Pratten v R

Catchwords

[1965] HCA 58 Aussie Airlines Pty Limited v Australian Airlines Pty Limited & Qantas Airlines Limited (1996) 65 FCR 215[1996] FCA 813 Bainton v Rajski (1992) 29 NSWLR 539 Barton v Walker (1979) 2 NSWLR 740 BCM v The Queen [2013] HCA 48[2016] HCA 45 Castagna v RAgius v R (2019) 278 A Crim R 194[2019] NSWCCA 114 Charisteas v Charisteas [2021] HCA 29 Crofts v The Queen (1996) 186 CLR 427[1996] HCA 22 Director of Public Prosecutions (Cth) v Pratten (No 2) (2017) 94 NSWLR 194[2017] NSWCCA 42 DJ Singh v DH Singh and Others (No 2) [2018] NSWCA 31 Dovade Pty Ltd v Westpac Banking Group (1999) 46 NSWLR 168[1999] NSWCA 113 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337[2000] HCA 63 Elomar v RHasan v RCheikho v RCheikho v RJamal v R (2014) 300 FLR 323[2014] NSWCCA 303 Federal Commissioner of Taxation v Mochkin (2003) 127 FCR 185[2003] FCAFC 15 Federal Commissioner of Taxes (South Australia) v Executor Trustee and Agency Co of South Australia Ltd (1938) 63 CLR 108

Judgment (51 paragraphs)

[1]

Background

The trial judge gave both written and oral directions as to the elements of the offence under sub-s 134.2(1) of the Code in these terms: [6] In order to prove the offences, the Crown must prove beyond reasonable doubt that: (a) Mr Pratten gained a financial advantage from the Commonwealth; (b) He did so by deception; (c) He acted dishonestly.
As to the element of dishonesty, the trial judge directed the jury, both in writing and orally, that: [10] "Dishonesty" or "dishonestly" must be given their ordinary meaning. It has an objective and subjective aspect. That is, it must be dishonest by the standards of ordinary people and known to the defendant to be dishonest according to those standards. [11] In other words, in this case, in relation to each year that is subject to a charge, you, the jury, must be satisfied: (a) that there were amounts of income received by Mr Pratten that were his income and not declared; and (b) he acted dishonestly in not declaring them and knew he was acting dishonestly. The second element in (b) above, involves a number of aspects: (i) "Dishonesty" or "dishonestly" is to be given its ordinary meaning; (ii) In order to have acted "dishonestly", Mr Pratten, in the circumstances of this case, must have: • Known the amounts were income in his hands; • Deliberately failed to declare them; and • Acted with the purpose, by deceiving the Commonwealth, of obtaining a financial advantage.
As to the element of deception, the trial judge instructed the jury: I didn't give you directions about deception. Part of the reason for that is I don't think in this case it is a matter of great moment, that is, if you were ultimately to come to the view that the Crown had proved beyond reasonable doubt that Mr Pratten receive [sic] income and was acting dishonestly by community standards and knew he was acting dishonestly by community standards, then deception almost follows because the filing of a tax return that did not disclose that income would be a deception. Nevertheless, deception is an element of the offence and, as a matter of formality, I have to tell you that you have to find that there was deception involved in that which Mr Pratten did in order for you to find guilt. The reason that it is more complicated is that, frankly, the Commonwealth Criminal Code under which Mr Pratten has been charged is one of the more complicated criminal statutes on the books. So what I am really saying to you is you have to find deception as well, but in some practical senses, in fact almost every practical sense, the term deception in this case and the term dishonesty in this case, in terms of a mental element, overlap significantly. I do have to tell you, however, that you can deceive someone, that is, be involved in deception, through reckless behaviour, you don't have to intend to deceive somebody. So as I said, you may think if you came to the conclusion that Mr Pratten acted dishonestly and knew the amounts were income and should have been declared, then there was an actual and known deception of the Tax Office. But if you were to have issues about deception, as distinct from dishonesty, you should understand that deception can be caused by recklessness, that is, by a deliberate disregard of consequences known to the accused or the substantial risk that what he was doing would deceive the Australian Taxation Office.
Later in the summing up, the trial judge directed the jury that they needed to be satisfied beyond reasonable doubt "that the accused acted dishonestly, that he engaged in deception and that he obtained a financial advantage, that is, he received income he did not declare".

[2]

Submissions

The principal submissions advanced by Mr Pratten were that the trial judge: 1. failed to give a direction that the jury had to be satisfied beyond reasonable doubt that Mr Pratten had committed the particular deception alleged by the Crown, which Mr Pratten described as "the avoidance", namely, that Mr Pratten changed his accountants in 2008 from Mr Greer to Mr Berry to avoid disclosure of his interests in Vanuatu after a query was made by Mr Greer in relation to questions 18 and 19 of his tax returns; 2. had conflated the elements of deception and dishonesty in the directions to the jury; and 3. failed to give a direction that the element of deception was the "physical" element of the offence.
In addition, complaint was made that the Crown Prosecutor had failed to draw these matters to the attention of the trial judge.

[3]

Consideration

For the purpose of Ch 7 of the Code ("The proper administration of government"), in which the offence under sub-s 134.2(1) is contained:

"deception" is defined in s 133.1 of the Code: 133.1 Definitions In this Part: … deception means an intentional or reckless deception, whether by words or other conduct, and whether as to fact or as to law, and includes: (a) a deception as to the intentions of the person using the deception or any other person; and (b) conduct by a person that causes a computer, a machine or an electronic device to make a response that the person is not authorised to cause it to do.
"dishonesty" is defined in s 130.3 of the Code: 130.3 Dishonesty For the purposes of this Chapter, dishonest means: (a) dishonest according to the standards of ordinary people; and (b) known by the defendant to be dishonest according to the standards of ordinary people.
the determination of dishonesty is a matter for the trier of fact; in this case, the jury: Code, s 130.4.

Mr Pratten's challenge to the direction on deception is based on a misconception that the Crown relied upon Mr Pratten's conduct in changing accountants in 2008 to prove the act of deception. That was not the Crown case. The act of deception relied upon by the Crown was Mr Pratten causing his tax returns to be lodged whilst knowingly under-declaring his income. Mr Pratten was cross-examined about his intention to deceive the Commonwealth in relation to his tax returns.
The evidence relating to Mr Pratten's change of accountants in 2008 was relevant to the Crown's circumstantial case about Mr Pratten's state of mind and whether he acted dishonestly. The evidence was also relevant to assessing whether Mr Pratten was being truthful when he gave evidence that he did not have an interest in CPI or PPI.
The jury was correctly directed as to the elements of the offences, relevantly, that dishonesty and deception are separate elements of the offences. The direction as to deception correctly distinguished the act of deception as an element of the offence from the "mental element" of the offence involving dishonesty.
Although the trial judge did not expressly describe the alleged act of "deception" as "conduct" or the "physical" element of the offence, the directions identified the nature of the conduct relied upon by the Crown as the act of deception: causing tax returns to be lodged in which Mr Pratten's income was knowingly under-declared. That was sufficient. It was not necessary for the directions, which contrasted the act of deception relied upon by the Crown from the mental element of dishonesty, to describe the act of deception as the "physical" element of the offence.

