence relating to the furtherance of the criminal enterprise and, if and to the extent admissible against Forge, should have been the subject of a direction by the Trial Judge to the effect that it was not admissible against Clark.

9. In the further alternative, if evidence of a criminal enterprise was admissible, the Trial Judge erred in failing to direct the jury adequately or at all as to:

(a) the particular evidence that was evidence of the enterprise which the Appellant was said to have joined and which could not be used for the purpose of deciding whether the Appellant had in fact joined the enterprise;

(b) the evidence to which the jury should have regard in deciding whether the Appellant had joined the alleged enterprise;

(c) the particular knowledge belief or intent which was said to render the Appellant's actions dishonest."

31 Forge's grounds of appeal against conviction after amendment and abandonment of some grounds are:

"1. The learned trial judge erred in law in admitting the evidence of an enterprise between Allan Endresz, David Muir and Peter Cain when there was no evidence to connect the appellant to the pre-concert whereby there was a miscarriage of justice.

2. ...

3. ...

4. The verdict of the jury was unsafe, unsatisfactory and unreasonable in that no reasonable jury could on the evidence admitted at trial draw an inference of guilt beyond reasonable doubt against the appellant on any of the counts on the indictment.

PARTICULARS

(a) The conviction was unsafe and unsatisfactory by reason that there was no evidence or any inference available against the appellant that he was a member of the enterprise and no other evidence capable of supporting a conviction.

(b) The crown case against the appellant being based entirely on circumstantial evidence, the verdict of the jury could not be supported having regard to that evidence.

5. In the alternative, if evidence of the unlawful joint enterprise was admissible, the learned trial Judge erred in admitting the evidence of McCartney and Yannopoulos (and associated exhibits), because their evidence related to a different enterprise - namely, the enterprise pertaining to the borrowing of funds to acquire shares in Hallmark.

6. In the alternative, having admitted evidence of a joint enterprise between Endresz, Muir and Cain, the learned trial Judge erred in failing to direct the Jury by specifically identifying:

(a) the actual terms of the joint enterprise the appellant was said to have joined and which could not be used for the purpose of deciding whether the Appellant had in fact joined the enterprise; and

(b) evidence the Jury could have considered in assessing whether the appellant had joined the alleged joint enterprise.

7. The learned trial Judge erred in failing to specifically identify evidence of the appellant's knowledge, belief or intent, which it was alleged, rendered his actions dishonest."

32 Each of Clark and Forge also seek leave to appeal against sentence. The ground upon which Clark seeks leave to appeal against sentence is:

"The learned Trial Judge erred in law in that the sentence imposed by him on the Appellant was manifestly excessive.

The learned Trial Judge imposed a sentence of 18 months imprisonment on terms that the Appellant be released after nine months upon entering into a recognizance release order when, having regard to the age and antecedents of the Appellant, the impact upon which a term of imprisonment immediately served would have on the Appellant and his family, the minor role played by the Appellant in the offences for which he was convicted and the fact that the learned Trial Judge found (alternatively ought to have found) that the Appellant would not re-offend, the learned Trial Judge ought to have ordered that the Appellant be released immediately upon entering into such recognizance release order".

33 The grounds upon which Forge seeks leave to appeal against sentence are:

"The applicant seeks leave to appeal against the sentence of 21/2 years imprisonment concurrently on all counts to be released after 12 months upon entering into a recognisance release order for the period of 12 months in the sum of $10,000 on the following grounds:

1. In imposing such a sentence the learned trial judge erred in law in that he did not give any or any adequate reasons why the sentence of imprisonment imposed by him was the only appropriate sentence available to be imposed upon the applicant.

2. The learned trial judge erred in law and in the exercise of the sentencing discretion by imposing such a sentence of imprisonment to be served immediately when in all the circumstances of the case and having regard to the age, health, prior good character and antecedents of the applicant there was no reason why such sentence could or should not have been suspended.

3. In imposing such a sentence the learned trial judge erred in law and in the exercise of the sentencing discretion in imposing a sentence that was in all the circumstances of the case manifestly excessive having regard to the age, health, prior good character and antecedents of the applicant.

4. The learned trial Judge erred in the exercise of his sentencing discretion in failing to have sufficient regard to Section 17A of the Crimes Act 1914 by not satisfying himself that no sentence other than imprisonment was appropriate in all the circumstances of the case after having first considered all other available sentences."

34 The prosecution case worked backwards from 23 October 1998. At 6.02 pm on that day, there was a meeting of the directors of Hallmark. Three persons were present. They were the two appellants and one Muir. Clark was present by telephone communication.

35 At this meeting, various resolutions were passed which are the subject of counts 1 - 7 inclusive on the indictment. A copy of the relevant page of the minutes is attached and marked "A". This document was tendered at trial. On it there is a cross-reference to counts 1- 7 on the indictment.

36 The prosecution case was that each of the first four items on the agenda was a transaction resolved upon by the directors without regard to the interests of Hallmark. It contended that:

(1) The first transaction was a retainer agreement entered into with Davis Samuel in order for that company to provide consultancy services at a cost to Hallmark of $350,000 per annum for a period of three years in circumstances where:

(i) a grossly excessive sum was being paid for services that were not clearly defined;

(ii) Davis Samuel was controlled by associates of the directors of Hallmark, namely an Alan Endresz ("Endresz") and Peter Cain ("Cain") and thus the transaction was not at arm's length; and

(iii) the retainer was "ludicrously uncommercial" in the sense that it offered little to Hallmark but was extremely favourable to Davis Samuel.

(2) The Kanowna acquisition was contrary to the interests of Hallmark in that the price paid for the acquisition of the options represented a price per option that was more than four times higher than the market price. Further, the options were to be sold to Hallmark by Kamanga and Quancorp, two companies controlled by Endresz and Cain, close associates of the two appellants. The motivation of the directors in resolving upon the acquisition was said to be to obtain an unfair benefit for Endresz and Cain.

(3) The acquisition of the fully paid ordinary shares in Kanowna was again contrary to the interests of Hallmark in that the price paid was more than twice the prevailing market price for those shares. The reason for what would otherwise be an inexplicable transaction was said to be that the vendor of the shares was CTC, a company closely associated with Endresz and Cain and with the directors of Hallmark, Forge and Muir. The transaction was thus said to be in the interests of CTC and not Hallmark.

(4) The options contract with Kanowna was alleged to be against the interests of Hallmark because the company contracted itself to acquire a further 8.2 million Kanowna shares for a total consideration of $1.64 million. The price per share was said to be more than twice the market price then prevailing for Kanowna shares and by reason of the second transaction, the end result was that Hallmark would pay an effective total of 28 cents per share at a time when Kanowna shares were trading in the market at 9.5 cents. $1.6 million would be paid to Kanowna, a company in which CTC and a number of the directors of Hallmark had an interest.

37 The prosecution case was that there was considerable doubt as to whether Muir, Clark and Forge had been properly appointed as directors of Hallmark. Muir and Forge had been appointed directors of Hallmark by way of filling casual vacancies on the Board, by resolution at a meeting approximately one month beforehand. The articles of association of the company provided that the appointment of Muir and Forge to casual vacancies on the Board terminated at the annual general meeting. Although there was an annual general meeting of Hallmark on 22 October 1998, neither Muir nor Forge were elected at that meeting. Indeed, no directors were elected at the meeting.

38 On the morning of 23 October 1998 Muir and Forge met as directors of Hallmark and purported to appoint Clark to the Board. The prosecution case was that whatever the validity of the appointment of Muir, Forge and Clark, they were acting as directors on 23 October 1998 and insofar as the two appellants were concerned, they were to be held accountable for their actions in so doing. The Crown's case was that they were officers of Hallmark because they acted as such.

39 To prove that the appellants knowingly made improper use of their positions as officers of Hallmark, and did so dishonestly, the prosecution contended that what they did on 23 October 1998 was the end result of substantial planning that had been in train for some weeks prior to the meeting. There was what was termed a "common enterprise or plan". That common enterprise was said to have been the result of a joint effort of the two appellants, an Allan Endresz ("Endresz"), Cain and Muir.

40 In his opening address to the jury, the prosecutor described the alleged common enterprise in these terms:

"The crown case is that a strong inference can be drawn that this meeting and the transactions which followed were the product of a joint enterprise between the five people I have named, Forge, Clark, Muir, Endresz and Cain to effectively strip Hallmark of a large proportion of its cash assets.

In any such scheme different players may play different roles; some may be more active, some less, some may join at a later time. Whilst the crown cannot say at what point each of the participants joined this, as we say illegal enterprise, we do say that all of them were clearly parties by the morning of 23 October. It may well be, for example, that Clark was a relative latecomer to this enterprise. The crown indeed would suggest he was recruited to bring up the numbers to the required quorum of three after the former directors of Hallmark resigned in protest at the proposed resolutions.

...

The actions and statements of Muir, Endresz and Cain and to some extent Forge, serve to explain the nature we say of the enterprise that was achieved in October 1998. It will be obvious to you that Muir, Cain and Endresz are not on trial here. You should not concern yourself with why that it so. I can tell you that the crown has no intention of calling Muir, Cain and Endresz as witnesses. The crown would say that they were participants in the criminal enterprise and not therefore people who you could expect to tell you the truth if they were called as witnesses."

41 The prosecutor then unfolded a sequence of events which began in September 1998 when one Corp, a director of Hallmark, advised a stockbroker named Smart that he and another director, Smith, wanted to sell their substantial shareholding in Hallmark. They had been shareholders and directors of the company for a considerable period, but had decided "to move on". Smart, in his capacity as a stockbroker, had dealt with Endresz. On 15 September 1998 he introduced Corp to Muir, Endresz and Cain as possible purchasers of Corp's shares in Hallmark.

42 Hallmark was at this time a cash rich company. It was an exploration company that had been involved in a successful mining tenement joint venture. It had sold its interest in the joint venture for $7 million cash. This money was on bank deposit.

43 Corp and Smith agreed to sell to Endresz, Cain and Muir 19.9 per cent of the issued shares in Hallmark. Davis Samuel was to be the entity which acquired that interest. The 19.9 per cent represented 7.4 million shares and the agreed price was $2.5 million. Endresz, Cain and Muir then gained control of Hallmark.

44 To enable the acquisition of this large parcel of shares to proceed, Muir sought bank finance. The prosecution case was that he made a representation to various banks that if the bank would advance $2.5 million to enable Muir and interests associated with him to acquire the shares, Hallmark would enter into a contract with Davis Samuel for management services for an amount of money to be paid back over several years. To secure payment of the amount required under the contract he would ensure that Hallmark placed a $2.5 million deposit with the lending bank.

45 The prosecution case was that the proposed Davis Samuel contract was a total sham. It contended that it had nothing to do with management or consultancy services but was a means whereby the associates of Clark and Forge were seeking to obtain finance to purchase shares in Hallmark. The funds of Hallmark would effectively be used to finance the acquisition of Hallmark shares by those associates.

46 Minutes of a meeting of Hallmark at 3.15pm on 24 September 1998 reveal that the directors present were Smith, Corp, Bunting, Forge and Smart. The latter two were said to be present by invitation. At this meeting, a former director named Judge resigned and it was resolved to appoint Muir and Forge. Smith then resigned.

47 24 September 1998 was the day upon which Smith and Corp's interest in Hallmark was transferred to Davis Samuel, and thus to Endresz and Cain. This gave Endresz and Cain the capacity to nominate members to the Board of Hallmark. The change in the make up of the directorship of the company reflected this fact.

48 After the resignations and appointment of directors, the first item of business attended to on 24 September 1998 was the termination of a management contract between Hallmark and BMS Consultants Pty Ltd. The latter was a service company which supplied staff and services at commercial rates. A management consultancy agreement from Davis Samuel was then tabled. The minutes record:

"A management consultancy agreement from Davis Samuel Pty Ltd was tabled. After some discussion it was decided not to make a decision at this time and that the agreement be raised at a later directors' meeting."

49 The prosecution case was that the proposed management consultancy agreement with Davis Samuel was produced by Forge. Neither Corp nor Bunting, both of whom had been directors of Hallmark prior to September 1998, had seen the agreement and both expressed grave reservations about it. It was for this reason that the matter was deferred.

50 The prosecution case was that there was no value for money in the proposed consultancy agreement and as Davis Samuel was the corporate body which had acquired the 19.9 per cent of interest in Hallmark, there must have been a clear conflict of interest in Forge representing the interests of Davis Samuel on the Hallmark Board.

51 It is unnecessary to trace the precise detail of the shareholding in Davis Samuel and associated companies. It is sufficient to say that Davis Samuel was holding the Hallmark shares in trust for Cain and Endresz. They were respectively directors and shareholders in Quancorp and Kamanga.

52 It was the essence of the prosecution case that the consultancy services ostensibly being offered to Hallmark by Davis Samuel, were substantially fictitious and the consultancy agreement was a proposed agreement for the purpose of extracting funds from Hallmark to enable Davis Samuel to acquire the 19.9 per cent interest in the company.

53 The prosecution contended that Forge and Clark controlled family companies named Bisoya Pty Ltd ("Bisoya") and Thurgoona Investments Pty Ltd ("Thurgoona") respectively. Muir controlled a similar company, Callform Pty Ltd ("Callform"). These three companies in turn held interests in CTC, of which Forge and Endresz were directors. CTC was the beneficial holder of a 14.45 per cent interest in Kanowna and these shares were ultimately sold to Hallmark for what the prosecution contended was the inflated price of $720,000. There were other relevant shareholdings detailed by the prosecution. They are set out in a chart which was made available to the jury. It is annexed and marked "B".

54 The prosecution case alleged that there was a very real connection between CTC and each of Bisoya and Kamanga by reason of the fact that CTC had entered into agreements to pay each of those companies significant sums of money for management services. Thus, the prosecution contended, Forge and Endresz had good reason for wanting CTC to make significant profits, which, as a consequence of the resolutions of 23 October 1998, it would do.

55 On 21 October 1998 Corp and Bunting met with Muir, Forge, Endresz and Cain at the offices of Hallmark in Perth. The Davis Samuel consultancy agreement was discussed. Endresz and Cain sought to justify why Davis Samuel should be retained and paid the sums of money proposed. Corp was unhappy with the proposal and voiced concern at whether it was a commercial agreement.

56 At the same meeting the proposal that Hallmark acquire a 30 per cent interest in Kanowna by acquiring shares and options from Davis Samuel and CTC was raised for the first time. This proposal was supported by Forge and Muir. The prosecution case was that they expressed their support because of the financial gain they anticipated they would receive. Forge was a member of the Board of CTC. He had a business relationship with CTC through Bisoya. Muir had an interest in the Hallmark Unit Trust which held the shares in Hallmark. The prosecution case was that neither Forge nor Muir could bring an independent judgment to these resolutions.

57 Bunting, who was a professional geologist, questioned why Hallmark might wish to acquire an interest in Kanowna. Kanowna had an interest in a project known as the Pinnacles project, but Bunting questioned whether the project was viable. Corp made it clear that he was not in favour of the resolutions. They were to be the subject of a meeting which was scheduled for 22 October 1998 at 11 am.

58 At the annual general meeting of Hallmark on 22 October 1998, Muir, Corp, Forge and Bunting were present. Nothing was discussed at the annual general meeting about the various proposals which became the subject of the Board meeting of Hallmark on 23 October 1998. On the notice for that meeting, Muir had endorsed the words "not to be discussed with anybody". It was the prosecution case that this note, which sought to keep secret the proposals in relation to the consultancy agreement, was evidence of the fact that it was understood that the transactions were not in the best interests of Hallmark.

59 Shortly after the annual general meeting, Corp and Bunting resigned as directors of Hallmark. The prosecution contended that these resignations posed a problem for Endresz, Cain, Forge and Muir because a quorum of three directors was needed and without Bunting and Corp, the directorship of the company was reduced to only the two directors; Muir and Forge. The prosecution case was that they needed to recruit somebody upon whom they could rely to pass the resolutions which were effected on 23 October.

60 There was then a meeting of directors of Hallmark held at 9.15 am on 23 October, at which Clark was appointed a director of the company. The resignations of Bunting and Corp were accepted. Bank signatories were changed to remove Corp and Bunting and substitute Forge and Muir. The prosecution case was that this was in anticipation of the passing of resolutions later that day which would require Hallmark to draw cheques against its cash at bank to pay for the shares and options being acquired by interests associated with Endresz, Cain and Muir.

61 The critical meeting of the Board of Hallmark at 6.02 pm on 23 October 1998 took only 23 minutes. By the resolutions passed at that meeting, Hallmark committed itself to arrangements which resulted in over $4 million of its net assets being expended. The minutes record no discussion of the resolutions. The prosecution case was that what occurred at the meeting at 6.02 pm on 23 October was largely a sham. It contended that there was never any intention that Hallmark would enter into the various transactions in its own best interests, but rather in the interests of the associates of the directors.

62 Forge absented himself from part of the meeting in consequence of a possible conflict of interest by reason of being a director of Kanowna. The prosecution contended that his conflict "ran far deeper than that". It pointed to the fact that not only was he a director of Kanowna but also a director of CTC. It said that he had a very real interest in CTC's wellbeing because of the financial relationship he enjoyed with that company. His conflict was alleged to be much more than merely being a director of Kanowna.

63 The prosecution case was that whilst Forge was absent from the meeting, he requested the company accountant to draw cheques to pay for the options and shares. This, it alleged, revealed that there was never any doubt in his mind that the resolutions would be passed, whether or not he was present. As the prosecution put it, "they were a foregone conclusion". That same day Forge and Muir executed the necessary transfer forms to effect the resolutions. It was the prosecution case that the execution of such transfers was in breach of Forge's duty as a director of Hallmark.

64 It is unnecessary to detail the various transfers that were signed by Forge and Muir and the mechanics of payment of moneys. Within a few days of 28 October the retainer agreement between Hallmark and Davis Samuel was signed. The prosecution alleged that the agreement contained no detail as to what Davis Samuel was to do for Hallmark in return for a payment of $350,000 per annum.

65 The sequel to the meeting of 28 October also involved the exercise of the options agreement. I have already touched on the prosecution case in relation to the alleged uncommerciality of this transaction. Payments were made from Hallmark to CTC and onwards to Kamanga and Bisoya. CTC on-loaned on 27 October 1998 $350,000 to Kamanga and $75,000 to Bisoya. On 13 November 1998 it on-loaned, $150,000 to Kamanga.

66 The prosecution assertion was that CTC was put into funds in consequence of the transaction and as a result gave a benefit to Forge and Endresz by way of extremely favourable unsecured loans of substantial sums of money. This, the prosecution asserted, was the practical and direct benefit which resulted from the transaction.

67 The essence of the prosecution case in relation to count 1 on the indictment was that the appellants, in doing what they did on 23 October 1998, were dishonestly motivated by the interests of Davis Samuel. By their actions, they were alleged to have intended to obtain a benefit for that company. They were thus acting improperly in the use of their position as officers of Hallmark and dishonestly so because, it was alleged, they performed the various actions in question with the knowledge that what they were doing was for an improper purpose.

