DUNN -v- THE QUEEN [2015] WASCA 126 (19 June 2015)

DUNN -v- THE QUEEN [2015] WASCA 126 (19 June 2015) - WASCA 2015 case summary — Zoe

[80]

Essentially, the proposal is as follows. Mr P M Bartlett and Mr R G Sayers have been, and are, the Appointors of the two family trusts, respectively. [Namely the P M Bartlett Family Trust of which Bremerton Pty Ltd is the trustee and the R G Sayers Family Trust of which Nebraska Pty Ltd is the trustee.] Both those trusts were created on 4 September 1985, before capital gains tax became effective on 20 September 1985. What is under contemplation is that Messrs P M Bartlett and Sayers will resign their offices as Appointors of the two family trusts in consideration for payment of $27 million. By virtue of the reasons discussed below, including that Messrs P M Bartlett and Sayers have been Appointors since before the enactment of the capital gains tax legislation, it is suggested that that $27 million will not be taxed. The New Appointor (Timebase Investments as trustee of the Corpex Trust) to both family trusts will pay the $27 million to Messrs P M Bartlett and Sayers as the cost price of attaining those offices as part of a profit-making undertaking or plan so that that cost should be deductible in the calculation of the profit on realisation in the profit-making undertaking or plan. It is proposed that the New Appointors will have distributed to it from the P M Bartlett Family Trust and the R G Sayers Family Trust, over a period of two years, an amount of $30 million. Under the documentation, that New Appointor/beneficiary of the two family trusts will then irrevocably cease to have any entitlement to further income from the two family trusts and that cessation is to be the realisation or finalisation of the profit-making undertaking or plan in which the $27 million should be able to be deducted. Thus, the $27 million received by Messrs P M Bartlett and Sayers is sought to be received as a non-taxable amount, yet that $27 million paid by the New Appointor/beneficiary is sought to be allowed as a deduction against the $30 million income received under the profit-making undertaking or plan.

[169]

Now, the other witness who I wish to mention briefly at this stage is Mr Trevor Thomson whose evidence has been the subject of much criticism, attack and challenge by counsel for each of the accused and by [the appellant]. All of whom have suggested to you in various ways, that he is a witness who is unworthy of credit and is also independently unreliable and whose evidence ought not be accepted. I have to say something about the position of Mr Thomson.

First of all, as you know, he is a convicted criminal who has pleaded guilty to this very charge and has been sentenced to a term of imprisonment by a judge of this court and he has served at least part of that sentence and is presently on release. It is the case that when he was sentenced the sentence which was imposed by the judge who sentenced him was reduced pursuant to statutory powers because of assistance which he had provided to the authorities up to that point and for assistance which he promised he would continue to give to the authorities in the future, including giving evidence in this particular case if it ever got to court, as it has. For both those reasons, including the latter, there was a reduction in the term of his sentence.

There is provision ... under State [sic] law which provides that where a person's sentence is reduced for those reasons, including because of the assurance of ... future cooperation, the court may recall the order imposing the sentence and impose a sentence based on the full sentence, if the offender subsequently fails, wholly or in part, to fulfil his undertaking of cooperation. So although it has not been pursued in any detail, there was always the possibility, strong [or faint] as you may consider, that if Mr Thomson did not maintain his assurance of cooperation with the authorities, he may be recalled and his sentence revised to the extent that it had been reduced because of his assurance of future assistance to the authorities. Whether that is a factor affecting the credibility of his evidence or truthfulness, is a matter for you to bear in mind. It may be, it may not be, it will be for you to decide but it is a factor which needs to be taken into account.

[Mr Thomson] was variously suggested to be dishonest, greedy, incompetent, lazy and by [the appellant] a cunning man. It was submitted that there was a natural tendency on his part to displace or dilute the importance or gravity of his own conduct onto others, onto the co-accused. Whether that is a matter to cause you to doubt or undervalue his evidence, again, is a matter for you to consider.