[4]

Rule 4.15

Rule 4.15 of the Supreme Court (Criminal Appeal) Rules provides: No direction, omission to direct, or decision as to the admission or rejection of evidence, given by a trial judge may, without the leave of the Court, be allowed as a ground for appeal or an application for leave to appeal unless objection was taken at the trial to the direction, omission, or decision by the appellant or applicant for leave.
In Obeid v R (2017) 96 NSWLR 155; [2017] NSWCCA 221 at [24]-[25], Bathurst CJ (Leeming JA, R A Hulme, Hamill and N Adams JJ agreeing) accepted, as Basten JA pointed out Greenhalgh v R [2017] NSWCCA 94 at [14], that the exercise of the discretion to grant leave conferred by the former r 4 (which was in almost equivalent terms to r 4.15) cannot be proscribed. In Trevascus v R [2021] NSWCCA 104 at [32], Bellew J observed that in Obeid, Bathurst CJ went on to formulate a number of propositions in relation to the operation of r 4, which Bellew J summarised as follows: (1) the discretion conferred by rule 4 will be exercised in an applicant's favour where there has been a miscarriage of justice, such that the applicant has lost a real chance of acquittal; (2) if a necessary element of a fair trial according to law has been overlooked, leave should generally be granted; and (3) the giving of proper directions by the trial judge to the jury as to the elements of the offence is a necessary element of a fair trial.
In Greenhalgh v R at [17]-[19], Basten JA said of the significance of legal representation at trial for the operation of r 4: [17] The discretionary power conferred by r 4 has a number of particular features which affect its application. Where, as in this case and in most serious criminal trials, there is legal representation at trial the following principle, stated by Gleeson CJ in Nudd (at [9]), is applicable: A criminal trial is conducted as adversarial litigation. A cardinal principle of such litigation is that, subject to carefully controlled qualifications, parties are bound by the conduct of their counsel, who exercise a wide discretion in deciding what issues to contest, what witnesses to call, what evidence to lead or to seek to have excluded, and what lines of argument to pursue…. It is the fairness of the process that is in question; not the wisdom of counsel. As a general rule, counsel's decisions bind the client. If it were otherwise, the adversarial system could not function. [18] Inherent in that proposition is the need to assess unfairness "by reference to an objective standard, and without an investigation of the subjective reasons for that conduct" (Nudd at [9]). Accepting that there may be unusual cases where the reason why an act or omission occurred may be relevant, the Chief Justice nevertheless reiterated (Nudd at [10]): As a matter of principle, such objectivity is consistent with the assumptions on which the adversarial system operates. As a matter of practicality, it avoids the difficulties inherent in turning a criminal appeal into an investigation of the performance of trial counsel. [19] An objective assessment may be inconclusive. In some cases it will be possible to infer that a step was not taken which might have been taken, for tactical reasons. However, in most cases it will be difficult to know from reading the transcript of the trial whether some tactical advantage may have been perceived, whether a step was not taken based on instructions as to how the case should be run, or whether it was omitted through inadvertence.

[5]

Ground 3: Direction as to financial advantage

Ground 3 contends: The trial judge erred in directing the jury as to the constitution of financial advantage, an essential element of each offence, in a way that confused and conflated the financial advantage alleged on the Crown case, that of being a lesser liability to tax consequent on failing to declare income, with that of a financial advantage resting on undisclosed income alone, so that it cannot be certain that the jury verdicts of guilty were rendered unanimously on a properly informed basis, thus causing the trial to miscarry.

[6]

Background

In the general written directions, the trial judge directed the jury: 7. In the particular circumstances of these offences: (a) There is no issue that, if there were a financial advantage, it was from the Commonwealth; (b) That, if one or more of the disputed amounts in any one year to which the Crown have referred were income of Mr Pratten, it was required to be declared and, since it was not declared, was a financial advantage unless there is a reasonable possibility on the evidence before you (being evidence you accept) that there were sufficient business deductions to negate wholly any such income. (Emphasis added.)
During legal argument about the general directions proposed to be given to the jury, defence counsel foreshadowed that the issue of deductions was not going to be the subject of a submission by the defence and requested that par [7(b)] be taken out of the general directions. The trial judge disagreed and indicated that par [7(b)] would remain and there would be some comment about deductions, consistent with the decision of this Court on the first conviction appeal and the tax law directions: Pratten v R [2014] NSWCCA 117 at [106].
In the tax law directions, the trial judge directed the jury on the concept of deductions: Taxable income 19. Taxable income is calculated by determining the assessable income minus all allowable deductions. Tax will be assessed on the taxable income, less losses, which have arisen from previous tax years, that meet the rules allowing them to be carried forward. Deductions 20. A taxpayer may deduct from their assessable income any "loss or outgoing" to the extent that it is incurred in gaining or producing their assessable income, or if it is necessarily incurred in carrying on a business, but may not deduct capital expenditure or private expenditure. 21. Where assessable income exceeds allowable deductions, the balance is taxable income.
The trial judge also gave the following oral directions: So, if Mr Pratten in fact received income that he did not declare, that is, a financial advantage from the Commonwealth, and got a tax advantage for it, that is a financial advantage from the Commonwealth. But the Crown also needs to prove beyond reasonable doubt that he did so as a matter of deception and he did so dishonestly. Now, not much attention has been paid to deception. You can deceive the Commonwealth recklessly. I do not think anyone is putting that. In some senses, in a case such as this, if you found the receipt of income that was not declared and was not offset by allowable deductions such that there was a financial advantage and you found that Mr Pratten knew that it was income, that is, knew it was dishonest, you would probably not trouble yourself with the question of deception for very long, and for that reason, neither of the parties have paid much attention to it. (Emphasis added.)

[7]

Submissions

Mr Pratten's challenge to the direction on financial advantage relied upon the following propositions: 1. the direction on financial advantage conflated the financial advantage alleged on the Crown case (being a lesser liability to tax consequent on failing to declare income) with that of the financial advantage resting on undisclosed income alone; 2. to the extent that on occasions the trial judge referred to the failure to declare "income", there was a possibility or likelihood that the jury reasoned to verdicts of guilt based upon a misunderstanding of the element of financial advantage, relying upon undeclared income alone to prove financial advantage; and 3. the general directions at [7(b)] were legally incorrect as deductions do not "negate" income, rather deductions reduce assessable income to taxable income from which a taxpayer's liability for tax is calculated.
Again, Mr Pratten complained that the Crown Prosecutor had failed to draw these matters to the attention of the trial judge.

[8]

Whether the direction conflated financial advantage with undisclosed income alone

Section 4-15 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997) provides that "taxable income" for the income year is to be calculated as follows: … Taxable Income = Assessable Income - Deductions
The statutory regime relating to Mr Pratten's liability for income tax was explained in Pratten v R [2014] NSWCCA 117 at [87]: The statutory regime provided that income tax became due and payable by the appellant 21 days after the due date for lodgement of his return or after a notice of assessment was given, whichever was the later: s 204(1) of the Income Tax Assessment Act 1936 (Cth) (ITAA36). The appellant was deemed to have received a notice of assessment of his taxable income and of the tax payable on that taxable income on the filing of each of his tax returns: s 166A of ITAA36. The amount of tax which by s 204(1) then became due and payable was the amount specified in each return. Once that tax-related liability was due and payable, the amount of the tax was a debt due to the Commonwealth and payable to the Commissioner of Taxation: Taxation Administration Act 1953 (Cth), Schedule 1, s 255-5.
The adequacy of the trial judge's directions and summing up will necessarily depend upon the circumstances of the case and the nature of the issues involved at the trial. In RPS v The Queen (2000) 199 CLR 620; [2000] HCA 3, Gaudron ACJ, Gummow, Kirby and Hayne JJ said at [41]: … The fundamental task of a trial judge is, of course, to ensure a fair trial of the accused. That will require the judge to instruct the jury about so much of the law as they need to know in order to dispose of the issues in the case. No doubt that will require instructions about the elements of the offence, the burden and standard of proof and the respective functions of judge and jury. Subject to any applicable statutory provisions it will require the judge to identify the issues in the case and to relate the law to those issues. It will require the judge to put fairly before the jury the case which the accused makes. … (Citations omitted.)
The Crown case was that the financial advantage obtained by Mr Pratten was a lesser liability to tax consequent on failing to declare income. That is, by not declaring income, the amount of income tax that Mr Pratten was deemed by the lodging of the return to be assessed as liable to pay, was less than it would have been had that amount been declared as income.