68 Count 2 alleged that the acquisition of options by Hallmark was intended to gain directly or indirectly an advantage for Kamanga and Quancorp. The prosecution case was that Clark had improperly used his position as an officer of the company and dishonestly so, with the very intention that Kamanga and Quancorp would gain that advantage directly or indirectly.

69 Counts 3, 5, 7, 8, 9 and 10 related to Forge alone. Counts 3, 5 and 7 alleged that he was knowingly concerned in the commission of offences by Muir. Muir's offences were alleged to relate to actions he took whilst Forge had absented himself from the meeting of 23 October. The prosecution case was that what Muir did was done dishonestly and with an intention to gain a benefit for Kamanga and Quancorp. Forge was alleged to be knowingly concerned in what had occurred, particularly as he had left the meeting and arranged for cheques to be drawn, and then subsequently executed transfers on behalf of Hallmark. The prosecution case was that Forge's absence from the meeting was a formality and he remained a party to what was being done. It was alleged that he was thus knowingly concerned in the actions of Muir. The execution of the documents were the subject of counts 8, 9 and 10.

70 Counts 4 and 6 on the indictment concerned respectively Clark's actions in relation to the resolutions that Hallmark would execute a transfer to purchase the $3.6 million Kanowna shares and execute an agreement for the exercise of the 8.2 million Kanowna options.

71 Counts 11 and 12, in relation to which the appellants were jointly charged, concerned respectively, the execution of the Davis Samuel retainer agreement and the execution of the agreement to exercise the 8.2 million Kanowna options.

72 The case for Clark was that the decisions he made on 23 October 1998 were the decisions of a man then 50 years of age who had no previous experience as a director of a public company and only nine hours within which to consider the matters which were being put to the Board of Hallmark. It was said on his behalf that the proposed resolutions at the meeting on that day were being put forward by people whom he trusted and in whom he had confidence. Further, the prosecution case against Clark was presented with the benefit of five and a half years of "analysis, hindsight and preparation" that Clark did not have on the day in question.

73 Character evidence was led to the effect that Clark was a person of good character and unlikely to have engaged in criminal activity after 50 years without a blemish on his character or reputation. Much reliance was placed by counsel for Clark on the fact that he had been invited to join the Board of Hallmark only a day prior to the meeting of 23 October and was informed of the agenda for the director's meeting only an hour before that meeting. He had made enquiries about Kanowna, but more importantly, knew Endresz to be a successful share trader and believed both Endresz and Forge were trustworthy men. It was put that Clark trusted these two men and against that background, he voted in favour of the resolutions which were put before him on 23 October.

74 Counsel for Clark submitted to the jury that there was no evidence Clark had ever been told there was any agreement to strip from Hallmark its assets. There was evidence to confirm that there was really no prospect of acquiring sufficient Kanowna shares on the market to secure control of the company because limited trade in Kanowna shares had occurred at or about the time of the transactions. Further, it was put that Clark knew Davis Samuel to be a successful and reputable firm; the consultancy fee to be paid to Davis Samuel was justified; the decisions of Clark were made without the benefit of the opinions of experts; there was no chance of Hallmark purchasing the number of shares it required without the market price spiralling; a placement of shares in Hallmark was not practicable and there was "no reason for Clark to second guess the transactions which seemed to be supported by people whom he trusted".

75 Counsel for Clark pointed to many aspects of the evidence and submitted to the jury that there was nothing before them to suggest that any suspicions should have been raised in Clark's mind about the merit of the resolutions before he joined in them and later signed documents in accordance with them.

76 The case for Forge was that the evidence did not justify the prosecution contention that the transactions entered into on 23 October were "ludicrously uncommercial" with "hugely inflated" prices. Reliance was placed upon evidence that following the acquisition of the Kanowna shares by Hallmark, those shares rose in value to a figure in the vicinity of 45 cents. It was put that having heard Forge, the jury could be confident that he acted honestly at all times, but more importantly, the general submission was that the transactions proposed at the Board meeting of 23 October were "a very good deal". Reliance was placed upon Forge's integrity and commitment to the Pinnacles project which, it was said, all valuers agreed was a very valuable project.

77 The case for Forge also relied on the fact that he believed Cain and Endresz to be experienced commercial people who had successfully advised commercial companies in the past and in those circumstances, the fees agreed to be paid to Davis Samuel could not be said to be unreasonable. Reliance was placed upon high fees paid to accountants and other professional people in the field. Character evidence led for Forge was relied on in the same way as it was for Clark. It was also put on behalf of Forge that risk taking is inherent in the world of mining and exploration companies and subsequent rises in Kanowna share prices justified the decisions which were made. Much emphasis was put upon the evidence of the then chairman of the Board of Kanowna, one Thomas Bannerman ("Bannerman"), that Kanowna had an optimistic future. The fact that Corp had subsequently bought shares in the company and went on to the Board was also relied upon.

Objection to evidence of the common enterprise

78 When the witness Smart was called to give evidence, objection was raised by counsel for Clark and Forge. It was contended that any evidence of events before the involvement of Clark and Forge in the company was irrelevant and inadmissible against them. Evidence of events involving Endresz, Cain and Muir prior to 23 October was said to be hearsay and inadmissible. The objection seems to have related to all evidence of the alleged common enterprise, as appears from the following extract from the submissions of counsel for Clark:

"There are two real evidentiary objections to the material that is sought to be led, the one I articulated as to relevance and secondly the issue of hearsay, which becomes important. I'm sorry to be taking time so early in the trial with an issue like this, but it's perhaps important that this is agitated before your Honour at this stage. One accepts that in the context of a trial such as the present, historical material can be relevant to establish a background to the transaction. If, however, any further use is sought to be made of the evidence than that, in other words, if it's sought to be called in aid in relation to my client, I can't speak for Mr Forge of course, then it's objected to as not relevant for two reasons: (1) on the material opened by the crown it is manifestly clear that this was well before Mr Clark was involved in any way in the company.

As your Honour will recall from my learned friend's opening yesterday he was invited to join the board of the company on the day of 23 October meeting and there is no material that ties him to any antecedent transaction. Secondly, these are transactions between people all of whom are strangers to Mr Clark, that is to say Mr Endresz, Mr Cain, Mr Muir - although Mr Muir was chairman of directors at the time Mr Cain was elected to the board - Mr Corp and the witness.

He is not present at those discussions. Anything that is said in the discussions cannot be either relevant or admissible against him, applying the ordinary rule against hearsay. In those circumstances so far as he at least is concerned the evidence is not admissible other than in the historical context and that has been established by the evidence that has already been given. To go beyond it and lead the content of the conversations is evidence which can only be tendered for its prejudicial value and it has no evidentiary basis for reception. In my submission it ought properly to be rejected."

79 Counsel for Forge stated his objection very shortly:

"DAVIES, MR: Yes. It appears to me that the only possible relevance that evidence of these statements, cast in direct speech as they must be, could possibly have is if there has already been independent evidence which reasonably suggests the existence of a preconcert. Although I had not anticipated that we would strike the issue this early in these proceedings that is the only basis that I can possibly see upon which such direct statements could be admitted and that is the principal that we have seen in Tripodi v (sic) Ahern. Simply stated there must be independent reasonable evidence upon which the inference can be drawn of preconcert ...".

80 Later objections made it clear that it was the totality of the "common enterprise" evidence which was the subject of objection.

81 The prosecutor sought to justify the admission of the evidence in the following way:

"HALL, MR: Your Honour, it's not as evidence of preconcert that we seek to admit this. I think I made it clear during the course of the opening that the crown would seek as part of its case to lead acts and utterances of others of those parties, not as evidence of the adhesion of the accused to the preconcert or the common purpose at that stage but to explain the nature of it. That's a recognised exception to the hearsay rule.

...

... there was an enterprise we say but an enterprise of which Clark was not in all likelihood a member. There was an enterprise between Endresz and Cain and Muir. Forge may have joined it at some stage and Clarke joined it at some stage."

82 The learned trial Judge deferred any ruling on the issue by saying:

"MARTINO DCJ: Yes. Senior counsel for the crown having informed me that the crown case is that as at this date of 15 September 1998 at the meeting of which evidence is sought to be led, there was a common purpose or enterprise to take over the company to force it to pass resolutions resulting in the paying out of cash and that the accused men in this trial subsequently became party to that enterprise, the appropriate course for me to follow in my view is the course explained in Ahern at page 104 of postponing my decision on the admissibility of this evidence until all of the evidence is in and once I have made that ruling to direct the jury on the use, if any, of which they can make of this evidence."

83 The ruling in relation to the admissibility of the evidence was ultimately given on 16 March 2004. It appears to have been limited to certain aspects of the evidence of common enterprise. It seems to have been assumed that the balance of the evidence of the alleged common enterprise was admissible.

84 The learned trial Judge referred to some of the evidence which had been led. He referred to evidence of an approach by Muir to a man named Yannopoulos in September 1998, enquiring whether Yannopoulos had any associates who might be interested in investing money at a high rate of interest. His Honour further referred to evidence that Endresz and Cain had visited Yannopoulos and explained a business proposal which involved borrowing approximately $2.5 million to buy Hallmark shares. There was reference to evidence that Yannopoulos telephoned his bank manager and introduced Muir, Endresz and Cain to him. The evidence of proposals in relation to loans of moneys to finance the acquisition of shares was detailed as follows:

"At the request of Mr Muir Mr Yannopoulos faxed Mr McCartney a two-page document which was a letter dated 14 September 1998 from Mr Muir as managing director of Callform Pty Ltd as trustee for the Doull Family Trust to Messrs Endresz and Cain. ... In short, the letter referred to the fact that an offer had been made to Endresz, Cain and Muir by Mr Gus Smart of Kirke Securities for them to acquire 8 million ordinary shares in Hallmark at 30 cents per share.

He proposed a possible method of purchasing the shares which method included among other things three steps: (1) borrowing $2.6 million from the ANZ Bank, (2) the new board of Hallmark resolving that Hallmark enter into an agreement described as a commercial agreement with Davis Samuel Pty Ltd and Callform Pty Ltd for management services for seven years at a $325,000 and $165,000 per annum respectively, and (3) the loan of $2.6 million being refinanced by a seven-year principle and interest loan to Davis Samuel and Callform which loan was described as being granted on the future value of the cash flow provided by the management contract which was to be entered into between Hallmark, Davis Samuel and Callform.

Mr McCartney faxed back a file note containing his requirements for the transaction."

His Honour then pointed out that in the end those proposals did not proceed. The funds which were ultimately raised for the acquisition of shares in Hallmark came from a different source.

85 The learned trial Judge outlined the essence of the objections which had been made on behalf of the appellants and the response of the prosecution:

"Counsel for each of Mr Forge and Mr Clark have submitted this evidence is inadmissible against their clients, that is the evidence of Messrs McCartney and Yannopoulos. They point to the fact that not only were neither of the accused men involved in these discussions there is no evidence to be led that they at any time knew of the discussions. The crown case is that the passing of the resolutions of 23 October and 28 October which are the subject of the indictment, are part of a joint enterprise between Endresz, Cain, Muir, Forge and Clark to take control of Hallmark and distribute a large portion of its cash assets.

The crown case is that as at 14 September 98, Endresz, Cain and Muir were part of that joint enterprise and Mr Forge and Mr Clark had joined it by 23 October 1998."

"... The legal principles which are relevant to proving the fact of a conspiracy or joint enterprise were explained by the High Court in Ahern v R [1988] HCA 39; (1998) 165 CLR 87 at page 93. The fact of the conspiracy or joint enterprise can be proved by proof of acts and declarations made in the presence of the accused. That case is also authority for the proposition that the principle upon which such evidence is admitted extends beyond cases of conspiracy to joint enterprises.

Further, where an accused person joins the conspiracy or enterprise after others had already done so evidence of declarations and actions before they join the enterprise are admissible against the accused to show the nature of the enterprise the accused joined. The authority for that is R v Bilick and Starke (1984) 36 SASR 321 at 331. The letter of 14 September 1998 and the forwarding of it to Mr McCartney shows that Messrs Endresz, Muir and Cain planned at that date to acquire Hallmark to secure control of the board and to secure the passing of resolutions for it to enter into long term contracts to pay substantial sums to Davis Samuel and Callform.

The fact that the details of the transactions subsequently entered into do not match precisely the details proposed in the letter of 14 September 1998, in my view does not detract from the fact that the evidence can lead to the conclusion that as at 14 September 1998, Messrs Endresz., Muir and Cain planned to take control of Hallmark and force it to pay out moneys. Further, there is evidence from which the jury can infer that each of Mr Forge and Mr Clark had to join that common enterprise by 28 October 1998.

In relation to the Davis Samuel management contract that evidence includes the evidence of the experienced accountant Mr Duncan Calder as to the uncommercial nature of the agreement entered into, that it was highly favourable to Davis Samuel, and the evidence as to the lack of analysis of the benefit to Hallmark before the resolution was passed notwithstanding that Mr Corp had raised with Mr Muir and Mr Forge the lack of evidence to support the agreement and the fact that Mr Clark joined the board on a day on which a resolution was passed.

For these reasons I conclude that the evidence of Mr McCartney and Mr Yannopoulos is admissible. The fact that Mr McCartney faxed back requirements can be led as part of the narrative that this proposal did not proceed. The requirements themselves are not relevant or admissible. In relation to Mr Walsh, Mr Roger John Craig Walsh was the auditor of CTC Resources. His evidence relates to management fees paid to Kamanga Holdings and Bisoya by CTC and to his inquiries to as to the justification for those payments.

Hallmark acquired shares in Kanowna Lights from CTC and that is something in relation to which these charges refer to. The evidence from Mr Walsh together with other evidence can show that moneys paid to CTC were used to be paid to companies associated with Mr Endresz and Mr Forge and evidence that Mr Clark subsequently joined the enterprise may be inferred from the evidence, that conclusion may be inferred from the evidence, including evidence that the price paid was in excess of the market price, that no analysis of the assets of Kanowna Lights, or on one view no adequate analysis, was performed and that Mr Clark joined the board on the day that the resolution was passed.

The legal principles I have set out in my ruling on Mr McCartney and Mr Christos George Yannopoulos and applying those same principles to that evidence I conclude for the same reason that the evidence of Mr Walsh is admissible against both accused men. In relation to prejudice, in my view the evidence is not so prejudicial that its evidentiary value is outweighed by its prejudicial value and if necessary to do so can be cured by an appropriate direction, so these are my rulings."

87 It will be seen that the ruling on admissibility was restricted to the evidence of the initial unsuccessful approach to Yannopoulos and McCartney and to the evidence of Walsh about management fees paid by CTC. However, the learned trial Judge clearly considered that all the evidence of "preconcert" was admissible for the reasons he gave.

Grounds 1, 2, 8(a), 9(a) and 9(b) (Clark) and grounds 1, 5 and 6 (Forge)

88 These grounds of appeal are common to both appellants. They challenge the admissibility of all the evidence of common enterprise, but particularly the evidence of McCartney and Yannopoulos. They make complaint about the way in which the learned trial Judge directed the jury on these issues.

89 The learned trial Judge clearly admitted evidence of common enterprise on the basis of the principles set out in Tripodi v R [1961] HCA 22; (1961) 104 CLR 1 and Ahern v R [1988] HCA 39; (1988) 165 CLR 87. In Tripodi v R the prosecution case was that in the commission of a crime, a number of persons had acted in preconcert. The question was whether, once reasonable evidence of the preconcert had been adduced, evidence of directions, instructions, arrangements or utterances accompanying acts by one of the persons in the absence of the other or others, in furtherance of the common purpose forming an element of the crime, was admissible against the other or others. The High Court held that it was. The reason for admission of such evidence was that the combination or preconcert to commit the crime was to be considered as implying an authority to each to act or speak in furtherance of a common purpose on behalf of the others.

90 Dixon CJ, Fullagar and Windeyer JJ (at 6 - 7) made it clear that it is a mistake to think that such evidence is admissible as a special rule of evidence which is confined to cases of conspiracy. Their Honours said:

"... when a substantive crime, not a conspiracy, is charged in the indictment it is the ingredients of the substantive crime that must be proved, not combination for a common purpose. When the case for the prosecution is that in the commission of the crime a number of men acted in preconcert, reasonable evidence of the preconcert must be adduced before evidence of acts or words of one of the parties in furtherance of the common purpose which constitutes or forms an element of the crime becomes admissible against the other or others, ...

...

It must be remembered that the basal reason for admitting the evidence of the acts or words of one against the other is that the combination or preconcert to commit the crime is considered as implying an authority to each to act or speak in furtherance of the common purpose on behalf of the others."

91 Ahern v R (supra) involved a charge of conspiracy to defraud the Commonwealth. Ahern was one of four alleged co-conspirators who were alleged to have knowingly participated in a scheme to evade the payment of income tax. At trial, he admitted the existence of a conspiracy to defraud the Commonwealth, but contended that it was the alleged co-conspirators who had joined in the conspiracy, not him. Ahern was an accountant who had introduced clients whose companies had been used in the scheme. There was evidence that he had taken part in various activities of the companies which were part of the scheme. He had shared in the fee which was paid by vendor shareholders.

92 The prosecution case against Ahern was that the activities in which he was engaged supported an inference that he knew the companies with which he was concerned were to be "dumped". It was alleged that he participated knowingly in the conspiracy to defraud. His defence was that what he did formed no part of any scheme to engage in fraudulent conduct. In his directions to the jury, the trial Judge instructed the jury to look first at the evidence of the acts and declarations of Ahern. He directed that if they were satisfied there was prima facie proof of his participation in the conspiracy, then they might look at evidence which included acts and declarations of other conspirators. This could be done for the purpose of determining the nature and extent of the underlying agreement which was alleged.

93 The High Court adopted what had been said in Tripodi v R (supra) at 7. At 92 - 93 the Court said:

"There it was said to be an 'empirical but practical and convenient test' that acts and declaration done or made outside the presence of an accused are not admissible against him. Practical and convenient though that test might be, it can be no more than a rule of thumb, because it is clear that it has a limited application. It represents an attempt to state in practical terms the effect of the hearsay rule although, of course, acts (other than certain acts of communication) cannot of themselves constitute hearsay and, strictly speaking, lie outside the rule. However, acts may contain an implied assertion on the part of the actor which makes it appropriate to treat evidence of those acts for some purposes as the equivalent of hearsay. A conspirator may, in the absence of another person alleged to be a co-conspirator, say or do something carrying with it the implication that the other person is involved. The statement or the act may be admissible in evidence to prove the fact of a conspiracy and, by way of admission, the participation of the maker of the statement or the actor in that conspiracy. But evidence of neither the statement nor the act should, except in the circumstances which we shall elaborate presently, be admitted against the other person to prove his participation because it would for this purpose be hearsay or the equivalent of hearsay.

