Petroulias v Wills

LOWER COURT Local Court JURISDICTION : LOWER COURT 20048335/012 FILE NUMBER(S) : LOWER COURT Sweeney LCM JUDICIAL OFFICER :

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Criminal

11249/04 Nikytas Nicholas Petroulias v Gary Andrew Wills

Judgment 1 Sperling J: This is an application for leave to appeal by Mr N N Petroulias as plaintiff against an order of the Local Court committing the plaintiff for trial on a charge of defrauding the Commonwealth, and against the decision of the Local Court dismissing an application for costs of the committal proceedings made on his behalf. 2 It was agreed that I should receive the argument on the application for leave and on the merits of the appeal concurrently. 3 On 24 March 2000 the plaintiff was charged with conspiracy to defraud the Commonwealth contrary to s 29D of the Crimes Act 1914 (Cth). 4 Section 29D provides as follows: A person who defrauds the Commonwealth… is guilty of an indictable offence. 5 In November 2001, committal proceedings commenced before Ms D Sweeney LCM in the Local Court. 6 In December 2001, the following charge was substituted, along with two further charges not presently relevant. That Nikytas Nicholas Petroulias between about 1 September 1997 and 27 February 1999 did defraud the Commonwealth, namely, the Australian Tax Office, in that while an officer of the Australian Tax Office he did by dishonest means assist taxpayers to avoid the payment of tax. 7 On July 2002, her Worship committed the applicant for trial on each of the three charges. 8 On 3 March 2003, Simpson J quashed the order for committal, holding that the charge as formulated required proof of the actual loss by the Commonwealth. That, it was held, required proof by the Crown that the plaintiff's conduct in issuing Private Building Rulings and Advance Opinions had incorrectly rendered unpayable tax which would otherwise have been payable, whereas there was no evidence that the Rulings and Opinions were wrong and hence no evidence of actual loss. 9 On 3 October 2003, the Court of Appeal, in Wills v Petroulias (No 1) (2003) 204 ALR 162, set aside Simpson J's order. On 22 December 2003, the Court of Appeal, in Wills v Petroulias (No 2) (2003) 204 ALR 180, confirmed its order setting aside Simpson J's order but now made the following additional order: Remit the casse to the magistrate to make the order of committal authorised by law and to amend the order accordingly.

(The order to be amended was, of course, the magistrate's order for committal). 10 Fraud does not necessarily involve actual pecuniary loss by the other person involved. Speaking of conspiracy to defraud, Toohey and Gaudron JJ said in Peters (1998) 192 CLR 493 at [25]: The first matter which should be mentioned is that, contrary to what was said by Lord Diplock in R v Scott , the offence of conspiracy to defraud is not limited to an agreement involving an intention to cause economic loss, even where the intended victim is a private person. It has always been sufficient that the accused be aware that there is a risk of economic loss. And even where the victim is a private person, there may be cases of fraud which do not involve an intention to put another person's economic interests at risk in any ordinary sense of that term. To take an example given by King CJ in R v Kastratovic , someone who believes that a person is indebted to him and that a defence which that person is genuinely asserting is without merit, nevertheless has an intention to defraud if he intends by dishonest means to deprive that other person of the opportunity of having the matter adjudicated. [Citations omitted.]