[9]

Use of the word "negate"

Accepting that deductions "reduce" assessable income, there is no substance in Mr Pratten's contention that the jury was misdirected by the use of the word "negate" in par [7(b)] of the general directions.
First, given the immediately preceding reference in par [7(b)] of the general directions to "business deductions", the context in which the word "negate" was used in par [7(b)] was that "deductions" reduce assessable income.
Second, the concept that deductions "reduce" assessable income was explained to the jury in the tax law directions at pars [19], [20] and [21], which were consistent with s 4-15 of the ITAA 1997 (see [102] above). Those tax law directions were repeated in the oral directions (see [103] above). Taken together, the general directions, the tax law directions and the oral directions correctly explained to the jury that taxable income is calculated by determining the taxpayer's assessable income minus allowable deductions.
Given the above, the complaint that the Crown Prosecutor did not draw the asserted deficiencies in the directions to the trial judge's attention is misconceived.
As there was no objection at trial to the directions on financial advantage, r 4.15 applies. I would refuse leave. In any event, for the reasons given, ground 3 has not been made out.

[10]

Ground 5: Directions on tax law as to derivation of ordinary income

Ground 5 contends: The trial judge erred in his directions as to how the jury was to approach the question of derivation of ordinary income.

[11]

Background

The jury was provided with written directions on tax law which relevantly included: Assessable income 12. Australian taxpayers are required to include in their returns all income derived directly or indirectly from all sources whether in or out of Australia in the twelve months of the relevant financial year or other approved substituted accounting period. 13. The time at which income is derived is, relevantly, when it is paid to or dealt with as directed by the taxpayer or on her, his or its behalf. An item of an income character is derived when it has "come home" to the taxpayer. The fact, if it be the fact, that income is earned illegally, immorally or invalidly does not preclude derivation of income. An item of an income character that has been derived will be income in the amount of its realisable value. 14. The assessable income of an Australian resident (which includes Mr Pratten) includes: a) Assessable income earned in Australia and assessable income earned overseas; b) Assessable income to which the taxpayer is entitled and which is dealt with on the person's behalf or as the person directs. 15. Not all money or items of value received by a taxpayer are assessable income, for example, loan monies are generally not treated as assessable income for companies, trusts or individuals. 16. The general rule relating to "loans", described in 15 above, does not apply in two circumstances: (a) the amount, although described as a loan, is not really a loan in that it is not genuine, has no legal effect i.e. is not to be repaid; (b) if the amount were an advance on income being an amount paid before the taxpayer is entitled to be paid which, in practical terms, was not intended to be repaid other than in the sense that it is required to be worked off later or credited against future income due or to be due later. Ordinary income 17. Assessable income consists of ordinary income and statutory income. Ordinary income, usually, excludes distributions from a trustee of a trust to a beneficiary of that trust and excludes genuine loans. 18. Otherwise, an item is ordinary income if the item has been derived in circumstances that gives it, in other respects, an income character. Some criteria for determining whether an amount (or a gain) is income include: a) The character of an item as income must be judged in the circumstances of its derivation by the taxpayer, and without regard to the character it would have had if it had been derived by another person; b) To have the character of income an item must be a gain by the taxpayer who derived it; c) There is no gain unless an item is derived by the taxpayer beneficially; d) There is no gain if an item is derived by the taxpayer from himself; e) There is no gain if an item is derived by the taxpayer as a contribution to capital; f) A gain that is a mere gift does not have the character of income; g) A mere windfall gain does not have the character of income; h) A capital gain does not ordinarily have the character of income; i) A gain that is one of a number derived periodically has the character of income; j) A gain (other than a capital gain) derived from property (e.g. rent) has the character of income; k) A gain that is a reward for services rendered or to be rendered has the character of income; and l) A gain that arises from an act done in carrying on a business (including an isolated business venture) has the character of income. (Emphasis added.)

[12]

Submissions

In writing, Mr Pratten submitted that the directions on tax law misdirected the jury as to the concept of derivation of ordinary income for three reasons: 1. the directions confused the concept of derivation of income with that of the timing of when an item becomes income; 2. the directions gave the impression that the fact that monies were dealt with by Mr Pratten or on his behalf was sufficient to conclude that those monies were assessable income; and 3. the trial judge failed to direct the jury that in order to be satisfied that an amount was ordinary income of Mr Pratten, the jury had to be satisfied that any undeclared income originated from CPI.
The third submission can be put aside as it was not pressed.
In oral argument, Mr Pratten submitted that par [13] of the tax law directions, concerning the timing of receipt of income, was a "commanding" direction because the direction used the word "is" in the phrase "is paid to or dealt with as directed by the taxpayer" (see [118] above). Reference was made, by way of contrast, to the direction given in relation to the timing of receipt of income in Castagna v R; Agius v R (2019) 278 A Crim R 194; [2019] NSWCCA 114 at [73].

[13]

Consideration

In Scott v Commissioner of Taxation (NSW) (1935) 35 SR (NSW) 215, Jordan CJ said of the concept of "income" at 219: … The word "income" is not a term of art, and what forms of receipts are comprehended within it, and what principles are to be applied to ascertain how much of those receipts ought to be treated as income, must be determined in accordance with the ordinary concepts and usages of mankind, except in so far as the statute states or indicates an intention that receipts which are not income in ordinary parlance are to be treated as income, or that special rules are to be applied for arriving at the taxable amount of such receipts. (Citations omitted.)
That remains the position; there is no comprehensive definition in the income tax legislation of what is meant by "income". Thus, s 6-5(1) of the ITAA 1997 provides: Operative provisions 6-5 Income according to ordinary concepts (ordinary income) (1) Your assessable income includes income according to ordinary concepts, which is called ordinary income. …
The effect of s 6-5(1) is that whether an amount is ordinary income is assessed according to ordinary concepts.
Section 6-5(2) of the ITAA 1997 provides that assessable income of an Australian resident includes: … the ordinary income you derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
In this case, the tax law directions addressed three related matters in determining the taxpayer's "ordinary income".
The first concerned the character of the taxpayer's receipts. This was the subject of par [18] of the tax law directions which identified the criteria for determining whether an amount (or a gain) is income. Those criteria were taken from RW Parsons' Income Taxation in Australia: Principles of Income, Deductibility and Tax Accounting at [2.7]. No complaint is made in relation to this aspect of the tax directions which instructed the jury about how they were to determine whether the particular amounts transferred from VITCO or IFTCO to Mr Pratten, to his associated entities or to third parties at his direction, were income.
The second concerned the taxpayer's entitlement to assessable income. This was dealt with in par [14] of the tax law directions. In the absence of actual receipt by the taxpayer, there must be some entitlement to receipt that meets the criteria of a gain in the sense that it has "come home" to a taxpayer in realised or realisable form: Federal Commissioner of Taxes (South Australia) v Executor Trustee and Agency Co of South Australia Ltd (1938) 63 CLR 108 at 155 (Dixon J); [1938] HCA 69. For an amount to have "come home", it needs to have been received or earned free of restriction: Arthur Murray (NSW) Pty Ltd v Commissioner of Taxation (1965) 114 CLR 314 at 318; [1965] HCA 58.