It is the fact that he has cooperated with the authorities. You will remember that he said when first asked by his friend and colleague of the Australian Taxation Office, I think the officer's name was Mr Jones, whether these particular resolutions had been backdated, he immediately answered that they had been. And he then made a variety of statements, pleaded guilty to the charge at the first opportunity and was given concessional punishment because of his cooperation. Whether this rehabilitates him to any extent in your eyes is, again, a matter for consideration but it would be open for you to conclude that he is, at least in part, a man who has made some very serious mistakes, has been punished severely for them and is attempting now to make amends. Whether that is so and what effect that may have on his testimony is for you to decide.

What it does mean is that because of the criticism made against him, you should evaluate [Mr Thomson's] evidence closely, as indeed you will evaluate ... the evidence of all the other witnesses, but if you are satisfied that his evidence is truthful or consistent with other evidence, or that certain parts of it are, then you are free to act on his evidence. But bearing in mind the need to scrutinise it as I have already said (ts 4000 - 4002). (emphasis added)

[179]

[Section 50] is in almost identical terms to the former s 36BE(1), save that it now extends to encompass all of those witnesses in respect of whom there was formerly a rule of law or practice which required the giving of a 'corroboration warning'. In relation to any such witness, the trial judge is now positively forbidden to give to the jury a warning to the effect that it is dangerous to convict on the evidence of a category of witness because the witness falls into some suspect 'category'. The judge may comment upon the evidence of a witness, provided that the judge makes it clear that it is for the jury alone to evaluate the evidence of that witness, in the light of common experience. Where, however, there is a particular danger in acting upon the evidence of a witness which a jury might not otherwise appreciate, a warning should be given. It may be that the need to warn is not confined to 'hidden' dangers, but that is the most usual case in which a need to warn is said to arise: Bromley v The Queen [1986] HCA 49; (1986) 161 CLR 315 at 319, 325 and see R v Johnson [2004] SASC 241 at [44] - [47], where some examples are discussed [70].

...

Authority in this Court has not been as clear as it might have been in relation to the relevance of s 50 in the past. There has perhaps in some cases been a tendency to analyse a direction to see if it was 'good enough' in traditional terms, with s 50 regarded almost as a provision which excuses a failure to give 'full' direction in traditional terms in some cases. For example, in Lambley v The Queen [[2001] WASCA 38] at [17], the Court appears to have suggested that a warning will be both justified and required whenever the circumstances show some intrinsic lack of reliability in the witness. However, in the particular circumstances of that case, it may well have been common ground that the witness was in a category 'similar to' a prison informer, so that a jury would not, unassisted, appreciate what the dangers of the witness's evidence might be. A case which is often cited in this Court is Foo v The Queen [2001] WASCA 406 at [30] in which Parker J, with whom Steytler J and Olsson AUJ agreed, said:

[400]

Now, the prosecution case against [the appellant] is essentially this: that he was regarded as having very considerable knowledge and experience in taxation affairs and in accounting and had acquired a reputation for advising people about legitimate ways of minimising or avoiding income tax by arranging their affairs in various ways, including by entering into schemes such as the Appointor [Arrangement], which is likely to have a major effect upon the taxable income which might otherwise be assessable in the hands of the individual taxpayers.

And it's now very well accepted and common ground in this case how [the appellant], through his acquaintance with Mr Thomson, was introduced to Messrs Bartlett and Sayers in 1999 or 2000, early 2000, and how he proposed the Appointor [Arrangement]; how opinions were sought from legal counsel about its legitimacy; how he agreed to set up a fighting fund; and how once the Appointor [Arrangement] was established he participated in a series of meetings involving distributions by way of cheques and promissory notes; and how this led on to associations with Mr Egglishaw, Crossline and the endorsement of promissory notes through to Crossline. All this is now common ground. It is not contentious in the case.