And at [30]: As has already been pointed out, there are difficulties in attempting an exhaustive statement of what is involved in the notion of defrauding or in the offence of conspiracy to defraud. Ordinarily, however, fraud involves the intentional creation of a situation in which one person deprives another of money or property or puts the money or property of that other person at risk or prejudicially affects that person in relation to "some lawful right, interest, opportunity or advantage", knowing that he or she has no right to deprive that person of that money or property or to prejudice his or her interests. [Citations omitted.] 11 Spigelman CJ (with whom Handley and Santow JJA agreed) said in Petroulias (No 1) at [72]: It is, in my opinion, sufficient for purposes of the element of deprivation, to establish that a lawful right, interest or opportunity which had not previously been resolved one way or another has been resolved, so that its very resolution constitutes the relevant detriment. That will be sufficient so long as there is a bona fide claim which, if correct, would be of value. 12 The facts so specified came within the ambit of the third species of deprivation referred to by Toohey and Gaudron JJ in Peters at [30]. 13 In the opinion of their Honours, those facts were made out to the requisite standard on the evidence in the case. The Chief Justice said, at [79]: On this basis, there was material before the magistrate which entitled [her] to conclude that there was "evidence … capable of satisfying a jury beyond reasonable doubt" (within s 41(2) of the Justices Act 1902) and that there was "a reasonable prospect that a jury would convict the defendant" (within s 41(6)). 14 That holding was affirmed by the Court of Appeal in Petroulias (No 2). Their Honours now considered the option of amending the magistrate's order themselves or remitting the case to the magistrate to amend the order as authorised by law: see [64]. 15 They invited the Crown to reformulate with a view to amending the order themselves. The draft submitted was as follows: That Nikytas Nicholas Petroulias between about 1 September 1997 and 27 February 1999 did defraud the Commonwealth, namely the Australian Taxation Office, in that while an officer of the Australian Taxation Office, he did by dishonest means cause Private Binding Rulings and Advance Opinions to issue to taxpayers, thereby depriving the Commissioner of Taxation of the opportunity of recovering tax contrary to the Rulings and Opinions. 16 The court rejected that formulation because, in the court's opinion, deprivation so averred required proof (which was absent) that the Private Rulings were at least arguably wrong: see [67]. A magistrate conducting an administrative inquiry was empowered to settle the indictment, so the case was remitted with a view to her doing so: see [69]. 17 It is clear that, in the opinion of the Court of Appeal, the plaintiff was to be committed for trial for an offence under s29 on the evidence adduced at the committal hearing. The case was remitted to the magistrate to formulate and make an order accordingly. 18 The Crown Prosecutor now reformulated the charge once more. The reformulation was as follows: Between about 1 September 1997 and 27 February 1999 Nikytas Nicholas Petroulias did defraud the Commonwealth namely the Australian Taxation Office, in that while an officer of the Australian Taxation Office he did by dishonest means cause Private Binding Rulings and Advance Opinions to issue to taxpayers whereby the Commissioner of Taxation was prejudiced in relation to his rights, interests, opportunity or advantages to determine the taxation consequences of the arrangements referred to in the Rulings and Opinions. 19 This formulation accorded literally with the third species of deprivation referred to by Toohey and Gaudron JJ in Peters at [30], quoted above. 20 The draft was apparently transmitted to the plaintiff's solicitors on 10 February 2004. On 15 March 2004, the plaintiff's solicitors requested further and better particulars of the averment that the Commissioner was prejudiced in relation to his rights, interests, opportunities and advantages to determine the taxation consequences of the Rulings and Opinions. On 18 March 2004, an answer was made to the request. 21 The request for further and better particulars and the answer provided served no purpose and are an irrelevancy. There was no question of the plaintiff needing to be apprised of a case to be met. The Court of Appeal had held that a case had been made out to the relevant standard. The only step remaining to be taken was to craft an order for committal on a charge which accorded with the judgments of the Court of Appeal. 22 On 22 March 2004, the matter came before her Worship pursuant to the Court of Appeal's orders. The Crown Prosecutor submitted that an order for committal should be made in terms of the draft order. On behalf of the plaintiff, it was submitted that the Crown's draft was no better than that rejected by the Court of Appeal. Her Worship made an order in the form proffered by the Crown. In her reasons for that decision, she said: Now the Court of Appeal decision, in my view, is binding on me and the Court of Appeal has made a finding about the evidence and has ordered me to re-commit.

That was a correct understanding of the orders of the Court of Appeal. 23 Her Worship went on to observe: [T]he Court can consider not only the charge which was originally laid by the prosecution before the Court but any other charge which is established upon the evidence.

That was also correct. 24 Her Worship had, earlier in her reasons for decision, referred to the legal principles relating to detriment falling short of actual pecuniary loss. She now referred to the evidence and went on to say: I'm of the view that, I suppose I have dual views. One is - I accept the Court of Appeal's view because, in my view, it is binding upon me but I agree with the Court of Appeal's view from my recollection of the evidence that there was evidence that meets that test of the element of defrauding in respect of a charge under Section 29D. 25 Concerning the Crown's draft order, she said: The charge which has been put before me today in draft form appears to me to be consistent with the Court of Appeal's findings, their statements as to law and their findings as to the evidence and I'm of the view that it is appropriate that I could commit Mr Petroulias for trial on a charge in that form.

That was also correct: see paragraph 11 above. 26 Application was then made on behalf of the plaintiff for an order for costs of the committal proceedings. Her Worship dismissed the application and gave reasons for that decision. 27 On 24 March 2004, her Worship formally made the order for committal in terms of the Crown's reformulation of the charge and the order dismissing the plaintiff's application for costs. 28 On 30 April 2004, the plaintiff commenced the present proceedings by filing a summons claiming orders for an extension of the time for instituting the proceedings, for leave to appeal against the Local Court orders to which I have referred and for the following orders: 3. That, should he be granted leave to appeal, the order committing the Plaintiff to stand trial, as aforesaid, be set aside and for such other order as the Court thinks just. 5. That, should he be granted leave to appeal the order referred to in paragraph 4, the further hearing of the Plaintiff's application for costs be remitted to the Local Court for hearing and determination in accordance with the law, or such other or further order as the Court thinks just. 29 An order extending time was made by me on 3 August 2004 by consent.