[14]

Castagna

Mr Pratten's reliance on the tax direction given in Castagna (referred to at [73] of that judgment) is misplaced. In that case, direction 12 was amended by the trial judge to read: 12. One factor that you might take into account when considering whether an Australian taxpayer has "derived" an amount of income is that an Australian taxpayer may have derived income when it is either paid to them, or when it is applied or dealt with in any way on their behalf or as they direct. Another factor which you might take into account on this question is the parties and terms of the consultancy agreements … (Emphasis added.)
Mr Pratten highlighted the difference between the word "is" in par [13] of the tax law directions in this case and the word "may" in the first sentence of direction 12 in Castagna. But the correctness or adequacy of direction 12 was not in issue on the appeal in Castagna, nor was any comment made by the Court concerning the adequacy of that direction. Moreover, Castagna involved a different issue, namely, whether Dr Castagna or the company which had provided his services to Macquarie Bank under a legitimate consulting arrangement, which the Crown did not allege to be a sham, had derived the income paid under that agreement, and therefore whether Dr Castagna had dishonestly failed to declare those amounts paid to the company in his tax return. The issue on appeal was whether the trial judge had erred in failing to enter a verdict by direction because the payments in question were income of the company and not Dr Castagna.
In contrast to Castagna, the issues in the present case involved the characterisation of the payments from the VITCO and IFTCO accounts, as well as the timing of those payments. On the Crown case, Mr Pratten had an entitlement to the monies in CPI and derived income at the time when the payments were made either directly to him or to third parties at his direction. Unlike Castagna, many of the payments in question were made directly to Mr Pratten; other payments were made for his benefit (such as the payment of his rent and his children's school fees). The factual circumstances of this case are distinguishable from Castagna.
As there was no objection at trial to the tax law directions, r 4.15 applies. I would refuse leave. In any event, for the reasons given, ground 5 has not been made out.

[15]

Ground 4: Failure to discharge the jury

Ground 4 contends: The trial judge erred in failing to discharge the jury on the appellant's application that there had been a fundamental change in the Crown case which thus substantially and irremediably prejudiced the appellant's defence thereby causing the trial to miscarry.

[16]

Background

The circumstances in which the trial judge refused the application by defence counsel to discharge the jury were as follows.
The Crown Prosecutor opened the case on the basis that the monies paid directly into Mr Pratten's St George bank account from VITCO and IFTCO during the 2003 to 2009 financial years, without being declared, was "some $2.9 million", and that the payments made to third parties from the VITCO and IFTCO accounts during that period for the benefit of Mr Pratten, without being declared, "totalled some $2.1 million".
The Crown Prosecutor took the jury to Exhibit A which included a chart prepared by Ms Celona identifying the total transfers from VITCO in the 2003 financial year. These comprised $389,898 paid to Mr Pratten's St George bank account, $458,825 paid for the purchase of Skallet and $219,983 paid for the purchase of the Stroud hardware store. The Crown Prosecutor drew attention to the fact that RGII/CPI was not incorporated until August 2002 and that there was evidence that prior to this date some monies were held in the VITCO account on behalf of Mr Pratten. The Crown Prosecutor said: Now in that first year you will recall that Rural & General International Insurance didn't begin to operate until August 2002. There is evidence there was some moneys already in VITCO on behalf of Mr Pratten, so that might be one of the areas you will consider closely when you look at determining whether you accept that that was income that should have been declared or something else.
The evidence of "some moneys" held in the VITCO account on behalf of Mr Pratten was a reference to a letter dated 28 June 2002 from BDO to RGIL confirming that VITCO held $500,000 in trust for GNPPD and those monies were a loan from RGIL to GNPPD. It will be recalled that GNPPD was Mr Pratten's company (see [21] above).
On the ninth day of the trial, in the course of legal argument, the Crown Prosecutor referred to his opening concerning the payments which occurred prior to the incorporation of RGII/CPI and said: Your Honour will recall I opened saying that not all the money came from CPI but that because there was already money come [from] IFTCO which the Crown says came from, or there is an inference that it came from loans that GNPPD had.
The reference to "IFTCO" was an error, as the reference should have been to VITCO; however, nothing turns on this misdescription. Later on the ninth day of the trial, Mr Greer gave evidence that there was an outstanding loan from GNPPD to Mr Pratten. Thus, as the Crown Prosecutor had indicated in his opening address, there was evidence to suggest that the first five payments for Skallet were not sourced from CPI, but from a loan by RGIL to GNPPD.

[17]

Submissions

Mr Pratten contended that the trial miscarried as a result of the failure to discharge the jury based on a fundamental change in the Crown case. The asserted prejudice to the defence case was said to be that the Crown was permitted to fix up a hole or gap in its case, and Mr Pratten would have obtained different evidence to deal with the change in the Crown case.

[18]

Legal principles: application to discharge the jury

Where a judge has refused to discharge the jury and the accused has been convicted, the appeal is "not against the failure to discharge the jury but against the conviction": Maric v The Queen (1978) 52 ALJR 631 at 634 (Gibbs ACJ). In Crofts v The Queen (1996) 186 CLR 427 at 440-441; [1996] HCA 22, the majority stated the principles in the following terms: It may be accepted that the Court of Criminal Appeal approached the matter with the correct principles in mind. No rigid rule can be adopted to govern decisions on an application to discharge a jury for an inadvertent and potentially prejudicial event that occurs during a trial. The possibilities of slips occurring are inescapable. Much depends upon the seriousness of the occurrence in the context of the contested issues; the stage at which the mishap occurs; the deliberateness of the conduct; and the likely effectiveness of a judicial direction designed to overcome its apprehended impact. As the court below acknowledged, much leeway must be allowed to the trial judge to evaluate these and other considerations relevant to the fairness of the trial, bearing in mind that the judge will usually have a better appreciation of the significance of the event complained of, seen in context, than can be discerned from reading transcript. Nevertheless, the duty of the appellate court, where the exercise of discretion to refuse a discharge is challenged, is not confined to examining the reasons given for the order to make sure that the correct principles were kept in mind. The appellate court must also decide for itself whether, in these circumstances, the result of the refusal to discharge the jury occasioned the risk of a substantial miscarriage of justice. In other words, can the appellate court say with assurance that, but for the admission of the inadmissible evidence, the conviction was inevitable? … (Emphasis added.)
Dawson J, although in dissent, made the following remarks at 432: Whether or not a jury should be discharged by reason of some incident which occurs during the course of a trial is a matter within the trial judge's discretion. But it is a discretion which is to be exercised in favour of a discharge only when that course is necessary to prevent a miscarriage of justice. It is in that sense that it has been said that the underlying principle is that of necessity and that "a high degree of need for such discharge" must appear before a discharge will be ordered. When a trial judge's refusal to discharge a jury is called in question, it must be borne in mind that he or she is ordinarily in a better position than an appeal court to assess whether, having regard to the course which the trial has taken and the atmosphere in which it has been conducted, any prejudice may be dispelled by a clear warning to the jury. (Citations omitted.)