We know that in May of 2002, [the appellant] went with Messrs Bartlett and [Sayers] to Singapore and met Mr Egglishaw where various matters were discussed and how on that occasion, [the appellant] told Messrs Bartlett and Sayers about the failure by Mr Thomson to lodge income tax returns for any period since 1997 and of the payment of what has been called a commission, part of [the appellant's] fee for involvement in the Appointor [Arrangement], to Mr Thomson. And how afterwards, when all three returned to Australia, there was a meeting with Mr Thomson in which he was effectively called to account for his neglect and delay in the accounting affairs of Barminco and the associated entities, and how Mr Thomson was embarrassed about [his] share in the commission or reward that [the appellant] was receiving from the implementation of the Appointor [Arrangement].

Now, essentially, the case is that on discovery of the greater than expected profit for Barminco for the '99 year in ... August 2002, Mr Thomson was away, he came back from his holiday, Ms Grace explained this to him and there were discussions about what to do with the increased profit or the profit.

And it's Mr Thomson's evidence that there were a series of meetings between him and [the appellant] and on occasion others at which it was discussed [how], if at all, this profit was to be dealt with. And no solutions were immediately forthcoming, but it was necessary to do something about this because of the effect which it might have on the Appointor [Arrangement] having regard to the pattern of distributions.

...

And it is, according to Mr Thomson, the case that it was [the appellant] who came up with the idea of the issue of the special units, 79.9 million of which would be partly paid, the unpaid component bear interest, the interest would be arranged in such a way that most of it would be receivable by Barminco in the 2000 year and only 19,000-odd in the '99 year, but that the interest be payable in advance by Bremerton and Nebraska, and hence deductible by them in the '99 year and would offset the greater profit emerging in the distributions to them from Barminco.

All this you understand very well now and how it was Mr Thomson's evidence that when this solution was identified, [the appellant] produced drafts of the proposed resolutions to give effect to it and instructed Mr Thomson to have them typed up and shown to him.

According to Mr Thomson, the drafts were in [the appellant's] handwriting and were handed directly by Thomson to his secretary, Ms Paternoster. She typed them up, handed them back to Thomson who ... handed them to [the appellant] and they came back with a number of corrections. They were given again to Ms Paternoster for typing up in their final form and were then ready for adoption and implementation.

Now, I'm sure you realise that within that brief description, a number of controversial points have quickly been glossed over.

First of all, it is the case that Mr Thomson has said and maintained that the handwritten draft notes of the resolutions which became [exhibits] 95 and 96 were in [the appellant's] handwriting, not his own. Yet Ms Paternoster has said that the notes as given to her were in Mr Thomson's handwriting and she did not swerve from that. We are of course speaking about events 11 years ago and as with this and all other evidence, some regard has to be made for the passage of time and the accuracy of memory, but neither of these two witnesses seem to be in much doubt about the identity of the handwriting on the particular document. So there is an issue there about that.

The next point which emerges is that it was some time between the delivery of the documents to Ms Paternoster for typing and handing back on the one hand and the corrected documents being returned to her for final [typing] on the other. According to her, it was a matter of weeks and not days and this is of course important when one looks at the time slot in which various persons were present in Perth and available to participate at the meeting or meetings as alleged or as sworn to by Mr Thomson. We have the situation that Mr Thomson was away until late August, not returning from an overseas holiday with his wife until then. And then we have the situation that [the appellant] was away in Thailand at various points so that over the period from late August to late September, there's only a period of about - it varies according to the estimate, 17 or 10 days within which all parties were or could have been present at the meeting said to have taken place. And all that has to be squared into the estimate by Ms Paternoster that it may have been two or three weeks between the first and second version of the documents which were given to her.

But whatever you choose to make of that, and it is very much [a matter] for your decision, the essential conclusion is that according to Mr Thomson, the documents, exhibits 95 and 96 were prepared. There was a meeting between himself, [the appellant], Mr Bartlett, Mr Sayers. It took place ... where [the appellant] explained the transactions on a whiteboard to the gentlemen present. There was agreement to the course recommended and the documents were signed and Mr Thomson saw them signed. Now, of course ... that version is challenged by more sources than [the appellant] alone and many attacks on the credibility of Mr Thomson have been made and are put before you as reasons for distrusting his testimony or not accepting it fully. But these are questions for you and they will be made on all the evidence as a whole (ts 4194 - 4197).