In conspiracy cases a clear distinction is to be made between the existence of a conspiracy and the participation of each of the alleged conspirators in it. Conspiracy is the agreement of two or more persons to do an unlawful act or to do a lawful act by unlawful means and it is the fact of the agreement, or combination, to engage in a common enterprise which is the nub of the offence. This fact can seldom be proved by direct evidence of the making of an agreement and must in almost all cases be proved as a matter of inference from other facts, that is to say, by circumstantial evidence. For this purpose, evidence may be led which includes the acts or declarations of one alleged conspirator made outside the presence of the others provided such evidence is not led to prove against the others the truth of any assertion or implied assertion made by the actor or the maker of the statement. It may take the form of evidence of separate acts or utterances from which the fact of combination might be inferred. Led in that way, it is not hearsay and is not dependent upon some circumstance to take it outside the hearsay rule, such as an implied authority making the acts and words of one the acts and words of the other."

94 The Court pointed out (at 94) that in some cases both the combination and the participation of participants may be proved by the same evidence. It quoted with approval the following passage of Isaacs J in R and Attorney-General (Cth) v Associated Northern Collieries [1911] HCA 73; (1911) 14 CLR 387 at 400:

"... though primarily each set of acts is attributable to the person whose acts they are, and to him alone, there may be such a concurrence of time, character, direction and result as naturally to lead to the inference that these separate acts were the outcome of pre-concert, or some mutual contemporaneous engagement, or that they were themselves the manifestations of mutual consent to carry out a common purpose, thus forming as well as evidencing a combination to effect the one object towards which the separate acts are found to converge."

95 The Court said, however, that evidence of the separate acts of the alleged conspirators will not in all cases prove the fact of combination and their participation. Their Honours said (at 94 - 95):

"... if the evidence fails to prove a combination at all then that is an end of the matter. But if it proves a combination, although not the participation of an individual alleged to be a conspirator, then the question arises whether there are circumstances in which evidence of the acts and declarations of other participants, outside the presence of the individual, may be led against him, not as separate facts from which, when combined with other facts, an inference of combination may be drawn, but as evidence of his own participation. Evidence of the acts or declarations of others led for this purpose will be led to prove the truth of the assertion or implied assertion contained in those acts or declarations. It would be excluded as hearsay or its equivalent were it not admissible upon some other basis.

That basis is provided in an appropriate case by the rule which states that when two or more persons are bound together in the pursuit of an unlawful object, anything said, done or written by one in furtherance of the common purpose is admissible in evidence against the others. The combination implies an authority in each to act or speak on behalf of the others: Tripodi. Thus anything said or done by one conspirator in pursuit of the common object may be treated as having been said or done on behalf of another conspirator. That being so, once participation in the conspiracy is established, such evidence may prove the nature and extent of the participation. The principle lying behind the rule is one of agency and the closest analogy is with partners in a partnership business. Indeed, conspirators have been described as partners in crime. The principle of agency has a particular application in cases of conspiracy where preconcert is the essence of the crime."

96 At 95, the Court highlighted what it termed a "dilemma". This passage was the foundation of the argument of counsel for Clark:

"The implied authority on the part of one conspirator to act or speak on behalf of another will only arise if the latter is part of the combination. Evidence of the acts or declarations of the former may, however, be led to prove that very fact. That is where the dilemma lies in cases of conspiracy because, to assume the participation of the latter in order to admit the evidence on the basis of implied authority is to assume the very fact which is sought to be proved by that evidence. If there were no prerequisite to the admission of such evidence 'hearsay would lift itself by its own bootstraps to the level of competent evidence': Glasser v United States."

97 The conclusion reached by the Court at 99 - 100 was:

"The significant distinction between conspiracy and other offences for present purposes is that indicated in Tripodi, namely, that on a charge of conspiracy combination is also an element in the offence and not merely a ground for the admission of the evidence. The question does not, therefore, arise in cases other than conspiracy of the use of evidence of the acts and declarations of others to prove the combination except as evidence of separate acts from which a combination might be inferred. Once there is reasonable ground for inferring a combination in cases other than conspiracy, acts and declarations of the participants in furtherance of the common purpose may be used to prove, not the fact of participation in the combination, but the offence charged.

...

In our view, the test adopted in Tripodi is the appropriate one. Where an accused is charged with conspiracy, evidence in the form of acts done or words uttered outside his presence by a person alleged to be a co-conspirator will only be admissible to prove the participation of the accused in the conspiracy where it is established that there was a combination of the type alleged, that the acts were done or the words uttered by a participant in furtherance of its common purpose and there is reasonable evidence, apart from the acts or words, that the accused was also a participant."

98 R v Bilick & Starke (1984) 36 SASR 321 was a case in which the two accused were jointly charged with others with trading in heroin. The prosecution case was that Starke had "adhered" in Adelaide to a criminal enterprise of trading in drugs which Bilick had undertaken in collaboration with two women. It was the prosecution case that the four of them were engaged in a common enterprise of trading in heroin. There was evidence of concert between Bilick and Starke and the women. Evidence of acts done and statements made in furtherance of the common purpose by Bilick and the women was therefore held to be admissible against Starke. King CJ (at 331 - 332) said:

"The case for the prosecution was that Starke adhered in Adelaide to a criminal enterprise of trading in drugs which Bilick had undertaken in collaboration with the two women. On the case for the prosecution the four of them were engaged in a common enterprise of trading in heroin. There was evidence of concert between Bilick and Starke and the women. Evidence of acts done and statements made in furtherance of the common purpose by Bilick and the women were therefore admissible against Starke. Evidence of things done and said before Starke's adhesion to the enterprise, were admissible against him for the purpose of showing the character of the enterprise to which he adhered. The case for the prosecution against Bilick was that Bilick was trading in heroin in Adelaide and that there was sufficient evidence of association with and collaboration with Bilick by Starke to justify the conclusion that Starke was a participant in the trading. There were therefore two major steps in the process of reasoning by which the prosecution sought to prove the case against Starke; the first was the proof that Bilick was engaged in trading and the second was the evidence of Starke's association and collaboration with him. All evidence which tended to prove that Bilick was engaged in trading in heroin was therefore admissible against Starke as well as against Bilick, unless its admission would infringe a particular rule of exclusion. The evidence of Karen James and of another witness, Koning, as well as the evidence of the articles found in the motel room and grounds and in Bilick's car, was therefore admissible either as indicative of the character of the enterprise to which Starke adhered, or as evidence of things done or used in furtherance of the joint enterprise."

99 There are other cases of similar effect. In R v Davidovic (1990) 51 A Crim R 197 the Full Federal Court (Miles, Foster and von Doussa JJ) dealt with a case in which the accused person was alleged to have been part of a conspiracy to supply heroin and to possess heroin for the purpose of supply. Tape recorded conversations of alleged co-conspirators were admitted in evidence against him. The appeal raised for consideration the question whether the trial Judge had erred in admitting evidence of acts and conversations involving persons alleged to be co-conspirators outside the presence of the accused person, it being alleged that there was insufficient other evidence to establish that the accused was a party to the conspiracy. At 202 their Honours said:

"The requirement that there be 'reasonable evidence of the preconcert' of the appellant was one which arose for consideration in the circumstances of this case not as a pre-condition to the admission of the tape-recordings for the purpose of establishing the existence of a conspiracy of the kind alleged, but as a pre-condition for the further use of that evidence as evidence to establish the truth of the oral statements of the other alleged conspirators against the appellant. It is to this question that the passage previously cited from Tripodi is directed. In Ahern the Court said (at 100; 182):

'In our view, the test adopted in Tripodi is the appropriate one. Where an accused is charged with conspiracy, evidence in the form of acts done or words uttered outside his presence by a person alleged to be a co-conspirator will only be admissible to prove the participation of the accused in the conspiracy where it is established that there was a combination of the type alleged, that the acts were done or the words uttered by a participant in furtherance of its common purpose and there is reasonable evidence, part from the acts or words, that the accused was also a participant.' [Emphasis added.]

Ahern holds that it is for the trial judge to determine whether 'reasonable evidence' that the accused was a participant had been adduced so as to allow the evidence to be left to the jury, whose decision it ultimately is to decide whether both the existence of the conspiracy and the accused's participation therein are proved beyond reasonable doubt."

100 In R v Dinh [2000] NSWCCA 536; (2000) 120 A Crim R 42, the Court of Criminal Appeal for New South Wales was concerned with an appeal against a refusal by a trial Judge to order separate trials. There were three accused persons, Ngo, Dao and Dinh. It was the prosecution case that Ngo had instigated and organised the killing of one John Newman, a member of the New South Wales parliament, and a political rival of Ngo. It was alleged that Dinh had fired the shots that killed Newman and Dao had driven the vehicle which conveyed Dinh to Newman's home to carry out the murder. A question arose as to whether evidence was admissible of the acts and declarations of the other participants in the common enterprise at a time before Dinh could be shown to have joined it. Simpson and Howie JJ (with whom Fitzgerald JA agreed) said at [49] - [56]:

"[49] The fact that a person enters into a joint criminal enterprise at a time after the enterprise has already commenced does not mean that the joint enterprise changes its nature or that a new joint enterprise commences merely by reason of the involvement of the new person in that enterprise. Nor is evidence of what occurred during the course of the enterprise before the person entered into it necessarily inadmissible against the person lately joining the enterprise.

[50] In Bilick and Starke (1984) 36 SASR 321 at 331; 11 A Crim R 452 at 462 the Crown case was that there was a joint enterprise between Bilick and two women to supply heroin. It was alleged that this enterprise had commenced in Perth. The three persons travelled to Adelaide and the Crown alleged that Starke then joined that existing joint enterprise. It was held by the Court of Criminal Appeal of South Australia that, as there was evidence of concert between Bilick and Starke and the women to supply heroin, 'evidence of things done and said before Starke's adhesion to the enterprise, were admissible against him for the purpose of showing the character of the enterprise to which he adhered'.

[51] Tran's evidence was enough to show Dinh's adherence to the joint enterprise which was operating on 5 September and had been operating since March or April of that year. If Tran's evidence is accepted, then before the shooting Dinh must have known of the existence of the joint enterprise to kill Newman which involved at least Ngo and Dao. The evidence of things done and said by persons engaged in the enterprise before Dinh joined it would, in our view, be admissible to show the nature of the enterprise in which he became involved.

[52] This has been held to be the law in a number of decisions of this Court which were relied upon by Dunford J in coming to the conclusion that the evidence of the acts and declarations of others prior to 5 September was admissible for this limited purpose and are referred to him in the passage quoted above. The evidence could not be used to prove Dinh's participation in the joint enterprise at that time, the Crown does not propose to use it for that purpose.

[53] True it might be that Tran's evidence concerning what happened on the night of 5 September 1994 and what Dinh did is sufficient to indicate the nature of the joint venture that was ongoing at the time. But that does not mean that other evidence available to prove the nature of the joint enterprise in which Dinh was engaged is for that reason alone rendered inadmissible. The Crown is not limited to presenting a minimalist case where it has admissible evidence to strengthen or support its contentions.

[54] Contrary to submissions made on behalf of the applicant, we are of the view that the admissibility of such evidence does not depend upon the role taken by the person in the joint enterprise or the technical basis upon which the person may be liable for the criminal act committed as a result of the joint enterprise. The admissibility of evidence of the acts and declarations of others in the joint enterprise against an accused does not depend upon a characterisation of that particular accused as a principal, either in the first or second degree, or an accessory. In many cases of joint criminal enterprise the Crown will not be able to indicate precisely the role played by a particular person shown to be involved in the joint enterprise.

[55] Nor is the admissibility of the evidence in the present case dependent upon proof that the particular accused adopted, either expressly or impliedly, the acts and declarations of the other members of the joint criminal enterprise. A passage from the judgment of the High Court, in Tripodi [1961] HCA 22; (1961) 104 CLR 1 at 7 relied upon by the applicant, is concerned with a different issue, being whether statements of others in a joint criminal enterprise could be used to prove the participation of the accused in that enterprise. That is not the purpose for which the evidence was to be used by the Crown in the present case.

[56] Further, the evidence of what had occurred prior to 5 September was admissible in order that the jury would understand why persons involved on the night of 5 September would act as they did. For example, evidence of the relationship between Ngo and persons at the Mekong Club where Dinh was employed was admissible to show why it was that Dinh would become involved in the enterprise to kill Newman on 5 September. Evidence of the relationship between persons is admissible to explain both the context in which the acts relied upon by the Crown occurred and why persons, including the accused, acted as they did in relation to the facts giving rise to the charge before the jury: Harriman [1989] HCA 50; (1989) 167 CLR 590 at 630; [1989] HCA 50; 43 A Crim R 221 at 251; Wilson [1970] HCA 17; (1970) 123 CLR 334. "

101 A case in which the offender joined a conspiracy at the "last moment" was R v Gouroff (1979) 1 A Crim R 367. There, the offender agreed to join a conspiracy already on foot to steal mail. Evidence was admitted against him of conversations between co-conspirators over a period of ten days before the attempt to steal the mail. This evidence was held to be admissible. O'Bryan J (with whom Young CJ and Kaye J agreed) said (at 371):

"In the present case the Crown relies upon the time sequence in which the conversations occurred over a period of some ten days, the subject matter of the conversations, the visits to the railway station by various persons with Johansen as all going to prove community of purpose. The acts and words of Johansen, if done and spoken in furtherance of a common purpose, became the acts and words of each person who is found by the jury to be a conspirator at the relevant time. As other persons joined in the conspiracy and adopted the common purpose those acts and words are also attributable to the newcomers.

...

It was open to the Crown to put its case to the jury firstly on the basis that Johansen conspired with Battye and/or persons unknown to steal mail between 21st November and 28th November and Mason's evidence in that regard was most material to prove such a case. Then, it was open to the Crown to ask the jury to infer from the actions of the applicant that, by 30th November, the applicant had himself become a conspirator, had joined in the plot or arrangement to steal the mail, and that his presence at the times and places demonstrated by the evidence wearing the clothing earlier described pointed conclusively to that result."

102 Although factually a different case from the present, R v Gouroff has parallels with this case. Here it was open to the prosecution to prove the unlawful enterprise between Endresz and others and to ask the jury to infer from the actions of each of Clark and Forge that they had by 23 October 1998, joined the enterprise.

103 Counsel for both Clark and Forge contended that what was missing in the case against them was "reasonable evidence" that they were participants in the alleged common enterprise to obtain control of Hallmark and use its cash resources for the benefit of companies associated with Endresz and others.

104 It was accepted by the prosecution that Clark had only joined the enterprise on 23 October 1998. It said that Forge had joined it at an earlier time in September 1998. The prosecution contention was that the joint enterprise had existed prior to September and had involved Endresz, Cain and Muir. Actions and statements of these men prior to the alleged joinder of the enterprise by Clark and Forge were sought to be adduced in order to establish the nature of the joint enterprise, to which it was said Forge and Clark had later adhered. The prosecution did not seek to adduce the evidence to show the participation of Forge and Clark in the enterprise.

105 The thrust of the prosecution case was that the appellants had become parties to the joint enterprise because their actions on the critical day of 23 October 1998 were self-evidently done to benefit others. Those others were the persons who had appointed them to the board of Hallmark. The prosecution case was that the appellants executed all necessary documents to give effect to the critical transactions in circumstances where they knew of the interest of others in the transactions.

106 Counsel for the respondent contended on the hearing of the appeal that without evidence of the nature of the joint enterprise, the surrounding circumstances of the events that occurred on 23 October 1998 would have been incomprehensible. Counsel cited the reasons why each of Forge and Clark had become involved in the enterprise, why Muir had behaved as he did at the critical meeting, why Endresz and Cain had played a role in directing the agenda for the meeting and why resolutions of such vital importance were passed immediately upon the appointment of Clark and without any discussion. There were other reasons advanced as well. However, the essence of the prosecution case was that it was the fact of the appellants' conduct alone which established the offending. Evidence of the enterprise was said to render explicable the surrounding circumstances.

107 In my view, there was sufficient evidence to establish that each of the appellants was a participant in a common enterprise to obtain control of Hallmark and to use its cash resources for the benefit of companies associated with others. That evidence lay in what the appellants did on 23 October 1998. There was a strong prima facie case that each of the appellants had acted improperly and dishonestly in the exercise of their duties as officers of Hallmark by approving the resolutions they did and by later participating in or being knowingly concerned in the documentation which was associated with those resolutions.

108 In my view, it is no answer for counsel for Clark to argue that Clark's actions were perfectly explicable for reasons other than joinder in a plan of which he had no knowledge. Counsel cited "naivety and/or incompetence or vulnerability to the influence of those in whom he unwisely reposed confidence" and contended that these were inferences consistent with innocence.

109 I do not agree that such an explanation was fairly open. In my view, the evidence against Clark, and more so in relation to Forge, revealed a strong case that they could only have approved the resolutions of 23 October and have performed the various acts which occurred after those resolutions by reason of participation in a criminal enterprise. I consider that there was at the very least reasonable evidence that the actions of Clark and Forge, in voting in favour of various uncommercial resolutions and taking part in the execution of documents to effect those resolutions, were part of a plan which involved the stripping of Hallmark's assets to the benefit of others.

110 Counsel for Clark contended that there was a vital missing link, namely, any evidence to the effect that Clark had any knowledge of the plan. However, in my view, a very clear inference was open to be drawn. That inference was that by doing what he did on 23 October 1998 and thereafter, Clark could be demonstrated by acts alone to be a participant in the illegal enterprise. Likewise, Forge. Only "reasonable evidence" was required that each was a participant and in my view, it was clearly adduced.

111 Ground 8(a) of Clark's grounds of appeal and ground 5 of Forge's grounds of appeal raised the question whether the learned trial Judge was correct to allow into evidence the testimony of McCartney and Yannopoulos in relation to the attempt by Endresz, Muir and Cain to obtain finance of approximately $2.6 million from the ANZ Bank for the acquisition of shares in Hallmark in September 1998. McCartney gave no evidence of any suggestion that shares or options in Kanowna would be acquired, although one aspect of the proposal was the intention of the purchasers to enter into consultancy agreements with Davis Samuel for what was then intended to be $325,000 per annum over seven years, and with another entity (Callform Pty Ltd) for $165,000 per annum over the same period. These contracts were to provide security for the proposed loan. However, Endresz, Muir and Cain abandoned the proposal when their finance application was rejected. They subsequently obtained other finance and the only aspect of the discussions which later came to pass was the provision of consultancy services by Davis Samuel in return for $350,000 per annum over a period of three years.

112 Counsel for both applicants argued that because the initial proposal whereby Endresz, Muir and Cain sought to obtain $2.6 million from the ANZ Bank to finance the acquisition of shares in Hallmark was not unlawful in itself, that evidence ought not to have been adduced as evidence of the illegal enterprise in which the prosecution contended Endresz, Muir and Cain had embarked. Further, whatever the characterisation of that evidence, the proposal to which it related had lapsed, with the result that it was irrelevant.

113 In my view, the evidence of the September approach to McCartney and Yannopoulos was admissible as evidence of the unlawful enterprise because it put into context the next step that was taken by Endresz, Cain and Muir. As counsel for Clark put it when he raised the initial objection to the admissibility of the enterprise evidence, "in the context of the trial such as the present, historical material can be relevant to establish a background to the transaction". That is precisely the basis upon which evidence of the approach to McCartney and Yannopoulos became admissible as part of the evidence of an unlawful enterprise. Given that the initial proposal put to McCartney and Yannopoulos was not in itself unlawful, it was the precursor of the next step which the Crown most certainly contended to be unlawful. Further, the initial approach to McCartney and Yannopoulos revealed the beginnings of the Davis Samuel consultancy plan which (in a different form) became the subject of one of the critical resolutions of 23 October 1998.