[19]

Consideration

Mr Pratten's contention that he was prejudiced by the Crown's acknowledgment that the five payments for the purchase of Skallet came from monies in the VITCO account held for GNPPD, not CPI, ignores how the case was in fact opened to the jury by the Crown. As indicated, in opening address the Crown acknowledged that there was evidence that "some moneys" were already held by VITCO on behalf of Mr Pratten prior to the incorporation of RGII/CPI in August 2002. The Crown told the jury that this was one of the areas they would need to consider closely when determining whether those payments were income that should have been declared or were "something else". There was no change in the Crown case.
The effect of the trial judge's ruling was that the Crown was ultimately confined in the way in which it could rely upon the first five payments. In closing address, the Crown Prosecutor told the jury they could not use those payments as proof of Mr Pratten's guilt on count 1 of the indictment. The jury was also given directions to the same effect in the trial judge's summing up. There was no prejudice to Mr Pratten in the Crown case being confined in that manner.
Three further observations should be made concerning the asserted prejudice to the defence case.
First, Mr Pratten was given, but did not exercise, the opportunity to further cross-examine Mr Geer and Ms Celona.
Second, in closing address, Mr Pratten relied upon the first five payments to undermine the Crown case, which defence counsel described as the "house of cards" as the Crown could not explain where the five transactions came from and referred to these payments as "mystery transactions" which "demonstrates and shows that the Crown theory fails".
Third, although Mr Pratten asserted in this Court that he would have obtained different evidence to deal with the so-called change in the Crown case, such evidence was not foreshadowed before the trial judge. Mr Pratten had ample notice of the Crown's intention to rely upon the evidence of monies in the VITCO account, as the first five transactions formed part of Exhibit A which was tendered without objection. There is no merit in Mr Pratten's assertion that the defence was prejudiced because it could have sought more documents to make the same point, namely, that $500,000 in the VITCO account was held for GNPPD. I am not persuaded that the refusal to discharge the jury occasioned a risk of a substantial miscarriage of justice.

[20]

Other issues raised under ground 4

Mr Pratten's submissions on ground 4 raised three other contentions: 1. the evidence of the first five payments was tendency evidence or, even if not adduced for a tendency purpose, was highly prejudicial and tendency reasoning may have been used by the jury. Accordingly, the trial judge should have rejected the evidence as tendency evidence under ss 97 and 101 of the Evidence Act 1995 (NSW), or as prejudicial evidence under ss 135 or 137; 2. the trial judge erred in admitting into evidence Mr Pratten's notices of assessment for the 1993 to 2002 financial years; and 3. the trial judge failed to give a direction as to how "control" of a company should be determined.

[21]

(i) Tendency evidence

No submission was made at trial by defence counsel that the evidence of the first five payments was tendency evidence, or that the jury would likely use the evidence for tendency reasoning. Nor was any application made by defence counsel that this evidence should be excluded under ss 135 or 137 of the Evidence Act.
In closing address, the Crown submitted: We know the first five payments used to purchase Skallet came from VITCO and they came on 29 July 2002, a few weeks before RGI was incorporated on 20 August 2002. The Crown says you can take into account the fact that the Crown would ask you to accept that [Mr] Pratten diverted funds to Vanuatu and then used them for his benefit without declaring it as income, and on the face of it those five payments fit that pattern even though they obviously don't come from CPI or RGII. However, you cannot consider those first five payments in the attribution of guilt for the first charge as wherever those monies come from they were not from RGII. RGII didn't exist until the 20th of August, 2002. The Crown says you can also take into account the fact that these five payments and later payments were said by Mr Pratten and the Vanuatu financial services firms to have come from Pacific Property Investments Ltd or PPI, that the CPI financial statements for 2009 records a loan to PPI for, it is approximately 850,000, that Mr Pratten said CPI now owns PPI and that all the payments came from either VITCO or IFTCO as these matter support the Crown's contention that Mr Pratten used PPI as part of his false trail, a device to hide his use of monies from Vanuatu for his personal benefit and should have been declared as income.
As indicated, defence counsel described the Crown case as based on "speculation, conjecture and suspicion" as there was no evidence that the first five payments came from CPI, and submitted that these payments undermined the remainder of the Crown case: 10 June 2002, this is an important date in relation to the purchase of Skallett [sic]. And why is it important? Because that is the day that a deposit is paid by BDO for the purchase of Skallett [sic]. Guess what? That falls in the 2002 tax year. Mr Pratten is not charged with trying to obtain a financial advantage in regard to the 2002 tax return. So here the Crown is saying, Whoa, he's been really naughty in 03, 04, 05, yet in 02, when the deposit is paid, he's not charged. Doesn't form any of the charges. So how does the Crown explain that? Have you been given any plausible sensible explanation from the Crown about how you are to treat the deposit monies? Because they are not even part of the charges. So what have you got about Skallett [sic]? All you have really is a Crown theory. And what is it based on? Speculation, conjecture, and suspicion. … … So we go right to that first transaction, and this is what the Crown builds its whole theory and case around. Yet the Crown cannot explain to you where those five transactions came from. So down goes the house built on the cards, crashing down. Because right from the start the Crown is incapable of offering to you a sensible and plausible explanation as to how those monies got into the VITCO account, and that is how this whole Crown theory is completely half-baked. And you just go back one step to the deposit paid in the 2002 tax year, and he's not charged. Half-baked. … So what is the real point about Skallet? Well, the real point about Skallet is that it just demonstrates and shows you that the Crown theory fails, because there are five mystery transactions.

[22]

Relevant statutory provisions

The provisions of the Evidence Act that bear upon the present issues are:

the tendency rule in s 97(1): (1) Evidence of the character, reputation or conduct of a person, or a tendency that a person has or had, is not admissible to prove that a person has or had a tendency (whether because of the person's character or otherwise) to act in a particular way, or to have a particular state of mind unless - (a) the party seeking to adduce the evidence gave reasonable notice in writing to each other party of the party's intention to adduce the evidence, and (b) the court thinks that the evidence will, either by itself or having regard to other evidence adduced or to be adduced by the party seeking to adduce the evidence, have significant probative value.
section 101 of the Evidence Act, which, at the time of the trial, provided: (1) This section only applies in a criminal proceeding and so applies in addition to sections 97 and 98. (2) Tendency evidence about a defendant, or coincidence evidence about a defendant, that is adduced by the prosecution cannot be used against the defendant unless the probative value of the evidence substantially outweighs any prejudicial effect it may have on the defendant. (3) This section does not apply to tendency evidence that the prosecution adduces to explain or contradict tendency evidence adduced by the defendant. (4) This section does not apply to coincidence evidence that the prosecution adduces to explain or contradict coincidence evidence adduced by the defendant.
sections 135 and 137, which deal with the exclusion of prejudicial evidence: 135 General discretion to exclude evidence The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might: (a) be unfairly prejudicial to a party, … 137 Exclusion of prejudicial evidence in criminal proceedings In a criminal proceeding, the court must refuse to admit evidence adduced by the prosecutor if its probative value is outweighed by the danger of unfair prejudice to the defendant.

[23]

The nature of tendency evidence

In R v Quach [2002] NSWCCA 519 at [30], Spigelman CJ said of the differing tests for the admission of tendency evidence and evidence admitted for a purpose other than to show a tendency (as to which s 97 is irrelevant): As s 95 makes clear, evidence may be admitted if it is relevant for another purpose without passing the special test of the balance between probative value and prejudicial effects. Sections 97 and 98 identify distinct kinds of evidence and, apply to them a higher order of test, namely significant probative value. In criminal cases where such evidence is sought to be adduced by the prosecution, s 101(2) imposes a more stringent requirement for the balancing exercise, ie requiring the probative value to "substantially outweigh" any prejudicial effect. The lower order tests in ss 135 and 137 of the Act do, however, apply to evidence admitted for a purpose other than a tendency or coincidence purpose.
The leading authorities discussing the nature of tendency evidence are collected in Taylor v R [2020] NSWCCA 355 at [92]-[94] (Bell P). In Elomar v R; Hasan v R; Cheikho v R; Cheikho v R; Jamal v R (2014) 300 FLR 323; [2014] NSWCCA 303, the Court (Bathurst CJ, Hoeben CJ at CL and Simpson J) said of tendency evidence at [359]-[360]: [359] … Tendency evidence is evidence that provides the foundation for an inference. The inference is that, because the person had the relevant tendency, it is more likely that he or she acted in the way asserted by the tendering party, or had the state of mind asserted by the tendering party on an occasion the subject of the proceedings. Tendency evidence is a stepping stone. It is indirect evidence. It allows for a form of syllogistic reasoning. … [360] Tendency evidence is a means of proving, by a process of deduction, that a person acted in a particular way, or had a particular state of mind, on a relevant occasion, when there is no, or inadequate, direct evidence of that conduct or that state of mind on that occasion.
In Hughes v The Queen (2017) 263 CLR 338; [2017] HCA 20 at [70], Gageler J (in dissent as to the result, although the majority judgment did not address this issue) observed that: … Applied to evidence of past conduct, tendency reasoning is no more sophisticated than: he did it before; he has a propensity to do this sort of thing; the likelihood is that he did it again on the occasion in issue.