[402]

Well, not necessarily in the order in which [the appellant] presented them, but I think his essential propositions go this way.

First of all, he had a reputation for being fastidious and precise, he would say pedantic and insistent on observance of all the formalities and proprieties and had a skill in drafting and on legal matters. He elicited from a number of witnesses who had been present on occasions where he had been involved in meetings for distributions and so on, that he was punctilious in following the format of the meetings, that he would insert the date and time of a particular meeting on the document in front of him. He would systematically go through it insisting that everybody understood what was occurring. The procedure followed would be observed to the letter. Cheques, promissory notes and other documents would be circulated and then he would move on to the second meeting and similar procedures would be followed and so on. He maintained and the witnesses whom he asked this question confirmed that he had never asked anybody to backdate a document or propose the backdating of a document or anything like that, by implication putting before you that he would not be involved in anything involving a backdating.

Secondly, he maintained that the particular documents used to implement the false interest transaction, exhibits 95 and 96, were incongruous and did not reflect strict observance of the legal formalities. And in this regard, he instanced the presence of Nebraska as being a party to both of those resolutions when Nebraska was not, as we have seen, strictly speaking or indeed formally, a unit holder in Barminco. And the implication in his questions and in his submissions to you is that he would never have drafted a document of that kind or have overlooked the fact that Nebraska, being a party to this deed, was not a unit holder.

Well, those are matters for you to evaluate but I pointed out to you some days ago now that there are and were substantial legal reasons which would justify Nebraska being included in the parties who entered into legal obligations in each of those documents because of the obligation to take up units and pay for them.

Next, it was part of the prosecution case that exhibit 12, the manuscript document which is in your jury book after folio number 15 and which is confirmed to be in [the appellant's] handwriting, is an explanation entirely consistent with what Mr Hewitt said was put up on the whiteboard at the meeting that he attended and that Mr Thomson said independently was essentially the substance of the explanation ... [the appellant] put on the whiteboard, although on a different occasion. Now, as to that document, it has been proved to have been in [the appellant's] handwriting but he points out quite justifiably that it has no date, and neither it does. And accordingly, he submits to you that it is open to conclude that this was a note which he prepared for or used at the meeting in December of 2002 with Ms Grace and Mr Watson and Mr Hewitt to discuss how the issue of the special units should be accounted for within the books of Barminco, and for that matter, Bremerton and Nebraska, when it was brought to light by Ms Grace, that being a matter of some uncertainty or unusual experience for them at the time. Now, as to that particular matter, you would of course give it such consideration as you think fit. But the possibility of that document being produced at that meeting was not put by [the appellant] to Mr Hewitt or to Mr Watson when they gave their evidence. And as a consequence, you have been deprived of any answer which they might have given as to whether they remember any such document being used or produced or written up as a result of that meeting.

I have already explained to you the reliance which the prosecution makes on the almost exact correspondence, indeed, ... the actual exact correspondence between the figures for interest and deductions in this document, exhibit 12, and the contents of exhibits 95 and 96 and the amounts returned as income from Barminco in the '99 and 2000 years and received [as] distributions by Bremerton and Nebraska and the deductions claimed by Bremerton and Nebraska, which you are very familiar with now in that pyramid chart diagram that we have looked at many times.

Now, the next thing that [the appellant] says is that Mr Thomson made a statutory declaration in January 2003. It's exhibit 116 and we might just put that up on the screen, if possible. And that document declares under the provisions of the Evidence Act, which I explained to you, that on or about 1 May 2002, he discovered that he'd: Lost or misplaced the documents listed in the declaration along with a number of other important documents held on behalf of several clients ... and associated entities. And if you scroll down the list, you come to exhibits 95 and 96, the resolutions of 14 and 16 June, copies of which are attached and which are in the annexures.