114 It is true that for evidence of an unlawful enterprise to be admissible, it was necessary to show that the unlawful purpose was of the same general character as the offence charged. This is made clear in R v Minuzzo & Williams [1984] VicRp 34; [1984] VR 417 where Starke J (at 436) said:

"It must be accepted, I think, that any understanding between the alleged conspirators cannot be the basis for allowing in evidence of acts and declarations of one accused to be evidence against another. The agreement or understanding must surely be of some relevance to the conspiracy charged.

...

... in this case where there was evidence of innocent agreements and understandings it was in my opinion essential to define what the nature and characteristics of the agreement or understanding must in the first instance be."

115 In R v Pektas [1989] VicRp 21; [1989] VR 239, Vincent J (at 270) followed this passage and added the following:

"There would be on this basis no requirement that the evidence be capable of supporting a finding of the specific conspiracy charged, but it would be necessary for it to possess this capacity in relation to an unlawful agreement of the same general character."

116 In my view, it was the totality of the evidence of what Endresz, Muir and Cain embarked upon, beginning with the approach to McCartney and Yannopoulos in September 1998, that constituted the evidence of the unlawful enterprise. Whilst that initial approach to McCartney and Yannopoulos may not in itself have involved anything unlawful, it was an explanation as to how it came to be that the next step was taken and the unlawful enterprise initiated. It was important evidence by way of narrative of the course of events which led Endresz, Muir and Cain to decide upon the unlawful enterprise of which the acts of Clark and Forge were ultimately to become a part.

117 However, it is the case that the learned trial Judge said little to identify for the jury the way in which the unlawful enterprise unfolded. What his Honour told the jury about the unlawful enterprise was the following:

"The crown led evidence of matters that occurred before October 1998 at which Mr Forge and Mr Clark took no part.

That evidence included matters such as evidence of a meeting on 14 September at Mr Yannopoulos' house which was attended by Mr Muir, Mr Endresz and Mr Cain, and evidence of a meeting on 15 September in Sydney attended by Mr Muir, Mr Endresz, Mr Cain, Mr Corp and Mr Smart. The crown case is not that either Mr Forge nor Mr Clark knew of those meetings at the time they took place. The crown case is that Mr Endresz, Mr Muir and Mr Cain had joined together to take control of Hallmark Gold to force the company to pass resolutions to take money out of the company, and that Mr Forge and Mr Clark joined in that plan later."

118 There was a shortcoming in this direction. It failed to point out to the jury that the approach to McCartney and Yannopoulos in September 1998 did not of itself reveal anything unlawful, but was the precursor to the alleged unlawful enterprise upon which the Crown relied. Further, the learned trial Judge appears to have merged what happened at the meeting of 14 September with the events that succeeded it in putting to the jury that the Crown case was that Endresz, Muir and Cain had joined together to take control of Hallmark to force the company to pass resolutions to take money out of the company. Even that description of the unlawful enterprise was inadequate. It certainly was the prosecution case that there was a joint enterprise of an unlawful nature between Forge, Clark, Muir, Endresz and Cain to effectively strip Hallmark of a large proportion of its cash assets, but the sequence of events which led to the events of 23 October 1998 needed more elaboration. The way the learned trial Judge put it, it appeared that the unlawful enterprise was Endresz, Muir and Cain joining together to get control of Hallmark and then "force it" to pass resolutions to "take money out of" it. This was an oversimplification of the enterprise, the full details of which I have already set out.

119 In my view, useful comment upon the evidence by the learned trial Judge would have informed the jury that:

(a) the evidence of the approach to McCartney and Yannopoulos in September 1998 and the initial proposal to fund the acquisition of shares in Hallmark did not establish anything unlawful, provided Davis Samuel and Callform were to provide services pursuant to contracts which were in Hallmark's best interests.

(b) that evidence was, however, admitted to put in perspective the events that followed;

(c) the unlawful enterprise upon which the prosecution relied began with the plan whereby Hallmark would enter into a contract with Davis Samuel and Callform for management services for a substantial amount of money over a period of several years.

120 The Davis Samuel agreement was contended by the prosecution to be a sham. It was asserted that it was a means for Endresz, Muir and Cain to obtain finance to acquire shares in Hallmark. The preparation of the Davis Samuel agreement and the acquisition by Hallmark of shares and options in Kanowna from Davis Samuel and CTC was alleged to be the unlawful enterprise which ultimately came to fruition. As I have said, the seeds of the Davis Samuel management and consultancy agreement were evident in the September approach to McCartney and Yannopoulos, but the learned trial Judge was obliged to point out to the jury what the unlawful enterprise actually was, and when it in fact began. There is no doubt that this was not done.

121 The question remains, however, whether notwithstanding this failure on the part of the learned trial Judge, it can be said that no substantial miscarriage of justice has actually occurred: Criminal Code, s 689(1). I shall return to this question when dealing with the question whether the verdict of the jury was unsafe and unsatisfactory.

122 I would dismiss grounds 1, 2 and 8(a) of Clark's grounds of appeal and grounds 1 and 5 of Forge's grounds of appeal, but the question whether grounds 9(a) and (b) of Clark's grounds and ground 6 of Forge's grounds can be made out, needs to be deferred pending consideration of the question whether, despite those grounds having substance, there was no substantial miscarriage of justice within the meaning of s 689(1) of the Criminal Code.

123 This ground contends that evidence of Corp, Bunting and one Woodhouse (and associated exhibits) relating to the opposition of these persons to the transactions the subject of the resolutions of 23 October 1998, was inadmissible in that it did not relate to the furtherance of the criminal enterprise. It is then contended that if and to the extent it may have been admissible against Forge, it should have been the subject of a direction by the learned trial Judge to the effect that it was not admissible against Clark.

124 In order to understand this ground it is necessary to summarise the evidence of Corp, Bunting and Woodhouse. Corp was a director and shareholder of Hallmark. He testified that through Smart at Kirke Securities, he arranged to sell his, Smith's and the interests of others in Hallmark to Davis Samuel. This arrangement was reached at a meeting in Sydney, at which Smart was in attendance. Others there were Endresz, Cain and Muir.

125 Corp testified that at a Board meeting of Hallmark on 24 September 1998, at which Forge and Smart were present, the resignations of Smith and Judge as directors were accepted and the nominations for Forge and Muir in their place accepted. It was at this meeting that Forge tabled a proposed management agreement with Davis Samuel. Corp testified that he objected to the agreement because of the high fees which would be payable to Davis Samuel under the agreement. He sought more information as to what work Davis Samuel would be undertaking to earn such fees.

126 On 21 October 1998 Corp was present at an informal Board meeting of Hallmark. At that meeting Forge and Muir were present, but Corp was uncertain about Bunting. A handwritten agenda was tabled at the meeting. It included the resolutions which were ultimately passed at the Hallmark Board meeting on 23 October 1998. Corp raised objections to these proposed resolutions and restated his concerns about the proposed management agreement with Davis Samuel. He also asked for publicly available information on Kanowna and its assets in order to ensure that it was an appropriate investment for Hallmark.

127 Corp testified that on 22 October 1998 he received a telephone call from Endresz. Endresz told Corp that he wanted the proposed resolutions passed. Corp continued to voice his objections. Later that day Corp attended a meeting of the Board of Hallmark with Muir, Forge and Bunting. Because Muir advised that he and Forge were seeking legal advice about a potential conflict of interest, the meeting was postponed to later that day.

128 Shortly after this meeting, Corp was called back to the Boardroom. Endresz and Cain were there. Endresz raised with Corp the question of his objection to the proposed resolutions. Corp maintained the objection and left. Cain followed Corp to his office and there asked for his resignation. Corp prepared it and handed it to Cain.

129 Corp testified that he and Bunting had looked at the Pinnacles project of Kanowna. Corp said that Bunting had told him that it was not a project in which Hallmark should be interested.

130 Bunting gave evidence that he was a geologist who performed consulting work for Hallmark. He was also a director of Hallmark. He was at the Board meeting of 24 September 1998, at which Forge, Smart and Corp were present. He confirmed the resignations and nominations which occurred on that day. He confirmed also that when the proposed management agreement with Davis Samuel was tabled, Corp had raised objections with it. With these objections Bunting was in agreement.

131 Bunting testified that on 21 October 1998 he had been telephoned by Muir and asked to attend a Board meeting that afternoon. He refused because he required at least 24 hours notice of such meeting. He did, however, agree to attend an informal meeting that evening. At this informal meeting Muir, Forge, Corp, Endresz and Cain were all present. The handwritten agenda of the resolutions ultimately passed on 23 October 1998 was the subject of discussion. Corp and Bunting both raised their objections to the proposed resolutions. Bunting also raised his concerns about the Kanowna Pinnacles project. He sought publicly available information about that project so that, as a geologist, he could properly assess it. No such information was made available to him.

132 On 22 October 1998 Bunting attended the Hallmark Board meeting at which Muir said he and Forge were seeking advice about potential conflict of interest and sought a postponement until that evening.

133 At approximately 12.30 pm Bunting was asked to attend the Boardroom. There he found Muir, Forge, Endresz and Cain assembled. Endresz confronted Bunting about his objections to the resolutions and Bunting asked Endresz and Cain to leave the meeting so that he could speak with Muir and Forge alone. He told them that he could not continue acting as a director or working for Hallmark in the circumstances which had developed and he would tender his resignation. This he subsequently did.

134 Following his resignation, Bunting looked at some material which had been made available by Endresz, Cain, Muir and Forge in relation to the Pinnacles project. It was not publicly available information. Upon reviewing it, Bunting confirmed that it was not an investment he would recommend for Kanowna.

135 Woodhouse testified that on or about 22 or 23 October 1998 he met with Endresz, Cain, Muir and Forge to discuss the possibility of employment as company secretary of Hallmark. He accepted the position. He was present at the Board meeting of 23 October 1998 and prepared the minutes of that meeting. He identified them.

136 Woodhouse testified that after reading the resolutions passed on 23 October 1998 he spoke to Muir and Forge about aspects of the resolutions and subsequently resigned his position as secretary.

137 As I have indicated, ground 8(b) of Clark's grounds of appeal contends that this evidence was not evidence relating to the furtherance of the criminal enterprise alleged by the prosecution and if and to the extent it was admissible against Forge, it should have been the subject of a direction by the learned trial Judge to the effect that it was inadmissible against Clark. No such direction was given.

138 In the course of his directions to the jury the learned trial Judge reminded the jury of the witnesses whom they had heard testify at the trial. He said he would remind the jury of who those witnesses were, but not of their evidence. His Honour indicated that he could "expand on that if at any time you wished me to do so". In reviewing the witnesses, the learned trial Judge said simply this of the evidence of Corp, Bunting and Woodhouse:

"You heard from Mr Stuart Adrian Corp who was a director and shareholder in Hallmark Gold NL and he sold his shares. You heard from Mr John Bunting the geologist for Hallmark and who was on the Hallmark board in 1998.

...

You heard from Mr John Hadley the manager for Computer Share Registry Services, from Mr Barry Woodhouse a certified practising accountant who became the company secretary of Hallmark in October of 1998."

139 The learned trial Judge summarised the cases for each of the appellants and also the case for the prosecution. In the course of summarising the case for Clark, his Honour made passing reference to the evidence of Corp in this way:

"He (counsel for Clark) submitted that Mr Corp's evidence shows that the crown case has not been made out. In this regard he submitted that it was Mr Corp's resignation from the board that created the vacancy that resulted in Mr Clark being offered a position on the board. Mr Corp had earlier been asked to remain on the board when he sold his shares and he did stay on the board.

Mr Glissan submitted to you that if there had been a dishonest enterprise to take control of Hallmark to force it to pay out cash then Mr Endresz and Mr Cain would not have asked Mr Corp to remain on the board as an independent director, rather they would have wanted all independent directors to be off the board as soon as possible."

140 In the course of summarising the case for Forge, his Honour said:

"He (counsel for Forge) submitted to you that the first defect in the crown case is that there is nothing wrong with the Kanowna transactions. They were, he submitted, good commercial transactions. Mr Corp's concern was that he did not think that he had enough information.

Mr Bunting is a conservative and cautious man, however, that does not detract from the fact that others such as Mr Forge could be justifiably optimistic. Mr Davies submitted to you that taking a risk is a legitimate function of mining and exploration companies and he pointed to the subsequent rise in the Kanowna Lights share price. Mr Davies pointed to the fact that Mr Bannerman has remained optimistic about Kanowna Lights and that Mr Corp subsequently purchased shares in the company and went onto the board of it."

141 In his directions to the jury the learned trial Judge also said in relation to Corp and Bunting:

"Mr Corp and Mr Bunting gave evidence that in considering the question of Hallmark acquiring shares and options in Kanowna Lights they did not want to consider information that was not publicly available. There is a principle that in buying or selling shares in a company the directors of the company cannot use or provide to others to use information which is not publicly available. There is no suggestion in this case that anyone did use such information."

142 Although ground 8(b) contends that the evidence of Corp, Bunting and Woodhouse was not related to the furtherance of the criminal enterprise, it seems to me that the evidence was so related. The evidence of both Corp and Bunting revealed that some time after 11 am on 22 October 1998 each was called into the Hallmark Boardroom to find Endresz and Cain in attendance. Endresz confronted Corp about objections which Corp had to the proposed resolutions passed on 23 October 1998. He did the same to Bunting later in the morning. This evidence established that Endresz and Cain were playing an active part in seeking to bring about Board approval of the resolutions which were ultimately passed on 23 October 1998 and which were alleged by the prosecution to have been the subject of improper use by each of the appellants of their positions as directors of Hallmark. I consider the evidence of Corp and Bunting as to the events which led up to the critical meeting of 23 October 1998 to have been admissible as part of the evidence of the criminal enterprise. It was admissible on this basis against both appellants.

143 The evidence of Corp, Bunting and Woodhouse was also admissible against Forge as evidence that two directors of the company and the company secretary who examined proposals contained within the proposed resolutions of 23 October 1998 found them difficult to justify in commercial terms. It was relevant for the jury to know that two persons who had been directors and one who had been a company secretary were opposed to the resolutions because they considered them not to be in the best interests of Hallmark. In considering whether Forge had knowingly made improper use of his position as a director in resolving upon these resolutions, and whether he had dishonestly intended to gain directly or indirectly an advantage for Davis Samuel, and/or associated companies, the jury was entitled to know what other directors and the company secretary contemporaneously thought of the proposals.

144 The evidence was particularly admissible against Forge because he was present when Corp and Bunting were confronted. So was the evidence of Woodhouse against Forge, as he had told him of his concern about aspects of the resolutions before his resignation.

145 The question remains whether this evidence was admissible against Clark. Clark was not present on any of the occasions when Corp, Bunting or Woodhouse expressed their concerns about the proposed resolutions of 23 October. There was no evidence that he knew of their concerns. Their evidence was not opinion evidence because they were not qualified as experts. It was merely evidence that two other directors and the company secretary were concerned about the resolutions or aspects of them. To that extent, the evidence was hearsay insofar as it related to Clark. The mere fact that another director or directors, or the company secretary may have been concerned about the resolutions, would not of itself be evidence in the case against Clark.

146 It was necessary that the learned trial Judge direct the jury that the evidence of Corp, Bunting and Woodhouse fell into a special category. It was evidence which was admissible against Forge for the reasons that I have mentioned, but it was not admissible as evidence against Clark, other than in relation to the unlawful enterprise. Here, the learned trial Judge ought to have pointed out that the evidence could only be used against Clark for this limited purpose and not against him in relation to the question of his belief at the time he passed the resolutions the subject of the 23 October meeting.

147 There are various exhibits to which objection is taken in association with this evidence. They were identified by counsel for Clark in written submissions to the Court as 2 - 44, 46 - 50, 52, 60 - 62, 90 - 91, 111 - 115, 191 - 198 and 213. These exhibits were said to contain a large volume of highly prejudicial material, being material that related to events in transactions of which Clark had no knowledge. These exhibits fall into the same category as the evidence of Corp, Bunting and Woodhouse. They were admissible in the case against Clark and Forge as evidence of the alleged unlawful enterprise and against Forge in relation to his knowledge at the time he participated in the events of 23 October 1998. They were not admissible against Clark in relation to his state of knowledge as to the desirability of the proposed resolutions of 23 October.

148 In my view, Clark has made out the second part of ground (b) of his grounds of appeal, but again the question remains whether, notwithstanding the failure of the learned trial Judge to give the direction required, it can be said that no substantial miscarriage of justice has occurred. I will deal later with that aspect.

149 These grounds of appeal raise the adequacy of the learned trial Judge's directions to the jury in relation to the purpose to which evidence of the alleged criminal enterprise should be put. Ground 9 of Clark's grounds of appeal contends that the learned trial Judge erred in failing to direct the jury in relation to:

(a) the particular evidence that was evidence of the enterprise which Clark was said to have joined and which could not be used for the purpose of deciding whether Clark had in fact joined the enterprise;

(b) the evidence to which the jury should have regard in deciding whether Clark had joined the enterprise; and

(c) the particular knowledge, belief or intent which was said to render Clark's actions dishonest.

150 Grounds 6 and 7 of Forge's grounds of appeal raised, in similar terms, the same objections.

151 Ground 9(a) of Clark's grounds overlaps with ground 8(a). It also seems to overlap with ground 8(b). To the extent that the learned trial Judge was required to isolate the evidence of Corp, Bunting and Woodhouse and categorise it in the two ways that I have mentioned, the ground has substance. However, once there was reasonable evidence that Clark was involved in an unlawful enterprise with Endresz, Muir and Cain, the evidence generally of the character of the unlawful enterprise became admissible against him. If the ground means that the learned trial Judge was obliged to point out to the jury what evidence there was of Clark's joinder in the unlawful enterprise, it is correct. This, however, seems to be the subject of ground 9(b).

152 In any event, the fact remains that the learned trial Judge was indeed obliged to tell the jury what evidence there was to which they could have regard in determining whether Clark had joined the alleged unlawful enterprise. In that respect, the learned trial Judge was obliged to separate out the cases against Clark on the one hand and Forge on the other. The responsibility of the trial Judge in a joint trial clearly carries this responsibility. It was stated by Kennedy J in R v Romeo & Ors (1987) 25 A Crim R 80 at 88 as follows:

"The responsibility of a trial judge in a joint trial was conveniently summarised by the New South Wales Court of Criminal Appeal in Towle (1954) 72 WN (NSW) 338 at 340:

'The summing up must speak for itself and should contain everything in the way of directions in law which it is necessary for the jury to bear in mind when they are considering the facts of the case. Where more than one are being tried together, except in unusual cases, it is the clear duty of the trial judge to separate for the jury's consideration the evidence properly relevant and material in the case of each, and to present the case made against each of the accused separately. The jury should be specifically told of the evidence which they may consider against each individual accused, together with appropriate directions as to the legal principles involved. In this connection it is insufficient to rest such direction upon the formula that each case must be considered separately without further explanation.'