[24]

Consideration

The first five payments were relevant to two issues; neither involved tendency reasoning. First, it was relevant to the relationship between Mr Pratten and PPI, the legal owner of Skallet (and other properties), which on the Crown case were beneficially owned by Mr Pratten. As Weinberg JA observed in Ivanoff v The Queen [2015] VSCA 116 at [17]: …. it has long been recognised that "relationship evidence", outside the bounds of tendency or coincidence, may be led if relevant, subject only to the possible exercise of judicial discretion.
Second, it was relevant as rebutting a defence that was reasonably anticipated (Ivanoff at [19]), being the foreshadowed submission by defence counsel, subsequently made in closing address, that the Crown case was a "house of cards" because the first five payments had not come from CPI. The Crown was entitled to rely upon the first five payments from monies held by VITCO on behalf of Mr Pratten's company, GNPPD, to rebut the foreshadowed defence submission that the Crown could not explain the source of the funds to purchase Skallet.
The evidence was not admitted "to prove" (in the language of s 97) that Mr Pratten had a tendency to act in a particular way, such as to receive income without declaring it. As such, the requirements of sS 97 and 101 are irrelevant: R v AH (1997) 42 NSWLR 702 at 708, cited in Quach at [32].
Nor was the Crown's submission in closing address that the first five payments fit the "pattern" of funds coming from Vanuatu using the evidence for tendency purposes. As the Crown correctly submitted in this Court, the reference to the "pattern" was the use of funds in the VITCO account by Mr Pratten (in this instance, the proceeds of the loan from RGIL to GNPPD) for Mr Pratten's benefit, which were, relevantly, used here to finance the purchase of Skallet by PPI.
It can be readily inferred, given the prominent reliance placed on the first five payments for the "house of cards" submission in the defence closing address, that a forensic decision was made by defence counsel not to seek to exclude this evidence as prejudicial under either ss 135 or 137.
One further matter should be mentioned. Mr Pratten complained about the "kosher" comment by the trial judge in the summing up highlighted in the passage set out below: [301] The other aspect of the issue of the Skallett [sic] payments is the way in which the Crown puts it and why it puts it. It is unusual, to say the least, that an accused complains that he has not been charged for 2002. That does not mean the Crown says everything was kosher in 2002. It just means that there is no charge relating to 2002. (Emphasis added.)

[25]

(ii) The admissibility of the 1993-2002 notices of assessment

Mr Pratten's notices of assessment for the 1993 to 2002 financial years were tendered by the Crown and admitted over objection: R v Pratten (No 19) [2015] NSWSC 1111. In tendering these documents, the Crown indicated that it wished to dispel any notion that there had been prior accumulated wealth which could explain the transfers from the VITCO and IFTCO accounts.
In opposing the tender of these documents, defence counsel argued that: (1) the notices of assessment fell outside the charge period and therefore were not relevant, and (2) there was a risk of prejudice that the jury may speculate whether Mr Pratten had avoided tax during those years as there was evidence that he was running a major insurance company yet had only declared $50,000 in assessable income for those financial years. In the context of this objection, defence counsel indicated his qualified disavowal ("at the moment") of an earlier foreshadowed argument based on prior accumulated wealth, namely, that the money distributed by VITCO or IFTCO may have been monies earned by Mr Pratten in years prior to the 2003 to 2009 years in question.
In admitting the notices of assessment, the trial judge reasoned that in the absence of any attempt to deal with income in the years between 1993 and 2002 (and even if the defence did not raise the issue in these terms), the jury would be prone to speculate as to whether the monies received, or the benefit received during the charge years, were the result of earlier accumulated wealth that was distributed during the charge years and, therefore, not caught by the limited definitions of income for the purposes of this case: R v Pratten (No 19).
The trial judge gave the jury the following direction when admitting the 1993 to 2002 notices of assessment: … For years prior to any year for which there is any charge outstanding or arising in this case or as far as I am aware any other case, indeed I will tell you, before any other case [T]here is capacity for the Tax Office Commissioner to issue default summonses if he/she were so minded. None of that has happened so you can readily assume or presume that the assessments that you are about to receive are accurate.
Neither party made reference to the notices of assessment for 1993 to 2002 in closing addresses.
Contrary to Mr Pratten's contention, the trial judge did not err in admitting these documents into evidence. As to relevance, it is not to the point that Mr Pratten ultimately did not advance an argument based upon prior accumulated wealth. The notices of assessment for 1993 to 2002 were relevant and admissible to prove the Crown case that the monies received by Mr Pratten from the VITCO and IFTCO accounts from 2003 to 2009 were assessable income that had not been declared in his tax returns, by formally disproving any suggestion of prior accumulated wealth.

[26]

(iii) Directions as to control of a company

Mr Pratten's contention that the trial judge failed to give a direction as to how "control" of a company should be determined was based upon the test stated by the High Court in Bywater Investments Ltd v Federal Commissioner of Taxation (2016) 260 CLR 169; [2016] HCA 45 in relation to the concept of "central management and control" as referred to in s 6(1) of the ITAA 1936.
Section 6(1) of the ITAA 1936 provides that a company is resident in Australia if it is incorporated in Australia or, if it is not incorporated in Australia, if it carries on business in Australia and has either its central management and control in Australia or its voting power controlled by shareholders who are residents of Australia. In Bywater, the joint judgment of French CJ, Kiefel, Bell and Nettle JJ held at [77] that the "residence of a company [for tax purposes] is first and last a question of fact and degree to be answered according to where the central management and control of the company actually abides" (emphasis in original).
The principles relating to a company's place of central management and control for the purpose of ascertaining whether a foreign company, such as CPI and PPI, is an Australian resident for tax purposes, have no relevance to the present case. It was not part of the Crown case that CPI and PPI were resident in Australia for tax purposes. The Crown correctly submitted that, whilst Mr Pratten's control of CPI and PPI formed part of the Crown's circumstantial case about receipt of income by Mr Pratten and his associated entities in Australia, the Crown was not required to prove that Mr Pratten controlled CPI or PPI in a way that met particular provisions of the tax legislation.
No further direction was requested by defence counsel at trial on the issue of control of CPI and PPI and, as the Crown correctly submitted, none was required in the circumstances of this case. Again, r 4.15 applies and I would refuse leave to raise this issue.