Appeal against order for committal 30 The plaintiff raised the following grounds of appeal in relation to the order for committal made by her Worship. 1 The learned Magistrate erred in law in finding that the charge as laid was capable of satisfying a jury beyond reasonable doubt that the Appellant defrauded the Commonwealth contrary to section 29D of the Crimes Act 1914 (Cth) and in particular, erred in finding: (i) That the charge as laid was drafted in accordance with the law as to defrauding enunciated by the Court of Appeal NSW in the matter of Wills v Petroulias (No 2) - 204 ALR 180, determined by the Court of Appeal on 22 December 2003; (ii) That the Court of Appeal decision, as aforesaid, was binding on the learned magistrate and ordered her to re-commit the Appellant for trial; (iii) That there was evidence led in the committal proceedings in support of that aspect of the charge relating to the issue of "prejudice in relation to [the] rights, interest, opportunity or advantages [of the Commissioner of Taxation] to determine the taxation consequences of the arrangements referred to in the Rulings and Opinions"; 2 The learned Magistrate erred in law in failing to identify the evidence which purportedly supported the issue contained within the charge of "prejudice in relation to [the] rights, interests, opportunity or advantages [of the Commissioner of Taxation] to determine the taxation consequences of the arrangements referred to in the Rulings and Opinions"; 3 The learned magistrate erred in law in concluding that it was not necessary for the prosecution to call further evidence in support of the charge, as to the issue of "prejudice in relation to [the] rights, interests, opportunity or advantages [of the Commissioner of Taxation] to determine the taxation consequences of the arrangements referred to in the Rulings and Opinions"; or alternatively, 4 The learned magistrate erred in law in failing to direct the prosecution to identify the evidence in support of the charge, as to the issue of "prejudice in relation to [the] rights, interests, opportunity or advantages [of the Commissioner of Taxation] to determine the taxation consequences of the arrangements referred to in the Rulings and Opinions"; 5 The learned magistrate erred in law in failing to require that the prosecution re-open the committal proceedings to permit the Appellant to cross examine witnesses as to the issue of "prejudice in relation to [the] rights, interests, opportunity or advantages [of the Commissioner of Taxation] to determine the taxation consequences of the arrangements referred to in the Rulings and Opinions" 31 Her Worship was required by the Court of Appeal to re-commit the plaintiff. The order adopted a formulation which specified deprivation of a kind endorsed in Peters and which comprehended the case for deprivation which the Court of Appeal found had been made out on the evidence to the requisite standard. 32 In these circumstances, her Worship had no obligation to identify or to direct the prosecution to identify the evidence which satisfied the Court of Appeal that the case it specified had been made out. There could be no question that further evidence was required to make out that case. There could be no requirement to allow further cross examination before re-committing the plaintiff. 33 The appeal against the order for committal made on 24 March 2004 must be dismissed on its merits, irrespective of leave.

Appeal against order dismissing plaintiff's application for costs 34 The ground of appeal in this regard is as follows: 6 The learned magistrate erred in law in dismissing the Appellant's application for costs, made pursuant to s41A(2A) of the Justices Act 1904, that he be granted such costs as seem just and reasonable, based on the Appellant being committed for trial for an indictable offence which was not identical in all respects to the indictable offence with which the Appellant was charged, and in particular, erred in finding - · That there were not exceptional circumstances relating to the conduct of the committal proceedings by the prosecution, such that it was just and reasonable to award costs [Section 41A(2A)(d) Justices Act 1904] 35 Section 41A of the Justices Act 1904 (which continued to apply in this instance) included the following provision: (2A) Costs are not to be awarded in favour of a defendant unless the Justice or Justices is or are satisfied as to any of the following: (a) that the investigation into the alleged offence was conducted in an unreasonable or improper manner, (b) that the proceedings were initiated without reasonable cause or in bad faith or were conducted by the prosecution in an improper manner, (c) that the prosecution unreasonably failed to investigate (or to investigate properly) any relevant matter of which it was aware or ought reasonably to have been aware and which suggested either that the defendant might not be guilty or that, for any other reason, the proceedings should not have been brought, (d) that, because of other exceptional circumstances relating to the conduct of the proceedings by the prosecution, it is just and reasonable to award costs. 36 Her Worship held that there were no such exceptional circumstances. 37 The gravamen of the plaintiff's complaint in relation to the conduct of the committal proceedings by the Crown was, and is, the reformulation of the charge by the prosecution in the course of the committal proceedings. 38 There is nothing exceptional about that. It is not uncommon that a charge on which a defendant is committed is different from that on which the defendant was initially charged or on which the defendant has been charged in the course of the proceedings. It is not established that costs incurred by the plaintiff in the committal proceedings were wasted as a result of such reformulation of the charge as occurred in the course of those proceedings. 39 Her Worship was not satisfied that the reformulations of the charge which occurred in this case constituted exceptional circumstances making it just and reasonable to award costs. 40 There was no demonstrated error, let alone error of law, in that determination.

Leave to appeal 41 The appeal is of insufficient merit to warrant leave to appeal. However, in order to ensure that the matter is disposed of with finality, I will grant leave.

(3) The plaintiff to pay the defendant's costs of the summons. -oOo-

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