I am of the view that the summing up in this case was defective by reason, inter alia, of the omission from it of 'such directions as would enable (the jury) to consider only the evidence admissible against each of the accused if he had been tried separately'. In particular, his Honour failed to instruct the jury as to what evidence was not admissible against each accused."

153 The learned trial Judge dealt with the use to which the jury could put the evidence of the alleged criminal enterprise in this way:

"The crown led evidence of matters that occurred before October 1998 at which Mr Forge and Mr Clark took no part.

That evidence included matters such as evidence of a meeting on 14 September at Mr Yannopoulos' house which was attended by Mr Muir, Mr Endresz and Mr Cain, and evidence of a meeting on 15 September in Sydney attended by Mr Muir, Mr Endresz, Mr Cain, Mr Corp and Mr Smart. The crown case is not that either Mr Forge nor Mr Clark knew of those meetings at the time they took place. The crown case is that Mr Endresz, Mr Muir and Mr Cain had joined together to take control of Hallmark Gold to force the company to pass resolutions to take money out of the company, and that Mr Forge and Mr Clark joined in that plan later.

That means that the evidence of what occurred at these early stages could only be used by you for a limited purpose. The crown led the evidence to seek to prove that there was a common plan by Mr Endresz, Mr Muir and Mr Cain to take control of Hallmark for that purpose. The evidence can be considered by you to decide whether the crown has proved that there was a common plan by Mr Endresz, Mr Muir and Mr Cain that the crown alleges. That evidence cannot be used by you as evidence that either Mr Forge or Mr Clark joined that common plan."

"As I have informed you, the crown case is that Mr Forge joined the alleged plan of Mr Endresz, Cain and Mr Muir to take control of Hallmark Gold to force the company to pay out money that it had and that Mr Clark also joined that alleged common plan. There is no direct evidence that either Mr Forge or Mr Clark joined that alleged common plan. The crown case is that you can draw the inferences that each of Mr Clark and Mr Forge did so."

Both Clark and Forge were represented at trial by experienced counsel. Clark's counsel was Senior Counsel. Neither counsel sought from the learned trial Judge any more detailed direction than this.

155 Unfortunately, the learned trial Judge's directions on the subject of the alleged criminal enterprise were brief, particularly in the context of a trial which had lasted three weeks. The directions identified in very brief summary form the nature of the alleged criminal enterprise as being an enterprise to take control of Hallmark and force it to pass resolutions which would have the effect of stripping the company of its assets. It was made clear that Clark and Forge were alleged to have joined in the plan at a later stage and in relation to that, there was no direct evidence that they did. Rather, the jury was being called upon to draw an inference that they did.

156 The learned trial Judge did stress to the jury that the evidence of the alleged criminal enterprise was to be considered by them to decide whether the plan had in fact been formed, but it was not to be used as evidence that either Clark or Forge had joined the plan. To this extent, the direction was accurate and correct.

157 In my view, the learned trial Judge sufficiently identified to the jury the proper use to which evidence of the alleged unlawful enterprise could be put. However, the question remains whether there was sufficient identification of the evidence against each of the appellants in relation to what each was alleged to have done in joining the enterprise. Regrettably, there was not. There was a direction that there was no direct evidence that either Clark or Forge had joined the alleged common plan and that the prosecution case was that the jury could draw the inferences that each did so. However, there was an obligation to spell out the evidence against each and how it was alleged that each had joined the enterprise. In this respect, the evidence against Forge was much stronger than it was against Clark. Forge had been present at vital meetings prior to the meeting of 23 October and was much more involved in the events that led up to that meeting than was Clark. Indeed, Clark had only been recruited on 22 October as a member of the Board. Although it is unnecessary to spell out exactly what evidence should have been identified as evidence that could have been used by the jury to establish that Clark joined the enterprise, it included:

(b) his recruitment as a director of Hallmark to represent the interests of Davis Samuel;

(c) the receipt of an agenda for the meeting of the evening of 23 October 1998, but without any supporting materials;

(d) his voting in support of the resolutions set out on that agenda without any proper research or consideration of the merits of them;

(e) the fact that he had not sighted the proposed retainer agreement with Davis Samuel, and yet he became a party to the resolution that Hallmark enter into an agreement for management services with Davis Samuel;

(f) his failure to make any enquiries in relation to Hallmark taking a possible placement in Kanowna; and

(g) his failure to make any independent inquiries in relation to the Pinnacles project.

158 These are some indications of the evidence that might have been outlined to the jury on the issue. Aspects of Clark's cross-examination (to which I will later refer) might also have been the subject of specific reference and discussion with the jury. In that cross-examination Clark appears to have been found wanting in many of his answers about the events of 23 October 1998. In short, the evidence against him, which pointed to his joinder of the enterprise, was his readiness to vote in favour of a number of resolutions which were particularly favourable to Davis Samuel without making any real inquiry or investigation of the subject matter of any one of those resolutions. The case against him was, in effect, that he had "rubber stamped" a series of resolutions which were particularly favourable to Davis Samuel and with interests associated with Endresz. An inference could properly be drawn that he knew those resolutions were not in the best interests of the shareholders of Hallmark, but conferred either directly or indirectly an advantage upon Davis Samuel.

159 It is not for me to spell out exactly how the learned trial Judge should have given this direction. However, from what I have set out above, it is apparent there was much that could have been discussed with the jury, enabling them to decide whether or not they were satisfied beyond reasonable doubt that Clark was part of an unlawful enterprise, which resulted in the passing of the resolutions of 23 October 1998 with consequential benefits which were alleged to have flowed to Davis Samuel.

160 The same criticism can be made of the failure of the learned trial Judge to give such directions in relation to the case against Forge. As it happened, there was a greater body of evidence against Forge than there was against Clark. Forge's involvement in the events leading up to the meeting of 23 October 1998 meant that that the case against him was very strong. Nevertheless, the learned trial Judge ought to have identified to the jury just what evidence there was against Forge which might enable them to conclude that he joined an unlawful enterprise and by the resolutions of 23 October 1998 and the subsequent execution of documents was either a party to or involved in dishonestly gaining an advantage for Davis Samuel and other interests associated with Endresz. There was, of course, no direct evidence that Forge was involved in such an enterprise, but the evidence of Corp, Bunting and Woodhouse, to which I have referred, was powerful evidence that he was aware of the criticisms of previous directors and the company secretary of the proposed resolutions. He was present at meetings at which Endresz and Cain had endeavoured to persuade Bunting and Corp to join in the resolutions. Other aspects of the prosecution case against Forge I have outlined earlier in these reasons.

161 It follows that Clark and Forge have each made out grounds 9(b) and 6(b) of their grounds respectively. The question which remains is whether, notwithstanding that these grounds should be decided in favour of the appellants, there has been no substantial miscarriage of justice. To that I will refer when dealing with the grounds of each of the appellants that the verdicts of the jury was unsafe, unsatisfactory and unreasonable.

162 Each of grounds 9(c) (Clark) and 7 (Forge) raises the question whether the learned trial Judge adequately directed the jury in relation to evidence of the knowledge, belief or intent which was alleged to have rendered the actions of each of the appellants dishonest.

163 The direction given by the learned trial Judge in relation to Forge was in these terms:

"The fifth element that the crown must prove is that Mr Forge did the act dishonestly. The crown must prove that Mr Forge was acting dishonestly when he knowingly made improper use of his position as an officer to gain an advantage for Davis Samuel. Whether Mr Forge acted dishonestly is to be determined by you according to the standards of ordinary decent people."

The same direction was impliedly incorporated into the directions in relation to the elements which the Crown had to prove to establish the guilt of Clark.

164 The learned trial Judge then spelt out in more detail what was meant by dishonesty in the context of this case. He said:

"I wish to say something more about this concept of dishonesty. The crown case on this count and on every count is that each of Mr Forge and Mr Clark acted dishonestly because each of them acted consciously following a plan by Mr Alan Endresz, Mr Peter Cain and Mr David Muir, which plan Mr Forge and Mr Clark had joined which was a plan to take control of Hallmark Gold and force it to pay out moneys that it had.

Each of Mr Forge and Mr Clark say that if Messrs Endresz, Cain and Muir had any such agreements or plan, they know nothing of it and they were not party to it. Their evidence is that at all times they acted in the best interests of the shareholders of Hallmark. It is for you to decide whether the crown has proved beyond reasonable doubt that each man you are considering was party to the alleged plan that the crown alleges and was acting consciously following that plan. If you are satisfied of those facts it is also for you to decide whether acting in that way was dishonest. Whether a person has acted dishonestly is to be determined by you according to the standards of ordinary, decent people."

165 Counsel for Forge, at the hearing of the appeal, outlined in written submissions the basis upon which the learned trial Judge was said to have erred in his direction on the issue of dishonesty:

"34. Various 'experts' and the appellant testified as to the market value of the shares, the impact a large placement would have on the price of thinly traded shares, the premiums to be paid for a takeover bid and the asset value of the company. It could not be said that the evidence was overwhelmingly in support of the Crown's opening submission that the prices paid or transactions entered into were so uncommercial as to suggest dishonesty. It equally suggested that the purchases were within the range of a sound commercial judgment.

35. Even if it could be said that the prices paid for the shares and options of Kanowna were too high that does not of itself suggest dishonesty. It may have been bad judgement on the part of the appellant believing as he testified that the asset base of the company was sufficient to justify the price paid and that there was a benefit to the company from entering into the arrangement for consultancy services with Davis Samuels.

36. The direction to the Jury by the trial Judge did little (if anything) to ameliorate the great prejudice suffered by the appellant by reason of its admission.

37. In fact, the learned sentencing Judge should in this case have directed the Jury as to the knowledge, belief or intent which was said to render the appellant's actions dishonest: Peters v The Queen [1998] HCA 7; (1998) 192 CLR 493. The trial concerned commercial matters of which the Jury may not have had any personal experience or knowledge thus warranting this type of analysis to assist them in their task."

166 In Peters v R [1998] HCA 7; (1998) 192 CLR 493, Toohey and Gaudron JJ (at [18]) said:

"In a case in which it is necessary for a jury to decide whether an act is dishonest, the proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief and, if so, to determine whether, on that account, the act was dishonest. Necessarily, the test to be applied in deciding whether the act done is properly characterised as dishonest will differ depending on whether the question is whether it was dishonest according to ordinary notions or dishonest in some special sense. If the question is whether the act was dishonest according to ordinary notions, it is sufficient that the jury be instructed that that is to be decided by the standards of ordinary, decent people. However, if 'dishonest' is used in some special sense in legislation creating an offence, it will ordinarily be necessary for the jury to be told what is or, perhaps, more usually, what is not meant by that word. Certainly, it will be necessary for the jury to be instructed as to that special meaning if there is an issue whether the act in question is properly characterised as dishonest."

167 Counsel for the respondent submitted that Toohey and Gaudron JJ were not asserting in Peters v R that a detailed direction by way of identification of the knowledge, belief or intent said to render a particular act dishonest was called for in every case. It was submitted that such specific directions are only required if there is an issue as to whether what was alleged was in fact dishonest. The present case was said to be outside that category because the issue was not whether the prosecution allegations constituted dishonest conduct, but whether that conduct had occurred. In the written submissions of counsel for the respondent it was put this way:

"If it was established that the Appellants had used their positions as directors without regard for the interests of Hallmark and with the purpose of obtaining a benefit for another there was no dispute that this constituted dishonesty. In the circumstances of this case because the misuse of position was alleged to be a conscious abuse of powers of directors the evidence to prove impropriety and dishonesty was the same."

168 I agree with this analysis. In the circumstances of this case, it was in my view sufficient for the learned trial Judge to direct the jury that the question whether the acts done by the appellants were dishonest was to be judged by the standards of ordinary, decent people. The case did not require a long and detailed direction on the particular knowledge, belief or intent which was said to render the actions of the appellants dishonest, because if it was the case that the appellants had used their positions as directors without regard to the interests of Hallmark and with the purpose of obtaining a benefit for others, such conduct clearly constituted dishonesty. I therefore consider the directions given by the learned trial Judge on this issue to have been adequate.

169 These grounds contend that the verdict of the jury was unsafe, unsatisfactory and unreasonable in that no reasonable jury could, on the evidence admitted at trial, have drawn an inference of guilt beyond reasonable doubt against the appellants on any of the counts on the indictment.

170 These grounds involve the application of the test formulated in M v R [1994] HCA 63; (1994) 181 CLR 487 where Mason CJ, Deane, Dawson and Toohey JJ said (at 493):

"Where, notwithstanding that as a matter of law there is evidence to sustain a verdict, a Court of criminal appeal is asked to conclude that the verdict is unsafe or unsatisfactory, the question which the Court must ask itself is whether it thinks that upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty. But in answering that question the Court must not disregard or discount either the consideration that the jury is the body entrusted with the primary responsibility of determining guilt or innocence, or the consideration that the jury has had the benefit of having seen and heard the witnesses. On the contrary, the Court must pay full regard to those considerations."

171 The case for each of the appellants was that even if all of the evidence adduced at trial, including that of the alleged criminal enterprise, was admissible against the appellants, the evidence in its entirety was insufficient to enable a reasonable jury to conclude beyond reasonable doubt that the appellants were acting dishonestly at the time they approved the resolutions and executed the documents at and following the meeting of 23 October 1998. On behalf of Clark, it was contended that the evidence was insufficient to exclude the reasonable hypothesis that he was "naïve and/or incompetent, or vulnerable to the influence of others in whom he unwisely reposed confidence." In relation to Forge it was contended that the resolutions and the steps taken to execute documents may have constituted bad judgment on his part but without dishonesty.

172 The contention of the respondent was that the evidence of dishonesty was constituted by an extreme absence of commerciality in the resolutions and transactions, combined with the fact that to the knowledge of the appellants, those resolutions and transactions involved related parties. Added to this, the respondent relied upon the failure by the appellants to make any enquiries about the proposed transactions or to seek any independent confirmation that they were in the best interests of Hallmark. This combination of factors was said to provide a sound basis for sustaining a conclusion that there was sufficient evidence of dishonesty to prove beyond reasonable doubt that each accused was guilty of the offences.

173 Although much of the argument at the hearing of this appeal dealt with the commerciality of the transactions which were the subject of the resolutions of 23 October 1998 and the subsequent documentation, it should be appreciated that the prosecution case was not that the transactions were uncommercial, but that they were improper because they were done for the ulterior purpose of benefiting another. It was not necessary that the prosecution prove that the transactions were in fact detrimental to Hallmark (although counsel for the respondent argued that they were). Each of the counts on the indictment pleaded an intention to gain an advantage for another, not the alternative available under s 232(6) of the Corporations Law of causing a detriment to the company.

174 In R v Byrnes & Hopwood (1995) 183 CLR 500 at 501, it was made clear that under the provisions of s 229(4) of the Companies (South Australia) Code, which is in the same terms as s 232 of the Corporations Law, the test of impropriety in the use of a position as an officer of a company is an objective one and does not depend on an alleged offender's consciousness of impropriety. Rather, it consists in a breach of the standards of conduct expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case. Brennan, Deane, Toohey and Gaudron JJ (at 512 - 513) said:

"The Court of Criminal Appeal appears to have understood Chew as holding that, if there be no intent to cause detriment to the corporation, there is no improper use of position. There are two fallacies in that reasoning. The first fallacy flows from a failure to appreciate that 'improper use' and purpose (or intention) are different elements of the offence and may be established by evidence of different circumstances. Although evidence of the same mental state may suffice in some cases to establish both elements, it does not follow that the element of improper use cannot be established unless there is evidence of a state of mind that detriment will be caused to the corporation.

The second fallacy is that an absence of purpose to cause detriment to the corporation negates the existence of a purpose to gain an advantage for the alleged offender or another person. In Edwards v The Queen which was decided at the same time as Chew, the difference between the two proscribed purposes was clearly pointed out.

...

Here, the Court of Criminal Appeal appears to have reasoned that the absence of a purpose to cause detriment to the corporation meant that the respondents ought not to have been convicted. That was erroneous."

175 Their Honours also dealt with the meaning of "improper use" within the meaning of the section, saying (at 514 - 515):

"Impropriety does not depend on an alleged offender's consciousness of impropriety. Impropriety consists in a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case. When impropriety is said to consist in an abuse of power, the state of mind of the alleged offender is important: the alleged offender's knowledge or means of knowledge of the circumstances in which the power is exercised and his purpose or intention in exercising the power are important factors in determining the question whether the power has been abused. But impropriety is not restricted to abuse of power. It may consist in the doing of an act which a director or officer knows or ought to know that he has no authority to do."

176 Their Honours (at 516 - 517) stated succinctly the obligations of a director of a public company in the following terms:

"A company is entitled to the unbiased and independent judgment of each of its directors. A director of a company who is also a director of another company may owe conflicting fiduciary duties. Being a fiduciary, the director of the first company must not exercise his or her powers for the benefit or gain of the second company without clearly disclosing the second company's interests to the first company and obtaining the first company's consent. Nor, of course, can the director exercise those powers for the director's own benefit or gain without clearly disclosing his or her interest and obtaining the company's consent. A fiduciary must not exercise an authority or power for the personal benefit or gain of the fiduciary or a third party to whom a fiduciary duty is owed without the beneficiary's consent."

177 I accept the submissions of counsel for the respondent that "the uncommercial features of the case were not matters that had to be proven conclusively as detrimental to the company". These features were evidence which, together with all of the other evidence, was properly led to support the inference that the appellants acted for an ulterior purpose. It follows that the emphasis placed by counsel for the appellants (particularly counsel for Clark) on the alleged "ambiguity" of the evidence in relation to the issue of commerciality is not the answer to the case. It does not determine whether or not the convictions were unsafe.

178 However, it is important to set out some of the evidence adduced by the prosecution in relation to this issue. It is also important to set out the response of the appellants to it.

179 The prosecution case against the appellants was supported by the testimony of John Hartley Poyton ("Poynton"), chairman of Poynton & Partners Pty Ltd, corporate advisers and management consultants. Poynton testified that he had joined Hartley Poynton & Co, a member of the Perth Stock Exchange, in 1976. He became a partner of the firm in 1980 and after the firm's incorporation, was managing director 1987 - 1995 and chairman 1995 - 1996. He then left to form Poynton & Partners. Between 1988 and 1990 he was chairman of the Perth Stock Exchange. Between 1980 and 1999 he was a member of the Australian Stock Exchange.

180 Poynton gave evidence of other qualifications he held. He graduated from the University of Western Australia with a Bachelor of Commerce degree and was a Fellow of the Securities Institute of Australia. He had been a Fellow of the Institute of Company Directors for some years and also a Fellow of the Institute of Management in Australia. By any account he was extremely experienced in the workings of the stock exchange and in corporate advisory work.

181 Poynton testified that he had been requested by the Australian Securities and Investments Commission to consider documentation relevant to the case. He was referred to the purchase by Hallmark of shares and options in Kanowna and asked whether, and if so, what alternative courses might be taken by a company desirous of securing a 35 per cent interest in Kanowna in October 1998. Poynton replied that there were three alternative courses of action. The first was to approach the directors of Kanowna and seek a placement of securities by arrangement. This would have involved an agreement to buy a parcel of securities at an agreed price. It could have secured a 15 per cent placement. Hallmark could then go beyond that threshold by either buying stock in the market or making a bid for the company.