[27]

Grounds 1 and 1A: The evidence of Mr Steven Barns

Grounds 1 and 1A relate to evidence given by Mr Steven Barns, an officer of the ATO. These grounds were advanced in the alternative: Ground 1 The trial judge erred in failing to give directions to the jury sufficient to extinguish, or alternatively insufficient to counter, the substantial prejudice arising from evidence given by a Crown witness, Mr Steven Barns, an officer of the Australian Taxation Office, as to amended assessments of the appellant's for the 2002 to 2009 income years, which was irrelevant to the facts to be determined in the trial and thus had no probative value, or alternatively the prejudicial effect of which substantially outweighed its probative value, thereby causing the trial to miscarry. Ground 1A The trial judge erred in allowing additional evidence to be given by Mr Steven Barns, over objection of the appellant, that amended assessments were issued to the appellant in which there 'was additional assessable income', which was irrelevant to the facts to be determined in the trial and thus had no probative value, or alternatively the prejudicial effect of which substantially outweighed its probative value, and further that the Crown's intention to lead such evidence effectively ambushed the appellant thus causing irremediable unfairness to the defence case, thereby causing the trial to miscarry.
Grounds 1 and 1A included two particulars of so-called "aggravation" of the prejudice: (1) the trial judge misdirected the jury concerning Mr Barns' evidence; and (2) the directions concerning Mr Barns' evidence were misleading as to the true legal position of the Commissioner and Mr Pratten in the statutory process of the tax system. The latter submission was a reference to the process of reviewing the Commissioner's decision in relation to a taxpayer's objection to a notice of assessment or amended notice of assessment by proceedings under Pt IVC of the TAA 1953.

[28]

Background

Mr Barns gave general evidence about the ATO's administration of the tax system, including audits undertaken by the ATO, the self-assessment system of taxation, and income tax thresholds. He gave an explanation of various questions contained in income tax returns, including questions about income, deductions and foreign assets. He explained the information contained in Mr Pratten's income tax returns, including the losses claimed in the 2006 to 2009 financial years from the operation of the Myidaho Natural Beef business. Mr Barns also identified the notices of assessment and notices of refund issued by the ATO to Mr Pratten and gave evidence concerning an audit process in respect of Mr Pratten; Mr Pratten had been selected for an audit because the ATO had become aware that Mr Pratten had received funds from Vanuatu. No objection was taken to any of this evidence.
In examination-in-chief, Mr Barns gave the following evidence on 5 August 2015: Q. And when you say the relevant years, what years are they? A. I understand it's the 2003 to 2009 years. Q. And are you saying it's relevant years because did you do some, were you involved in an assessment of Mr Pratten's tax returns? A. Amended assessments. I actually did for the 2002 to 2009 years, as part of the audit process we did those years.
Shortly after this evidence, the Crown asked Mr Barns what happened to the tax paid by Mr Pratten for the years 2002 to 2009 to which Mr Barns responded that the "Commissioner accepted those original returns that were lodged as they were without any scrutiny. And it wasn't until - sorry".
Later that day, the Crown returned to the topic of the audit of Mr Pratten's tax affairs and asked Mr Barns: "What, did that result in something occurring at the end of it in terms of assessments?". Defence counsel objected to this question on the basis that it was counsel's understanding that there was to be no evidence about amended notices of assessment and submitted that the amended assessments were not relevant.
Argument on the objection took place on the following day. Defence counsel repeated his objection on the ground of relevance and argued that proof of the financial advantage could simply be satisfied by evidence that the income tax returns had been lodged by or on behalf of Mr Pratten and that Mr Pratten thereby avoided a liability to pay tax. It was submitted that there was a risk that admission of the amended notices of assessment, which indicated the Commissioner's view that Mr Pratten owed more tax than the tax assessed by reference to the income declared in his tax returns, would circumvent the jury's role in determining whether Mr Pratten obtained a financial advantage. It was also submitted that the evidence of Mr Barns referring to an amended assessment for the 2002 financial year was irrelevant because it was outside the charge period.

[29]

(i) Ambush

An understanding of Mr Pratten's complaint of ambush requires reference to some background matters. At Mr Pratten's first trial, the amended assessments for 2003 to 2009 were ultimately tendered without objection, subject to an order under s 136 of the Evidence Act limiting the use to which they could be put to proving that the assessments had been made and issued: see Pratten v R [2014] NSWCCA 117 at [97]. Ground 3 of Mr Pratten's appeal against conviction from the first trial contended that the trial miscarried because the amended assessments were admitted into evidence when they were not relevant and were therefore inadmissible. The Court refused leave to raise this ground under r 4, as it then was, and the ground was otherwise dismissed. Meagher JA said at [100]-[101]: [100] Whilst there may be force in the appellant's contention that the Tax Commissioner's opinion could not rationally affect the assessment of a fact in issue, there is equal force in the Crown's contention that no miscarriage of justice occurred by the admission of the assessments into evidence on a limited basis, because of the directions that were given. [101] The parties had agreed that the assessments would be admitted on a limited basis. The Crown contended that the assessments showed that the appellant had paid less tax than he would have been liable to pay had there been disclosure in the amounts the Crown alleged. That much would have been self-evident to the jury if it accepted that the appellant had deliberately understated his income in the various returns by the amounts of hundreds of thousands of dollars. That was, as the trial judge's directions made clear, one of the questions that the jury was called upon to answer. In our view, in the light of the clear directions given, the assessments would have had no impact on the jury's consideration of that question. For that reason, the admission of the evidence on the limited basis did not cause the trial to miscarry.
On 22 May 2015, prior to the second trial commencing, Mr Pratten sought an adjournment on the basis that three issues required resolution before the commencement of the trial. One issue was the admissibility of the amended assessments. Another issue was the relevance of particular expert evidence that would be adduced by the Crown. In opposing the adjournment, the Crown Prosecutor indicated that the Crown would not tender the "admitted" [sic] assessments, but would simply lead evidence of "what the additional income was, or what the tax tables were at the relevant years, and the calculation of what additional tax would have been payable relative to the returns that he lodged had the full amount of what the Crown alleges that his additional income had been disclosed". The trial judge said in the course of oral argument that he had previously ruled: The fact the tax department said you owed tax was sufficient only to overcome the issue as to whether or not you could ever have a disadvantage if the Commonwealth did or was not saying you owed money. That was the only aspect from my recollection.

[30]

Submissions

Mr Pratten submitted that he was taken by surprise by Mr Barns' evidence as there was no reference to the amended assessments in the particulars provided to Mr Pratten prior to trial, and the Crown Prosecutor had indicated in pre-trial argument that the Crown would not tender the amended assessments.
Mr Pratten further submitted that the Crown's reliance on Mr Barns' evidence "as part of the formal proof of the case", being that the Commissioner considered Mr Pratten owes money, was a failure by the prosecution to disclose all relevant evidence to an accused which amounted to a material procedural irregularity and required the quashing of the guilty verdicts.