Now, what [the appellant] submits to you is that if those resolutions have been lost by Mr Thomson [on] or before 1 May 2002, they could not have been used at a meeting in September and that they were brought into existence presumably at some time before May. The consequence if that were to be correct would be that somehow or other, there was anticipation by Mr Thomson of the need for some false interest scheme or maybe it's just not possible to conclude what might have been the position if that were true. But Mr Thomson, as you will remember, says that this was a clumsy declaration and that it was erroneous, and notwithstanding the obligations placed on anybody making the statutory declaration, this was a mistake or an error on his part. And although the promissory notes, he'd discovered they had been lost in May, he didn't discover that the resolutions had been lost until later, much later, and that they ... certainly had come into existence in or about September. Now, [the appellant] fastens on this point and says this is just one of many reasons to disregard Mr Thomson as a reliable witness and that his account of these meetings and the sequence is not reliable.

Well, again, those submissions carefully prepared and put to you by [the appellant] deserve careful attention and consideration and I'm sure you will ... give that attention to them but essentially his case is that he would not draw a document of the kind in exhibit 95 and 96 [and] that Mr Thomson's evidence is unreliable. That the document, exhibit 12, is not dated and because it's not dated it cannot be concluded that it was used as a basis for any explanation by him in relation to the events or alleged events of September 2002.

[The appellant] also emphasises that so far as compliance with the taxation law and tax obligations are concerned, his companies, Timebase, Keyworld Nominees and the Corpex Trust, all filed income tax returns and paid tax when due and that there was no suggestion that he was or ever had been in arrear[s] or in default in complying with the obligation to file income tax returns for those companies.

Essentially, he says to you that the prosecution has not proved the case alleged against him and how could it, when he was on such cold terms with Mr Thomson after mid-2002 when he, as he says, sacked Thomson and had this brisk meeting with him in the waiting lounge of the Bangkok Airport when they came across each other by coincidence and that he would not be a person with whom he would enter into any such enterprise, whether legal or illegal.

The case for the prosecution in relation to that, however, is that Mr Thomson was essentially following and complying with a design and instructions originating from [the appellant] who was the tax expert, who did have the influence at that time ... in suggesting or advising what steps should be made or taken in relation to taxation affairs of Barminco and that Mr Thomson simply was doing as he was asked and putting into effect a strategy designed by [the appellant] (ts 4197 - 4201).

[500]

Could you tell us, please, your role in relation to what happened in the creation of these documents?---Yes. I was given pages of handwritten notes and requested to type up these minutes on old style minute paper as it is on the exhibit, not on the computer but on a type - electric typewriter.

And who requested you to do that?---Trevor Thomson.

Now, in relation to the handwritten notes, were they written - who's handwriting was that?---In my memory they were Trevor Thomson's handwriting.

All right. And did you type the document from the handwritten notes?---I did, the first time, yes.

And then what happened?---I handed both sets back to Trevor Thomson and then two to three weeks later they were given back to me with handwritten amendments on these, the ones I'd typed, and I was requested to immediately retype them again in exactly the same format with just - incorporating the amendments.

All right. And when you originally received the handwritten document to type, do you recall whether or not the handwritten documents had dates on them?---Only the dates of 'held on 14 June 1999' and 'held on 16 June '99'.

It has those dates?---It had those dates on them, yes.

Right. Did you - did you say anything to Mr Thomson in relation - - - ?--- - - -

- - - to this?---Sorry. I queried as to why they had to be done [on] a typewriter - - -

Yes?---- - - - rather than being done on the computer which, as you would understand, if it's done on the computer if you make a mistake you can, you know, backtrack and sort of correct it.

And what did Mr Thomson tell you?---That it had been Mr Dunn's instructions they were to be done - they didn't want records kept. That's why they had to be done on a typewriter, not on a computer where it could be held, you know, further on down the track on the hard disk.

And was anything said about the paper that was to be used for the typing?---Just had to be the old style minute paper which we had in the office in - on corporate files anyway. Had to ensure that the sections lined up with 1999 (ts 2265 - 2266).

At a glance

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Judgment (569 paragraphs)

DUNN -v- THE QUEEN [2015] WASCA 126 (19 June 2015)

Legislation Cited (4)

Cases Cited (21)