182 Poynton testified that obtaining a placement in a company was a fairly straightforward procedure. Such placements were occurring pretty much every day of the working week in the stock market at the time of trial. The procedure was explained in these terms:

"Basically. a company can engage a corporate adviser or stockbroker or in fact not even do that, just go and approach individuals or corporations who may be interested in obtaining securities, and essentially issue to them or agree in the first instance, agree to issue to them a certain percentage of the issued capital of the company at an agreed price. A cheque is paid over and effectively the securities are issued.

How is the price reached when placements are made?---By negotiation and, really, it depends a lot on the external environment of the stock market, it depends a lot on the supply and demand dynamic of the trading in the particular company's securities, but inevitably most placements are done at a small discount to what we would call the weighted value if you like in the trading in the securities in the previous week or two, not always but most of the time, the view being, if I might keep going, that in order to create the incentive for someone to take the placement offering a slight discount or up to say a 10 or 15 per cent discount to the trading range of the stock creates a situation where someone is actually going to make a profit, at least on paper, if they take the securities. Of course, if it's being offered at a premium the opportunity was always there for the place to actually buy stock in the market at below the placement price."

183 Poynton was asked about the circumstances in which a placement might attract a premium. He said:

"You mentioned that on occasion placements can attract a premium, they can be made an issue at above the market price. In what sort of circumstances does that occur?---A company may decide that there's a particular individual with a very good track record in a particular field, say in mining, and the company might be very keen to obtain the services of, as an executive or non-executive, of that particular person or indeed association with them and also that individual might say, 'I'm very keen to get access to that company as well' and by agreement, given that the potential for significant level of demand for the security might in fact force the price a little higher, they can come to an agreement to pay a premium. It's usually not a very large one though.

In your experience what premiums are paid for placements in those circumstances?---Well, in my experience no more than 10 or 20 per cent. The same kind of premium that you would see as a discount, essentially, within that range."

184 When directed specifically to Hallmark's acquisition of an interest in Kanowna, Poynton gave the following evidence:

"So you have been advised what the total share capital on issue of this company was, Kanowna Lights. I think it was somewhere approximating 26 million shares?---Yes.

Given the amount of shares that were being sought by Hallmark would that represent in your view a problem such as you have described?---No, not at all.

If Hallmark were to purchase shares by way of a placement rather than purchasing them on the market what would that mean in terms of where the money went?---The money would go from Hallmark to the company making the placement, Kanowna, and would sit as available funds in that company's bank account.

As opposed to which if they purchased shares from another shareholder?---It goes to the pocket of the shareholder."

185 Poynton then outlined other alternatives that might have been available to Hallmark to acquire shares in Kanowna. The second alternative was to buy either shares or options in the market place, either by direct approach to shareholders or by instructing the stockbroker to go into the market with an order and to purchase stock.

186 Poynton outlined the problem often associated with the acquisition of options:

"The problem with purchasing options is that essentially you're not just buying the option, you're buying the right or in some cases, not the obligation, but you're buying the right to convert that option into a share by paying an additional 20 cents at some point in the future. I guess logic would suggest that you'd be trying to buy as many shares as you could at a price below 20 cents because it's going to be better value. If you're paying 2, 3, 4 cents for options and then you're required to pay another 20 cents but you could've bought the shares at 9 or 10 or 11 or 12 cents you'd be trying to buy as many shares as you could. That doesn't preclude the possibility of buying lots of options as well but it just didn't seem to me to be particularly logical."

187 The third alternative mentioned by Poynton was a partial takeover. This he said was a much rarer way in which to acquire an interest in a company, but nevertheless one that was open.

188 When directed specifically to Hallmark's actions in relation to Kanowna, Poynton said:

"The premium on these shares was between two and three hundred per cent on the market price. Have you ever encountered a premium being paid for control of those sorts of figures?---Not that immediately comes to mind.

You have gone through the various alternatives that might have been open to Hallmark to acquire a 34 per cent interest in Kanowna. Had you been approached, what would you have advised Hallmark to do to get the best value it could in order to acquire those shares?---Given that there was a possibility that stock might be obtained at a placement at a discount to the recent trading price of the shares, that would have been the place I would have gone first. I would approach the directors and management of Kanowna to see a placement."

189 Poynton was cross-examined by counsel for Forge. He agreed that the alternatives he had spelled out in relation to the acquisition by Hallmark of an interest in Kanowna all entailed a degree of uncertainty. He agreed that placements were very much a matter for negotiation and given the magnitude of the proposed acquisition by Hallmark, a placement would most likely have been at a higher price than that prevailing in the market. Poynton said that although this was so, it remained "a question of how much higher". In relation to this, "historical precedent" was the only yardstick. Poynton agreed that the alternative of buying shares or options in the market place might have an effect on the market price of the shares. He agreed too that once a takeover bid had been filed, that would, as a rule, have an upward effect on the price of shares on the market. He agreed that an advantage of the approach taken in the present case to acquire an interest in the Pinnacles project was that the directors of Hallmark knew with some certainty what they were paying. Poynton was not cross-examined by counsel for Clark.

190 Nothing in the cross-examination of Poynton took away from the general thesis he advanced, namely, that the way in which the directors of Hallmark went about the Kanowna acquisition was generally illogical and not in accordance with accepted practices.

191 Bannerman was called by the prosecution. He was executive chairman of Kanowna and a director of the company during 1993 - 2003. He gave evidence that in 1998 Kanowna had an interest in the Pinnacles nickel project and he detailed that project. He explained that Kanowna had received advice from geologists that they had a resource (described as an "inferred resource") of some tens of millions of tonnes of around 1 per cent nickel in this project. Results from a drilling programme for the project had been released to the market through the stock exchange and it was his evidence that the Pinnacles project was a significant asset of Kanowna in 1998.

192 Bannerman explained that to raise funds for a drilling programme, Kanowna would issue shares by way of placement. Details of the various placements that had taken place were given. Evidence was also given of meetings with Endresz and others, leading to an agreement in principle that CTC would take a placement of approximately 3 million shares at around 9 cents per share to acquire 5 per cent interest in the Pinnacles project.

193 In due course Bannerman became aware that Hallmark had become a shareholder in Kanowna. As Poynton was later to do, Bannerman outlined how a large placement of shares in Kanowna may have been obtained by Hallmark, however, no approach was ever made to Kanowna by Hallmark for such a placement.

194 Bannerman was cross-examined at length by counsel for Forge. He confirmed his earlier view that the Pinnacles project had great potential. He considered that the underlying value of the project had increased but accepted that this had not necessarily been reflected in the market price of the stock. Bannerman accepted that the Kanowna share price in the latter part of 1998 did not reflect the true value of the underlying assets of the company. He also accepted the proposition that it was ridiculously low if compared to a valuation described as the "Mackay and Schnellmann valuation". After reference to that report, Bannerman expressed the view that the true value of Kanowna shares was in excess of the market price, although it was too difficult to put a figure on what the true value was.

195 Bannerman conceded to counsel for Clark that the shares in Kanowna during the time in which he had been involved with the company had been quite volatile. They had been issued at a par of 20 cents. The value of the shares had increased dramatically after the acquisition of the Pinnacles project, with an increase in the market price of the shares after the initial establishment of the project to nearly 40 cents. The options in relation to Kanowna shares were also described as having behaved in a volatile manner, having fallen to 1, 2 or 3 cents at the end of 1998, but gaining to 10 cents by December 1999 and 27 cents by March 2000. (Although the 2000 options were clearly different options from the earlier ones).

196 Bannerman gave the following evidence about movement in Kanowna shares between 1997 and 2000:

"When you acquired the Pinnacles project at the time that Mr Endresz and CTC and all those people first became interested in this company in about the middle of 1997 the shares, those 20-cent shares were trading on the exchange for 65 cents?---Yes.

They continued to trade at 50 cents or above for some considerable time?---Yes.

By October of 1998, just in the ordinary course of things, there had been not much happen. Isn't that right?---That's true.

You had had your drilling, you had acquired Pinnacles but you hadn't had any reports that showed anything terribly dramatic?

---No.

And so would it be fair to say that investor interest, those who buy and sell on the market, had waned--Yes.

The shares had fallen to about 10 cents?---Yes.

Between then and the end of 1999 when you didn't get the $1.6 million that was to come in from this transaction was there any further exploration or drilling done or did the Pinnacles project stay pretty much as it was?---I can't recall specifically but I'd be surprised if we hadn't been doing some work.

All events, you would agree, wouldn't you, that by the end of 1999, 12 months or so afterwards the shares had climbed back above 25 cents?---Yes.

They were trading at 26 cents on 321 December 1999 and by March 2000 had reached 50 cents again, or 47.5 at all events?

---Yes.

Yes. And in that time had ranged between 30 and 45 cents between January and March?---That sounds correct.

So that the perceived value to the stock market, to the stock market investor, was always very variable?---Yes.

And not a good guide to the value of the stock in the company if you were to have an interest in it as a long term investor?---That would be one point of view that would be quite acceptable. Yes.

And a perfectly reasonable point of view if you were a long term investor?---Yes.

Yes. In the same way as at the time the chairman of the company if you'd been asked to give up a controlling interest in the company with the view you had and the view you would've communicated to your shareholders you would've been very reluctant to do so at par or less, wouldn't you?---I'd have been certainly reluctant to do so at less than par.

And par is 20 cents?---Yes."

"HALL, MR: Was it a sure thing, Mr Bannerman, that if additional capital was spent on the Pinnacles project it would have become profitable?---Once again I feel uncomfortable with that question because in the realm in which we're delving nothing is a sure thing and it's unfair, with respect, to ask me whether it would be a sure thing. I can certainly say that the expenditure of a million dollars on the property would have enhanced its value inasmuch as in our expectation and the geologists' expectation it would have resulted in increasing the amount of material available and hopefully enhancing the grade of the material available for our hoped for sale to one or other of the commercial plants which were in the course of being constructed at the time.

In the course of that answer you have used the word 'hope' twice, hopeful, hoped for. Why do you use that word in that context?---Well, because it's not certain."

198 This summary of Bannerman's evidence is probably sufficient to reveal that although he spoke of volatility in the market price of shares in Kanowna and the hopes he had for the success of the Pinnacles project, there was nothing which really took away from the essence of Poynton's testimony that the resolutions of Hallmark in October 1998 appeared to be outside standard commercial practice.

199 Evidence was given by both appellants. Forge gave evidence that in 1994 he became a director of CTC. In July 1998 he became a director of Kanowna. In September 1998 he became a director of Hallmark. These three directorships were acknowledged to have put him in a potential position of conflict of interest.

200 Forge testified that he was aware of the objections of Corp and Bunting to the proposed resolutions of October 1998 and the acquisitions in Kanowna. He admitted that he attempted to persuade Corp that the resolutions were worthwhile. He acknowledged that Corp and Bunting were opposed to the transactions. His evidence was that in determining what was a reasonable price for the acquisition by Hallmark of an interest in Kanowna, he was looking at Hallmark taking a controlling interest in Kanowna. He said he relied on Muir to negotiate the price of shares being sold by CTC to Hallmark, although acknowledging that Muir was a nominee of Davis Samuel.

201 Forge conceded that he had no discussions with Bannerman about Hallmark taking a placement of Kanowna shares, nor was there any formal partial takeover ever discussed. He conceded that although it was his opinion that the resolutions approved at the Board meeting of Hallmark on 23 October 1998 were in the best interests of Hallmark, there was no documentation to confirm this.

202 The cross-examination of Forge revealed him to be seriously wanting in relation to his approach to the resolutions of 23 October 1998. Extracts from that cross-examination are as follows:

"But didn't you think that in those circumstances it bore upon you as a director of Hallmark to find out everything about this transaction before you urged it upon your fellow directors?---It's your words that I urged it, I didn't. I participated but I was not a dominant person

But you recommended it?--- Because I was not setting the price.

You made your views known?---I believe in the project, yes.

You recommended it to the directors?---No, I didn't say that.

In making your views known you made it known that you positively viewed this transaction as one that Hallmark should enter into?---I clearly believed that there was a benefit to Hallmark to enter into the Kanowna transaction, yes.

Didn't you in that context think it was beholden on you to find out what price Hallmark was paying?---I believe the people I was dealing with were reasonable persons, honourable and would make a fair judgment as to price.

And who was that?---David Muir as the other board director and in discussion with Alan Endresz and Peter Cain.

Well, now, why would you rely on those people because Mr Muir you well knew had been placed on the board as a nominee for Davis Samuel?---It might be said that I was too.

You were too indeed, but you said that you relied upon Mr Muir as being somebody who you thought could form a fair deal but you knew that Mr Muir had been put on the board as a nominee of Davis Samuel. Yes?---That's fine.

...

At the meeting on 14 October Mr Alan Endresz had been present when the proposal that CTC sell its shares had been discussed. Yes?---Not unusual for Alan Endresz to be present, yes.

In what capacity was he there? What hat was he wearing?

---Which hat?

Yes?---I believe he would've been wearing the hat of Davis Samuel if everyone had to have a hat, but it was a discussion.

Yes, wearing a hat as Davis Samuel as being advisers to CTC?

---He was not engaged as a consultant as such to CTC on matters other than what is involved in a Supreme Court in Perth.

Why would Davis Samuel be present at a discussion of you and Joseph Endresz as directors of CTC about the sale of its shares?---It's very simple. It's a very small office. There's a lot of common discussion.

But what role would he have to play in CTC's decision?---The decision, none. The final decision would be made by the board but the discussion and the lead up to it invariably involved Alan Endresz and his parents.

Knowing that, knowing that he'd been involved in the discussions about CTC selling its shares to Hallmark ?

---Yes.

...

But how could you justify that precise price being paid: 20 cents for the shares and 8 cents plus 20 cents for the options which were exercised? How could it be justified, Mr Forge?

---The only thing I have to say is that I still believe that it was a reasonable transaction.

And that's what you propose to say if anyone asks why you had gone along with these transactions, that you thought it was fair?---Yes.

You didn't think that it was appropriate to get an accountant's report, and independent accountant's report?---No.

So that you could provide that to shareholders if they asked why?---No.

You didn't think it was appropriate to get a geologist's report as to whether your believe in the Pinnacles project was correct?

---No.

Why not?---The geologist would not have added anything that I didn't already know.

You are not a geologist are you, Mr Forge?---No, I'm not.

Do you respect those who are?---Yes, I do.

And on occasions when you were managing CTC's tenements you have acquired for CTC the benefits of expert geologists' advice, haven't you?---Correct.

Why wouldn't you do that in this case?---I didn't believe it was necessary.

Why not?---I liked the project.

...

Did you actually discuss with your fellow board members of Hallmark whether it was economic to get a partial placement?

---No. No, I didn't.

Why not?---Because I didn't believe that it had any merit.

Why not discuss it?---And very little merit, in fact no merit at all, as far as success.

You see, Mr Forge, if it had been discussed and recorded, then there would be a record in Hallmark's books of all of these things having been considered and it would then show a line of reasoning which you say we should follow that would end up with these resolutions being the only viable alternative, but there's none of that, is there?---No. You're adopting a clinical approach to all of these matters in a very small company.

Don't you accept that this is the sort of approach that a shareholder of Hallmark might expect that you would do?---If the shareholders of Hallmark knew what the administrative costs were going to be I don't think they would. It was wasting their money.

Another alternative was to look at the register of shareholders of Kanowna and see if you could purchase any shares from the register. You said yesterday to Mr Davies that shares in Kanowna were thinly held in small packages?---Correct.

When did you look at the register?---I know from the annual report that the substantial share price - I think there were three, that is shareholders who hold 5 per cent of more of which - - -

Mr Forge, when did you look at the register?---At the annual report of Kanowna.

When?---I can't recall specifically but I have - - -

Did you - - -?---I know that the shares in Kanowna from that report both the substantial shareholders and the top 20 are very thinly held.

Did you give consideration to whether any shares could be purchased from other shareholders of Kanowna at a cheaper price?---No.

Why not?---Because it wasn't worthwhile in my view.

How do you know? How did you know that?---That was my opinion.

What was it based on?---That the shares were too thinly held.

So you say you knew that at the time?---Yes.

There were other substantial parcels of shares though in Kanowna, weren't there?---I think there are three.

Did you consider approaching any of those people?---They - a worthless exercise.

How did you know?---One of those is Mr Bannerman's the chairman, the other one is the royalty holder and I think there is one other.

Yes. So would you like to answer my question now?---I can't recall who it is. What?

How did you know it was worthless to approach any of those people?---Tom Bannerman was committed to it and so was Della-Bosca.

How did you know that? Had you asked them whether they would consider selling their shares to Hallmark?---I'd been to the Pinnacles with them. I knew their enthusiasm for the Pinnacles project.

But did you ask them?---No.

Whether they would consider selling their shares?---No.

They might have if you'd offered them as much as you were offering to CTC and Davis Samuel?---I doubt it.

Well, you might doubt it but did you try?---No.

Was it discussed with the other members of the board?

---Which board are we talking about?

The board of Hallmark?---No.

What about a partial takeover, did you consider that?---That's what we were doing.

Did you consider a formal partial takeover by way of a takeover offer to the market?---No. It's an expensive process and not necessarily succeeds.

Did you consider it?---No.

Was it discussed?---No.

with your other members of the Hallmark board?---No.

...

Given what you knew about Mr Muir that he had been a nominee to the board by Davis Samuel, you knew that?---Yes, I did.

You knew that Davis Samuel were selling the options. You knew that?---Correct.

How could you be confident that Mr Muir was uninfluenced by that extraneous factor?---I don't believe there's any evidence to say that Davis Samuel was exerting an influence on him.

But how did you know that that would not occur?---I didn't know but - I didn't know and I didn't now know.

You didn't care, did you?---I did care, of course I cared.

Did you speak to Muir about it?---That's a despicable thing to say.

Did you speak to Muir about it?---About the transactions?

Yes?---The related parties?

Yes?---At length.

Did you speak to him about whether he might be influenced by the fact that Davis Samuel had nominated him for the board?

---No, that was never a consideration.

...

In respect of the first resolution passed on that day at that meeting on the evening of 23 October you were present at the first of those resolutions?---Yes.

The Davis Samuel retainer agreement?---Yes, I believe I was.

You were a nominee you've told us by Davis Samuel to the board?---That's correct.

Davis Samuel were a 19 per cent shareholder in the company?

---Yeah, 19.7 or something, yes.

19.7 or something?---Yes.

And here was a retainer agreement that promised them $350,000 per annum for the next three ?---Three years.

Three years?---Yes.

In those circumstances did you not consider that an objective person might be concerned about whether you were influenced by Davis Samuel?---And objective person might not know Alan Endresz and Peter Cain like I did.

But how did you protect yourself from an such suggestion or suspicion?---I had full confidence that they would do the job and give fair value, in fact profit value to Hallmark.

How could you be satisfied as to that?---Past performance.

How could you be satisfied that Hallmark would get $350,000 worth of services every year for the next three years?---My view is if they settled the Cawse, and as I said to you yesterday or I said to the Court, there are thinkers and doers and Davis Samuel just happen to fit both categories and if they were able to get just one additional million dollars in that valuation on the final 20 per cent which was distinctly possible then I had three - Hallmark had three years of consultancy at no cost.

But the agreement didn't require them to do that, did it?---That was the purpose of going into the Hallmark in the first instance, was to clean up the mess in the Cawse extended.

It didn't require them to do that, did it?---It required them on best endeavours.

Yes, but it didn't require them to produce a result on Cawse extended, did it?---It didn't specifically identify Cawse extended, it didn't specifically say what end result was to be got but I was confident they would get the best possible result.

Well, you might be but the agreement doesn't require them to do anything at all in that regard, does it?---The agreement required them to provide corporate consultancy services for Hallmark.

Mr Forge, the agreement did not require them to do anything specifically in respect of Cawse extended at all, did it?

---Correct."

203 These lengthy extracts from the cross-examination of Forge reveal that he had no answer to many of the questions that were put to him. His performance in cross-examination was such that any reasonable jury could, in my view, be satisfied beyond reasonable doubt that the only inference open to be drawn was that he knowingly made improper use of his position as a director of Hallmark, dishonestly and intending to gain directly or indirectly an advantage for others.

204 Clark gave evidence that in mid-1998 he had indicated to Endresz an interest in taking a company directorship. On 22 October 1998 Endresz telephoned him to ask whether he would be interested in being a nominee director for Davis Samuel on the Board of Hallmark. He accepted the invitation in the knowledge that in joining the Hallmark Board he would be representing the interests of Davis Samuel. He acknowledged, however, that his prime responsibility as a director was to the shareholders of Hallmark.

205 Clark testified that on 23 October 1998 he was telephoned by Forge with advice that the Board had met that day and appointed him a director. Later on the same day he spoke separately to Endresz and Muir about a planned takeover of Kanowna by acquisition of shares and options. He knew only what was contained in the notice of resolutions which was faxed to him shortly before the meeting at 6 pm on 23 October. That was the only document he received which related to the transactions before he voted in favour of the resolutions. He had not even seen the retainer agreement, but he had no problem with agreeing to a resolution that Hallmark enter into a retainer agreement for management services with Davis Samuel. The essence of his testimony was that he relied on what Endresz told him about the Pinnacles project and its value, and this led him to the view that the acquisition was in the interest of Hallmark and it mattered not what interest in the matter Endresz may have had.

206 At the hearing of the appeal counsel for Clark urged the Court to read Clark's evidence in full. He was confident that a reading of the evidence would reveal that the evidence in relation to the commerciality of the transactions was equivocal and incapable of excluding a hypothesis consistent with the innocence of Clark, namely, that he was naïve or incompetent. It was further contended that the evidence of Clark was "quite incapable of leading a reasonable jury to be satisfied beyond reasonable doubt, that by approving the resolutions in question he had joined the alleged criminal enterprise".

207 As I have pointed out, the prosecution case was not that the transactions the subject of the 23 October resolutions were improper because they were uncommercial, but that they were improper because they were done for the ulterior purpose of benefiting another. It is against this background of the thrust of the prosecution case that Clark's evidence is to be judged.

208 A reading of Clark's evidence does not reflect the confident assertion of his counsel that the evidence was quite incapable of leading a reasonable jury to be satisfied beyond reasonable doubt that by his actions he had joined the unlawful enterprise and acted dishonestly.

209 Clark was 55 years of age at the time of trial. He had no record of criminal convictions. He had been a farmer for several years until the 1990s when he moved into another business and thereafter, in about 1996, took up full-time share trading. He purchased a small interest in CTC in 1996-1997, but played no role in its management. His share trading activities were primarily in mining and industrial companies. He had never been a director of a public company.

210 Clark met Forge in about 1996. They had an office in the building occupied by CTC. Through his wife, Clark met Endresz and when he decided to engage in full-time share trading, he looked to Endresz for advice. He was a successful share trader who was described by Clark as having a "great mind" and a great ability to share trade. Clark came into contact with Davis Samuel through Endresz. He advanced money by way of loan to Davis Samuel. Clark's opinion of Forge was that he was "a straight shooter and a good bloke ... a very honest person". He had numerous discussions with him about Kanowna and the Pinnacles project. This led Clark to acquire options in Kanowna in mid-1997. Clark met Cain through Davis Samuel but had no business dealings with him. He knew that he was a lawyer.

211 Towards the middle of 1998 Clark indicated to Endresz that if a position ever came up in any one of his companies he would be interested in it. He said he was getting tired of the grind of share trading. Prior to 23 October 1998 Clark was told by Endresz that CTC had taken a 5 per cent interest in the Pinnacles project. Endresz expressed the opinion that the project was worth $10 million, making the shares (Hallmark shares) worth 40 cents.

212 On 22 October 1998 Endresz rang Clark in the morning. He asked him if he would be interested in taking a position on the Board of Hallmark. This was the first communication about taking a position as a director of a public company since the early discussion with Endresz in the middle of the year.

213 Clark's understanding of what he would be required to do was as follows:

"Did he tell you anything about the shareholding in Hallmark?

---The shareholding, I don't recall he even told me the number of shares in the company. My only feeling was that being asked to be a director I had to be prepared to sit on boards, go to meetings, annual meetings as well as directors' meetings, be involved in the company - day-to-day - directly day-to-day running of the business, the business

Had you had any training for that?---I hadn't at all."

Clark knew that he was a nominee of Davis Samuel and that his responsibility was to represent the interests of Davis Samuel, "being well aware that the shareholders in Hallmark was (sic) my major concern".

214 Clark accepted the offer of a directorship. He received no documents of any kind on 22 October. On 23 October he was advised that there was to be a director's meeting in the morning. He was advised that at that meeting he was appointed a member of the Board. He knew that Muir was a director but he had no dealings with Muir. It was Muir who telephoned him on the late afternoon of 23 October to advise that legal advice was being taken by the company about certain related transactions that were going to be the subject of a Board meeting. Clark was told that an agenda would be faxed through to him for a meeting to be held later that evening.

215 Clark received the agenda, but no papers. He was of the view that the proposed transactions were very good. He said that it was hard to buy shares in Kanowna on the market. His evidence was that he did not expect any discussion at the Board meeting in relation to the proposed resolutions as "it was obviously negotiated between the parties and that was - that's how I felt".

216 Clark testified that he had no knowledge of the existence of previous directors Corp and Bunting and no knowledge of any reservations they had expressed about the transactions.

217 So far as the retainer agreement for Davis Samuel was concerned, Clark had seen no papers prior to the meeting. He had, however, had personal dealings with Davis Samuel and held the view that they were very reputable, successful and honest.

218 In answer to a number of leading questions, he had this to say:

"Were you at all troubled by the concept of engaging the services of Davis Samuel, knowing what you knew about them as professional advisers to this company?---No, I had no problems with it.

Did the amount of money seem to you to be unusual?---No, not at all, no

I'm sorry, go on?---No, just knowing some of the fees paid to lawyers and

Now, now?--- - - - accountants."

219 So far as his preparation for the Board meeting was concerned, Clark testified as follows:

"Now, in the hour that was available to you between receiving the agenda and the actual meeting taking place, did you do anything in relation to making inquiries about any of these transactions of your own?---I did spend a bit of time.

What did you do?---Looking at Kanowna and their reports, the annual report and the quarterly report.

Were they available to you on-line? Was that part of the on-line service you had?---A lot of that was on-line, yes, and also company announcements, I went through those. I couldn't

Did what you saw in any way change your view about whether or not Hallmark, of which you were now a director, should invest in or take over Kanowna Lights?---No, it didn't. I thought it was a very good idea, a good proposition."

220 Clark then said that he received a call from Muir to the effect that a solicitor had advised that the transactions did not involve "a related parties issue", but he conceded that at no time did he seek any legal advice. He relied on Muir's advice to this effect. The resolutions were duly put at the meeting (which he attended by telephone) and he voted for them.

"Did you take your job as a director of Hallmark, for the very brief time you had it, seriously?---I did.

How did you try to discharge it in the time you were there in relation to your own personal honesty and probity?---How id I?

How did you try to discharge your duty?---Well, I took it seriously as you said.

Did you try to be honest?---Most certainly, I tried to be very honest which goes without saying, and also to take the - well, take into consideration the best interests of the shareholders."

222 It is obvious that Clark's evidence required testing in cross-examination. For a director of a public company to accede to the resolutions he did on 23 October 1998 without any prior consideration of the proposals and without any supporting materials clearly raised some question marks. It is not practicable to set out all the cross-examination. However, the prosecutor very clearly shook the credibility of Clark. The following extracts sufficiently make the point:

"You see whether it's a good deal or not to buy a stake in Kanowna must depend to some extent on what you get that interest for, mustn't it?---I thought, as I said before, the negotiation was done between the Davis Samuel and the directors at that stage.

You thought the negotiations had been done already? ---That's what I said.

Why did you think that?---I thought it was - I'd come in very late in the proceedings.

Did anyone say to you that there had been negotiations?---It was obvious there was.

Well, did anyone say that to you?---No.

Did you ask?---No.

You became aware the following day of what the price was for the shares and options, didn't you?---That's correct.

That it was 20 cents for the shares?---Yes.

And 8 cents for the options?---That's correct.

And the options would then be exercised for a further 20 cents?

---That's correct.

Because you had been trading in Kanowna shares yourself you had a very good idea of what the market price of the Kanowna shares was?---I'd bought shares at nearly 40 cents.

Yes, but you knew what they were on that day too, didn't you?

---I did.

On 23 October?---I did.

You knew that Kanowna shares were trading at 9.5 cents, didn't you?---I knew they were trading at - say again?

9.5 cents?---Correct.

And you knew that the options were trading at just below 2 cents?---That's correct.

So you were presented with a resolution that was requiring Hallmark to purchase these shares for very much higher than the market price. Yes?---That's very true but they were very undervalued.

Well?---I've said that.

Yes, I know you've said that but knowing that they were being purchased for so much higher than the market price did you ask how that price had been reached?---I think I've said that already.

Well, how did you work that out? How did you determine that it was a fair price that had been reached?---I'd been - I was told the valuation and you can work that out from the valuation, from the number of shares in the company.

But knowing that you'd been able to purchase shares on market did you not ask whether it was possible for Hallmark to purchase shares at a lower price than it was paying?---It was impossible to do that and I've said that already. It was a very thinly traded stock.

Did you ask about a placement, Mr Clark?---I didn't.

Why not?---Well, again as I said, the negotiation, the discussions the board had had, it wasn't privy - I wasn't involved in those discussions.

You said you assumed that the negotiations had occurred already but did you as a director of Hallmark looking for the best price possible in respect of this transaction ask anybody whether they had considered a placement?---I didn't.

Why not?---I did know what a placement was. As I said, the discussions between the board and negotiation between Davis Samuel and the board, I wasn't privy to those discussions and that's what it was.

...

Did you ask whether there had been any independent valuation done of the Pinnacles project?---Independent, no.

Did you ask whether any geologise employed by Hallmark had considered the Kanowna Pinnacles project?---Well, Hallmark, no; Kanowna, yes.

You did ask that?---I'd asked through Bill Forge for progress of the

Not all you had seen by way of documentation was the agenda and then some annual and quarterly reports that you saw in the Internet?---That's all I saw.

None of which valued the project, did they?---I was relying totally on the information I received from Kanowna and Mr Endresz.

What information did you receive from Kanowna?---Well, only the fact that - the board itself; Bill Forge was on the board. He had been to the Pinnacles, inspected the site, spoken to geologists and had some firm opinion on the valuation.

Did you ask Bill Forge whether there was any documentation that you could see that would support a valuation that justified paying this price for the shares and options?---I relied on Bill Forge's word.

Did you ask him whether there was any documents that you could see?---I didn't.

Why not?---Because I don't think there was any.

You had never been a director of a public company before?

---That's correct.

But you can't honestly have thought that it was a daily occurrence for directors of a public to pass resolutions committing millions of dollars of a company's funds, surely?

---Say again?

You can't have thought it was a daily occurrence for a director of a public company to pass resolutions committing millions of dollars of a company's funds?---Quite possible, depending on the size of the company.

Did you not think that this was a rather sudden occurrence, given that you were appointed the very day?---I just think I was the wrong person at the wrong time. I don't - I think I was particularly unlucky, the fact that I was faced with such major decisions to make, but as I said I wasn't actually faced with the decisions because the board had dealt with the negotiation and the proposition put to them.

...

The first of those resolutions related to the Davis Samuel retainer agreement. You knew that, because you had been given the agenda beforehand. Yes?---That's correct.

You didn't see the agreement, did you, before you voted on it?

---That's correct, but I was very aware of Davis Samuel and what they'd achieved over the years.

What did you know about the agreement when you resolved that it be executed?---I saw it on the 28th.

What did you know about it when you voted on the 23rd?---I knew it was a corporate agreement.

What does that mean?---A corporations-type agreement.

What does that mean?---How can I put it? An agreement to look after the interests of a public company.

In what respect?---A basis - on a - well, in other words, the agreement had to be put place was to look after the interests of the shareholders, look after the - I've drawn a blank - I suppose the financial interests to a certain extent

You're just making this up, aren't you, Mr Clark?---No, I'm not; I'm thinking it through.

You had no idea what the detail of this agreement was on 23 October, did you?---But I knew what a normal Davis Samuel agreement was basically concerned with.

You had no idea what this agreement said, did you?---I had no idea? I would only assume that it'd be a typical Davis Samuel agreement looking after the interests of the company.

You had no idea what it required Davis Samuel to do by way of work for the company?---Well, let's face it, it involved the law - the law side of things, within the law. It involved the - the accountancy that we were involved - accountancy. It involved - yeah.

Mr Clark, how could honestly be of the view that this agreement was in the interests of the company when you hadn't even read it?---I - the only - I did know Peter Cain was a corporate lawyer, a very good corporate lawyer. I believe that Alan Endresz could have offered an awful - a lot in regard to the accountancy side of the - as well, and that's basically what he did do.

How could you be satisfied that this agreement would achieve anything by way of securing services from Endresz or Cain if you hadn't read it?---I hadn't read it is correct.

Well, can you help me with how you can be satisfied that the terms of that agreement were in the interests of the company when you hadn't read it?---I do think it was in the interests of the company and it proved that - to be the - to be so.

You assumed it was in the interests of the company simply because you believed in Endresz and Cain?---I did believe in those men, their expertise.

Yes, but that's all there was to it?---Their expertise.

But you didn't satisfy yourself independently of those men whether the terms of this agreement were in the interests of the company, did you?---Well, I knew that it was definitely in the interests of the company.

Did you not think that the shareholders might be concerned that you as the nominee of Davis Samuel were hear agreeing to the execution of such an agreement without having read it?---Well, I think you'd hope the shareholders would have faith in the - in the directors.

Well, don't you think they'd have more faith in you if you bothered to read it?---But I did know the quality of the - the agreement. "

223 For my part, I am unable to conclude from a reading of the evidence of Clark that there was any reasonable hypothesis open that was consistent with naivety or incompetence on his part. To the contrary, it seems apparent that Clark was prepared to take a position on a board of a public company at the request of people whose interests he was to serve and in circumstances where, on the very day of his appointment, he was prepared to join in the passing of a number of resolutions of far reaching effect to the company and about which he really knew nothing. Far from being a naïve person, Clark prided himself on a background of share trading and corporate involvement which he said equipped him to discharge his duties as a director of a public company. His performance was lamentable and it was, in my view, open to a reasonable jury, properly instructed, to be satisfied beyond reasonable doubt that the only inference open on the evidence was one which was consistent with his guilt in respect of the counts he faced.

224 In the course of his directions to the jury, the learned trial Judge made clear reference to the fact that neither Forge nor Clark were obliged to give evidence and the presumption of innocence must apply to them. He said:

"Neither Mr Forge nor Mr Clark had to give evidence. Because of the presumption of innocence that applies to any person who stands trial each of them was quite at liberty not to give evidence but they each chose to give evidence and as a result to submit himself to cross examination by Mr Hall. The fact that each of them chose to give evidence does not in any way detract from the important principles of our system of law that the onus is on the crown to prove the charges that it presents against an accused person and the accused is presumed to be innocent until the charge has been proved beyond reasonable doubt.

It may be that you believe all of the evidence of Mr Forge and all of the evidence of Mr Clark. In that event you would acquit them. Even if you are not to believe an accused person's evidence you cannot find an issue against the accused person contrary to his evidence if his evidence has given rise to a reasonable doubt on that issue. It is important to remember the questions for you to consider is whether on all the evidence the crown has proved a charge beyond reasonable doubt.

If the evidence of an accused person has given rise to a reasonable doubt he is entitled to the benefit of that reasonable doubt and you cannot convict him on the count or counts on which the reasonable doubt has arisen. Further, even if you were not to accept an accused person's evidence and you were to reject that evidence entirely it does not follow automatically that you convict the accused person of an offence with which they have been charged. An accused person does not have to prove anything."

225 His Honour then referred to character evidence which had been given on behalf of both appellants and directed the jury properly as to how that evidence might be taken into account.

226 A full direction was given on the way in which inferences might properly be drawn in the case and no point has been taken in any way in relation to that direction. What is complained about by counsel for both appellants is that the jury was prepared to draw an inference beyond reasonable doubt that each of the appellants had improperly used his position as a director and acted dishonestly in so doing. It was argued that there were other explicable reasons for the conduct of the appellants, consistent with their innocence, so that the evidence was incapable of sustaining a conclusion only of dishonesty.

227 I am of the view that there was ample evidence before the jury which entitled it to conclude beyond reasonable doubt that the only inference that could be drawn was that each of the appellants had improperly and dishonestly used his position as a director. The retainer agreement with Davis Samuel appeared prima facie to be uncommercial. It contained no details of the services to be provided by Davis Samuel, no measure as to how the services would be performed and no provisions for review. There was evidence that such an agreement was highly favourable and exceptional to the retained party. The fact that the agreement was with an entity which held a majority shareholding in Hallmark and which had appointed both appellants to the Board of directors of Hallmark, weighs heavily against the appellants. Further, in their evidence they were unable to advance any real explanation for their agreement with the resolution which approved the retainer. Clark agreed that he had not seen the agreement and had no knowledge of its contents. Forge and Clark both said they trusted Endresz to provide the necessary services that would be beneficial to Hallmark, but without more.

228 The prosecution called expert evidence in relation to the Davis Samuel agreement. It came from Duncan Harvey Calder, a chartered accountant with KPMG. He was an Associate of the Institute of Chartered Accountants, a member of the Institute of Chartered Accountants of England and Wales and a member of the Institute of Chartered Accountants in Australia. He held the position of Lead Lecturer in the Applied Valuations unit of the Securities Institute of Australia. Other qualifications put him in a position to comment upon the resolutions of 23 October 1998. It is his view on the Davis Samuel retainer agreement that should be quoted. He said:

"You were also asked to look at the Davis Samuel retainer agreement?---Yes.

...

You were provided with a copy of that retainer agreement?

---Yes.

...

What conclusion did you reach when you looked at this agreement as to whether it reflected normal commercial practice?---I concluded it was a very attractive deal for the advisers and the type of deal I would love to have got for myself. The term three years is an unusually long term. Most retainers offer a year and usually there are some exit clauses from that depending upon performance. It's unusual for someone to commit to - use the same adviser for three years without requiring them to have some sort of performance - minimum performance thresholds. Directors of publicly listed companies would seldom enter into retainer agreements beyond 12 months. They would be uncomfortable to do so from a corporate governance perspective. The range of services provided was quite broad on this agreement and typically you would want to retain flexibility to be able to choose specific advisers who have relevant expertise for specific services so if you wanted someone that's particularly experienced in capital raising you might want to pursue a particular type of adviser and certainly Davis Samuel appear to have quite a lot of experience in that area, or if you were looking for other types of corporate finance advice you might want to pursue someone who has specific expertise in that area. The other feature which was unusual which was in favour of the company was that there was no indemnity provided to the adviser. Typically, if I was providing services I'd be looking for some form of indemnity from the company.

In this case the remuneration that was to be paid to Davis Samuel was fixed, was it not? It was $350,000 per annum?

---Yes.

Is that unusual in your experience?---It's unusual to have a wholly fixed retainer and it's unusual to have a retainer of that size. It's not unusual to have a smaller retainer with bonus payments paid based on actual performance.

...

And were there any performance requirements in terms of, for example, the number of hours that Davis Samuel had to commit to Hallmark?---No.

Was there anything in regard to specific objectives that Samuel Davis had to achieve for Hallmark?---No.

Are they the sorts of features that you in your experience would have expected for an agreement of this type involving this amount of money?---That's - that's difficult in a sense that I've never seen a deal that pays so much as a fixed - as a fixed amount. So - so you do sometimes have smaller retainers, say 10,000 a month running for a year where there's not a specification of a minimum number of hours, but if it was a larger contract then you would typically expect some - some committed minimum performance or - or minimum service levels.

And was there any provision in this agreement for it to be reviewed during the term of the three years?---Not that I could identify.

Have you ever in your experience seen a retainer agreement in this form?---Not for - not for providing advisory services."

229 By 23 October 1998 the market share price in Kanowna shares was 9.5 cents. For options it was 1.9 cents. Those options had an expiry date of 31 December 1998. The prices paid by Hallmark by reason of the resolution to prove on 23 October 1998 represented a 110 per cent premium over the market price of the shares and a 300 - 400 per cent premium over the market price of the options. This in turn led to a 195 per cent premium for the shares acquired by exercise of the options. On the expert evidence led at trial, this was well outside normal limits. Further, there was no independent valuation of the shares or options which could have justified the appellant's approving the resolutions to acquire those shares and options. There was no exploration of any of the alternative means mentioned by Poynton for securing a substantial holding in Kanowna shares.

230 The vendors of the Kanowna shares and options were companies associated with Endresz. They were Davis Samuel, CTC and Kamanga. This was known to each of the appellants in respect of the options and Clark acknowledged that he believed the vendor of the shares was a company which was associated with Endresz. Forge was actually a director of CTC and so had an interest in any agreement for the acquisition of shares from that company.

231 The appellants contended that the prices paid for the shares and options were fair, but they were unable to testify in relation to any negotiations with Endresz in relation to those prices. They acknowledged that they were set by Endresz and accepted.

232 The exercise of the options required Hallmark to expend 28 cents to acquire each share (8 cents per option and 20 cents for the exercise) in circumstances where the shares were trading at 9.5 cents. The majority of options of this type expired without being exercised before the end of 1998 because the market price of Kanowna shares did not rise above 20 cents. There was no commercial justification in the transaction.

233 Counsel for Clark argued on the hearing of the appeal that the evidence in relation to commercial justification of the various transactions was equivocal. There were three primary bases for this submission:

(1) The asset backing of the Kanowna shares was in fact 40 cents.

(2) The value placed on the Kanowna shares was supported by expert valuation.

(3) The Kanowna shares rose at a subsequent time above 40 cents.

234 Counsel for the respondent countered these submissions by first pointing to the fact that the asset backing contended for was calculated on the basis of an earlier transaction to purchase 5 per cent of the Pinnacles project by CTC. It was contended that this transaction did not provide any independent evidence of the value of the Pinnacles project as the appellants must, had they investigated the matter, have known. In answer to the second proposition, counsel for the respondent pointed to the fact that the valuation in question was from McKay Schnellman, and was not commissioned until well after 23 October 1998. It was not something that the appellants could have been aware of at the time of the meeting of 23 October. It could not have justified the price they agreed to pay. In any event, the valuation was obtained for the benefit of Kanowna, not Hallmark, and in arguably different circumstances. Question marks were raised about the valuation, particularly as an independent accountant ultimately commissioned by Hallmark to consider whether the share and options transactions were fair and reasonable, expressed the view that the report was not reliable and commissioned his own independent report.

235 In answer to the third proposition, counsel for the respondent conceded that the price of shares in Kanowna did, after 23 October 1998, rise above 40 cents. It was contended, however, that this was not due to any valuation placed upon the Pinnacles project, but upon other events. Counsel for Clark contested this contention, pointing out that Corp, who had resigned from Hallmark prior to 23 October 1998, later bought shares himself in Kanowna. He also relied upon the evidence of Bannerman, to which I have previously referred.

236 It is unnecessary to trace the voluminous evidence in relation to the question of commerciality of the transactions which are the subject of the resolutions of 23 October 1998. As I have pointed out, it was not the Crown case that the transactions were in fact detrimental to Hallmark, although this was an inference the prosecution said could be drawn. Each of the counts faced by the appellants pleaded an intention to gain an advantage for another, and not the alternative of causing a detriment to Hallmark.

237 The question of the commerciality of the various transactions was, of course, an important aspect of the trial. There was some evidence upon which the defence could rely in contending that the question of commerciality was at least ambiguous, but the preponderance of the evidence clearly supported the prosecution contention that the transactions were far from being in the best commercial interests of Hallmark.

238 I am of the view that there is no substance in grounds 4 and 5 of Clark's grounds of appeal and ground 4 of Forge's grounds of appeal. There was ample evidence upon which the jury was entitled to find beyond reasonable doubt that the only inference that could be drawn was that each of the appellants had in relation to each of the transactions referred to in the indictment acted in breach of their duties as directors, and dishonestly, intending to gain, directly or indirectly, an advantage for another or others.

Application of the proviso to s 689(1) of the Criminal Code

239 I have concluded that the learned trial Judge erred in his directions to the jury in the following respects:

(1) Failing to identify to the jury just what was the unlawful enterprise which it was contended the appellants had joined - with a clear direction as to what aspects of the evidence of that enterprise revealed unlawfulness and which did not.

(2) Failing to single out and identify for the jury the evidence which was admissible against each of the appellants individually to support the prosecution contention that each had joined the unlawful enterprise.

(3) Failing to direct the jury that evidence of Corp, Bunting and Woodhouse, whilst evidence in relation to the unlawful enterprise alleged, was not evidence against Clark insofar as it went to the question of their views on the commerciality of the transactions, the subject of the resolutions of 23 October 1998.

240 It must also be said that the learned trial Judge's directions to the jury were particularly brief in the context of what was a long and complex trial. Nevertheless, the directions given did, apart from the blemishes to which I have referred, essentially comply with the requirements of a Judge's charge to a jury as set out in R v Zorad (1990) 19 NSWLR 91 at 105:

"A summing up should, in every case, not only include directions as to the ingredients of the offence which the Crown has to establish and an explanation of how the relevant law may be applied to the facts of the particular case, but it should also include a collected resume of the evidence which relates to each of those ingredients and a brief outline of the arguments which have been put in relation to that evidence: Holford v Melbourne Tramway & Omnibus Co Ltd [1909] VicLawRp 89; [1909] VLR 497 at 522-523: Mowlds v Fergusson (1939) 40 SR (NSW) 311 at 323 and Alford v Magee [1952] HCA 3; (1952) 85 CLR 437 at 466. This is a rule which appears increasingly to be ignored by trial judges. It is not a compliance with that rule simply to read the relevant part of the section to the jury and then to read out the evidence which has been given chronologically, starting with the first witness and going through the evidence in chief, the cross-examination and then re-examination of each witness before turning to the next witness and so on. The idea of a summing up is to present for the jury the issues of fact which they have to determine."

241 The question to be considered is whether, despite the shortcomings I have identified, there was no substantial miscarriage of justice within the meaning of s 689(1) of the Criminal Code.

242 In Mraz v R [1955] HCA 59; (1955) 93 CLR 493 at 514, in a judgment generally regarded as authoritative on the meaning of the proviso to s 689(1) of the Criminal Code (although the provision was s 6(1) of the Criminal Appeal Act 1912 (NSW)), Fullagar J said:

"It is very well established that the proviso to s 6(1) does not mean that a convicted person ... must show that he ought not to have been convicted of anything. It ought to be read, and it has in fact always been read, in the light of the long tradition of the English criminal law that every accused person is entitled to a trial in which the relevant law is correctly explained to the jury and the rules of procedure and evidence are strictly followed. If there is any failure in any of these respects, and the appellant may thereby have lost a chance which was fairly open to him of being acquitted, there is, in the eye of the law, a miscarriage of justice. Justice has miscarried in such cases, because the appellant has not had what the law says that he shall have, and justice is justice according to law. It is for the Crown to make it clear that there is no real possibility that justice has miscarried."

243 In Hoy & Ors v R [2002] WASCA 275 at [46] - [48], I made reference to the more recent observations of members of the High Court in Festa v R [2001] HCA 72; (2001) 208 CLR 593, to the following effect:

"46 In Festa v The Queen [2001] HCA 72; (2001) 76 ALJR 291, McHugh J considered this passage in considerable detail. His Honour concluded (at [120]) that what had been said by Barwick CJ in Driscoll v The Queen [1977] HCA 43; (1977) 137 CLR 517 at 524 - 525 and before that in R v Storey [1978] HCA 39; (1978) 140 CLR 364 at 376, contained the correct principles to be applied to the interpretation of the proviso. In the first of those cases Barwick CJ said:

'It is noticeable that the proviso to s 6(1) speaks in terms of 'substantial miscarriage of justice'. The word 'substantial' in this connexion denies, as it seems to me, the proposition that of necessity the existence of any of the enumerated circumstances in the subsection amounts to a miscarriage of justice. No doubt the oft quoted passage from the reasons for judgment of Fullagar J in [Mraz] rightly emphasises that it is for the Crown to satisfy the Court that occasion exists for resort to the proviso: but that passage ought not be read as saying that every departure in the course of a trial from compliance with the relevant law or rule of procedure results of necessity in a miscarriage of justice. Indeed, in my opinion, the very terms of s 6(1) and its counterparts would seem to deny that proposition_._ The important words, in my opinion, in the passage from the judgment of Fullagar J in that decision and at that page are 'may thereby have lost a chance which was fairly open to him of being acquitted'. Of course, if the Court of Criminal Appeal on its review of the facts and circumstances of the case concludes that before a jury, properly directed, the appellant can be said fairly or reasonably to have had a chance of acquittal, it will not be warranted in concluding that there was no miscarriage of justice.

It is for the Court itself to be affirmatively satisfied in this respect, and for this purpose the Court will consider for itself the evidence and the inferences properly available therefrom.'

47 In Festa v The Queen, McHugh J (at [121] - [122]) added these observations:

'[121] The question whether a jury, acting reasonably, would inevitably have convicted an accused ultimately falls to be determined by the relevant Court according to its assessment of the facts of the case. The prevalence of dissenting views in cases dealing with the application of the proviso illustrates the largely subjective nature of the inquiry, resting as it does on factors such as the error alleged, the relative strength of the prosecution and defence cases and the Court's characterisation of the hypothetical jury, 'acting reasonably' and properly directed. As Brennan, Dawson and Toohey JJ stated in Wilde:

"In the end no mechanical approach can be adopted and each case must be determined upon its own circumstances."

[122] But one important development has occurred since this Court decided Mraz, Storey, Driscoll and Wilde. Courts of criminal appeal are now required to examine and analyse the evidence in criminal trials to a much greater extent than previously. This Court has interpreted the 'miscarriage of justice' ground of appeal as entitling a Court of criminal appeal to examine the whole of the evidence and form its own opinion as to whether there is a reasonable doubt as to the accused's guilt. Even 30 years ago, such an approach would not have been contemplated.'

48 Similar observations to those of McHugh J were made in Festa v The Queen by Hayne J (at [228] - [229]). Other members of the Court determined the appeal on the basis that notwithstanding the error of the trial Judge in his directions to the jury concerning identification evidence, there was no substantial miscarriage of justice within the meaning of s 668(e)(1)A of the Criminal Code (Queensland). I have referred to the case in some detail because it is clear authority for the proposition that not every departure in the course of a trial from compliance with the relevant law or rule of procedure will result of necessity in a miscarriage of justice. That principle is of primary importance in considering the learned trial Judge's charge to the jury and the challenges to it that have been made in this appeal."

244 A statement to similar effect is to be found in Krakouer v R [1998] HCA 43; (1998) 194 CLR 202 per Gaudron, Gummow, Kirby and Hayne JJ at [23] - [24].

245 In the present case, I am of the view that an examination of the whole of the evidence leads inevitably to the conclusion that no reasonable jury could have been left with a reasonable doubt as to the guilt of either of the appellants. The case against each of them was very strong. I remain entirely unconvinced of the plea of counsel for Clark that there was a reasonable hypothesis open which was consistent with his innocence, namely, his naivety and inexperience as a company director. The review of the evidence that I have made in relation to grounds 4 and 5 of Clark's grounds of appeal and ground 4 of Forge's grounds of appeal reveals the strength of the prosecution case and the existence of ample evidence, upon which a jury was entitled to conclude beyond reasonable doubt that the only inference that could be drawn was that each of the appellants was guilty of the offences charged. In those circumstances I am confident that despite the shortcomings in the learned trial Judge's directions to the jury, there was no substantial miscarriage of justice within the meaning of s 689(1) of the Criminal Code. In relation to the three areas in which there were shortcomings, it can be said:

(1) The evidence in relation to the unlawful enterprise was clearly identified by counsel, and aspects of the enterprise that were not unlawful in themselves highlighted by counsel.

(2) Great emphasis was placed by counsel on the acts from which it could be said that an inference could or could not be drawn, that each appellant had joined the unlawful enterprise.

(3) The evidence of Corp, Bunting and Woodhouse in relation to their opinions of the resolutions of 23 October 1998 was only a minor aspect of the prosecution case on that point. Other evidence independently established the uncommerciality of those resolutions.

For these reasons I would dismiss the appeals against conviction.

Application for leave to appeal against sentence

246 Each count of which the appellants were convicted carried a maximum penalty of a fine of $200,000 and/or imprisonment for five years. The sentences imposed upon the appellants were (Clark) 18 months' imprisonment on each count, to be served concurrently with an order for release after 9 months upon entering into a recognisance release order and (Forge) 2 1/2 years' imprisonment on each count, to be served concurrently, with an order for release after 12 months upon entering into a recognisance release order.

247 Clark contends that the sentence he received was excessive, having regard to his age, antecedents, the impact of the sentence on his family, the minor role he played and the fact that the learned trial Judge found him unlikely to reoffend. Forge contends that the sentence he received was excessive, having regard to his age, health, prior good character, antecedents and because the learned trial Judge failed to satisfy himself that no sentence other than imprisonment was appropriate in all the circumstances of the case.

248 When the learned trial Judge sentenced the appellants he first made reference to the facts of the case. He found Forge to have been more culpable than Clark because he had joined the "dishonest plan" at an earlier stage than Clark. His conclusion in this respect was:

"Your involvement in the plan was greater and you disregarded clear and well founded concerns expressed by Mr Corp and Mr Bunting."

249 The learned trial Judge concluded in relation to Clark:

"Mr Clark. You also joined the dishonest plan, but you did so late in the piece on no earlier than 22 October 1998 and you did not know of the concerns that had been expressed, but you nevertheless committed serious offences because you dishonestly, acting pursuant to a plan to take control of Hallmark and force it to pay out moneys, passed the resolutions which were for the payments to which I have referred and you signed the agreements with Davis Samuel and with Kanowna for the exercise of the Kanowna options."

250 The learned trial Judge then took into account the good character of Forge and all matters personal to him. He noted that because of the convictions his commercial career would be devastated. Clark was also described as coming to the Court with "an excellent character". He was said to be of a person who engaged in a wide range of activities and business life successfully and had been completely honest until his convictions. He too would be devastated because of the loss of opportunity to engage in further commercial public life.

251 After reviewing the penalties applicable for the offences, the learned trial Judge said:

"Those high maximum penalties reflect the seriousness of the offences that you have committed. I cannot find precisely the sum lost by the victim company but I have set out the amounts that were placed at risk, the amounts that were spent. The amounts lost were less than the amounts spent because at least in relation to the shares the company still has Kanowna shares.

In arriving at the appropriate sentence it's necessary in each case for me to consider not only the need to punish and deter each of you for these offences but also to deter others who might be tempted dishonestly to improperly use their position as officers of public companies."

252 The learned trial Judge clearly took the view that only a sentence of imprisonment was appropriate to deal with the offences committed by the appellants. He gave consideration to the question whether he could suspend the whole of the term of the sentence, but decided he could not.

253 In my view the exercise of the sentencing discretion by the learned trial Judge in this case was entirely open to him. It cannot be said that he failed to consider options other than imprisonment. His Honour saw imprisonment as the only appropriate disposition of the matter, having regard to the seriousness of the offences. Careful consideration was given to the period of the sentence which the sentence should be served in each case. Full account was taken of the antecedents of each of the offenders and their prior good character. So too was an acceptance of the fact that their commercial life would be "devastated" in consequence of the convictions.

254 In my view the learned trial Judge was fully entitled to impose the sentences he did and I can see no error that occurred in the sentencing process, nor can I see how it can be properly argued that the sentences were excessive in any way. The case is a classic application of the principle clearly stated in Lowndes v R [1999] HCA 29; (1999) 195 CLR 665 at [15]:

"The principles according to which an appellate Court may interfere with such a discretionary judgment by a sentencing judge are well established. In their application to a Crown appeal against sentence they were summarised in R v Allpass and R v Clarke. Of particular importance in the present case is the principle that a Court of criminal appeal may not substitute its own opinion for that of the sentencing judge merely because the appellate Court would have exercised its discretion in a manner different from the manner in which the sentencing judge exercised his or her discretion. This is basic. The discretion which the law commits to sentencing judges is of vital importance in the administration of our system of criminal justice."

256 JENKINS J: I have read the draft reasons of Miller J. For the reasons expressed by his Honour I would dismiss the appeals against the convictions and the applications for leave to appeal against the sentences.

• Terms of the Indictment
• Trial
• Grounds of appeal
• The prosecution case
• The defence cases
• Objection to evidence of the common enterprise
• Grounds of appeal
• Application of the proviso to s 689(1) of the Criminal Code
• Application for leave to appeal against sentence