[31]

Consideration

The premise of Mr Pratten's submission that he was ambushed by Mr Barns' evidence is flawed. It is not in dispute that the Crown served as part of the pre-trial disclosure a witness statement by Mr Barns which annexed the amended assessments which had been allowed into evidence at the first trial by consent on a limited basis. Although the Crown had indicated at the pre-trial hearing in May 2015 that it would not tender the amended assessments at the second trial, the Crown did not indicate that it would not adduce evidence from Mr Barns that the amended assessments were issued. The evidence given by Mr Barns, to which objection was unsuccessfully taken, went no further than establishing that the audit process resulted in the ATO issuing amended assessments for Mr Pratten in each of the tax years of 2003 to 2009.
Mr Pratten submitted in this Court that he "was denied the opportunity to obtain expert evidence dealing with the workings of the tax system", a reference to the procedure by which a taxpayer is entitled to challenge amended assessments under Part IVC of the TAA 1953. The assertion of prejudice should be rejected. First, as the trial judge noted when rejecting the adjournment application on 22 May 2015, Mr Pratten had ample time to obtain a tax expert since the decision of the Court upholding the conviction appeal from the first trial and the order for a retrial: R v Pratten (No 17) at [14]. Second, no submission as to prejudice was made by defence counsel at trial. To the contrary, defence counsel successfully objected to the giving of tax directions dealing with a taxpayer's right to review an assessment or amended assessment.
Mr Pratten made a forensic decision at trial not to challenge the evidence given by Mr Barns that amended assessments were issued. Mr Pratten also made a forensic decision not to refer to his right to challenge the amended assessments under Part IVC of the TAA 1953 or the fact that he had commenced review proceedings under Pt IVC in the Tribunal. There was no breach of the Crown Prosecutor's duty of disclosure. Mr Pratten was on notice of the substance of the evidence that Mr Barns could give. The admissibility of Mr Barns' evidence, to which objection was taken by defence counsel, is a separate question.

[32]

(ii) Relevance: 2003 to 2009 amended assessments

The principal submissions advanced by Mr Pratten concerning the admissibility of Mr Barns' evidence were as follows: 1. the evidence given by Mr Barns that amended assessments were issued for the 2003 to 2009 tax years was irrelevant; it could only be relevant to Mr Pratten's "civil liability to [pay] tax" and the admission of such evidence could have been misunderstood and misused by the jury; 2. Mr Barns' evidence was "unchallengeable evidence" in the sense that Mr Pratten could not have legally or practically contested the amended assessments in the context of the criminal trial and, in any event, the amended assessments were inconclusive prior to the conclusion of the Pt IVC tax proceedings brought by Mr Pratten in the Tribunal; 3. Mr Barns' evidence as to the amended assessments "and the characterisation of assessable income" was inadmissible opinion evidence; and 4. even if the evidence was relevant, its probative value was substantially outweighed by the danger of unfair prejudice because the evidence could have been, and was likely to have been, accepted by the jury as conclusive evidence that there was assessable income in each of the relevant years which had not been disclosed by Mr Pratten, being an essential element of the offences otherwise to be determined on the whole of the evidence.
The Crown submitted that the evidence that the ATO had issued amended assessments was relevant to show that the Commissioner did not agree with Mr Pratten when he said that he did not owe any additional tax and to rebut any suggestion to the converse that the Commonwealth agreed that no money was owed by Mr Pratten.
The Crown emphasised that the evidence was admitted on a very limited basis, and that the jury was properly directed as to that basis both following Mr Barns' evidence and in summing up. The Crown submitted that the jury was correctly directed that it was for them to determine whether the Crown had established beyond reasonable doubt whether an amount was income and had not been declared in Mr Pratten's tax returns. The Crown drew attention to the fact that the disputed evidence went to a matter that was not the subject of address by either the Crown or the defence in closing, although the trial judge referred to the matter in summing up.

[33]

Consideration

The provisions of the Evidence Act that bear upon the admissibility of Mr Barns' evidence are: 55 Relevant evidence (1) The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding. … 56 Evidence to be admissible (1) Except as otherwise provided by this Act, evidence that is relevant in a proceeding is admissible in the proceeding. (2) Evidence that is not relevant in the proceeding is not admissible.
The Dictionary to the Evidence Act provides: probative value of evidence means the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue.
As explained in the joint judgment of Kiefel CJ, Bell, Keane and Edelman JJ in Hughes at [16], "[t]he facts in issue in a criminal proceeding are those which establish the elements of the offence". However, as observed by Gleeson CJ, Gaudron, Gummow and Hayne JJ in Smith v The Queen (2001) 206 CLR 650; [2001] HCA 50 at [7]: In determining relevance, it is fundamentally important to identify what are the issues at the trial. On a criminal trial the ultimate issues will be expressed in terms of the elements of the offence with which the accused stands charged. They will, therefore, be issues about the facts which constitute those elements. Behind those ultimate issues there will often be many issues about facts relevant to facts in issue. In proceedings in which the Evidence Act 1995 (NSW) applies, as it did here, the question of relevance must be answered by applying Pt 3.1 of the Act and s 55 in particular. Thus, the question is whether the evidence, if it were accepted, could rationally affect (directly or indirectly) the assessment by the tribunal of fact, here the jury, of the probability of the existence of a fact in issue in the proceeding. (Emphasis added.) (Citations omitted.)
Importantly, as the last sentence in the passage in Smith at [7] acknowledges, the definition of "relevant evidence" contained in s 55(1) of the Evidence Act makes clear that relevance may be indirect.
In Washer v Western Australia (2007) 234 CLR 492; [2003] HCA 48 at [5], Gleeson CJ, Heydon and Crennan JJ said that the determination of relevance: … requires consideration of the process of reasoning by which information as to the fact of the acquittal could rationally affect the assessment of the probabilities. The word "rationally" is significant in this context. In order to establish relevance, it is necessary to point to a process of reasoning by which the information in question could affect the jury's assessment of the probability of the existence of a fact in issue at the trial.

[34]

(iii) Asserted misdirections to the jury

Mr Pratten also submitted that the trial judge misdirected the jury as to the effect of Mr Barns' evidence in the following respects: 1. the direction that the jury was free to accept or reject any of the evidence at the trial did not make sufficiently clear that the jury could accept or reject the evidence of Mr Barns; 2. the direction that "which part of the evidence you accept, and whether particular evidence has been controverted, is an issue that you take into account, and you can believe or not believe as you choose" could have, and likely did, cause the jury to accept Mr Barns' evidence concerning the amended assessments as Mr Pratten did not attempt to controvert the evidence; 3. the direction that the jury use their "common sense" would have "bolstered the jury's basic common sense logic, that is, that the Commissioner must have been right", as there was no evidence to the contrary that the Commissioner or Mr Barns was wrong; 4. describing the Commissioner's powers to be akin to that of "Superman" conveyed to the jury that the Commissioner's reassessment of Mr Pratten's assessable income was "unimpeachable, immutable and incontrovertible" so that there was "no need to consider further this essential element of each offence"; and 5. that the trial judge erred in failing to give a specific direction to the jury which addressed Mr Barns' evidence as to an amended assessment issued for the 2002 tax year: see [205] above.

[35]

Consideration

Each of the directions referred to in (1), (2) and (3) above were part of the general directions given by the trial judge as to how the jury was to approach the evidence and submissions by the parties. Those directions would have been understood by the jury as applying to all the evidence, including the evidence of Mr Barns.
Contrary to Mr Pratten's submission, there was no conflict between the general directions and the specific direction given by the trial judge immediately after Mr Barns' evidence that "you may rely upon his factual explanation of the documents he has prepared, or have been obtained through him from the tax office, or any other fact". The specific direction as to how the jury could view Mr Barns' evidence would have been understood by the jury as subject to the general direction about acceptance or rejection of any evidence.
Nor does it follow from the absence of cross-examination of Mr Barns by defence counsel that the direction about acceptance of parts of the evidence, taking into account whether it had been controverted, created irremediable unfairness to Mr Pratten. There was no suggestion in the directions or the summing up that Mr Barns' evidence that amended assessments were issued should be accepted because he had not been cross-examined. The trial judge instructed the jury, both following Mr Barns' evidence and in summing up, that it was for them to determine whether the Crown had established beyond reasonable doubt whether an amount was income and had not been declared in Mr Pratten's tax returns. The jury were instructed that they could not take into account Mr Barns' evidence as opinion evidence. The jury was specifically directed in relation to the elements of the offences that the Commissioner's view that a receipt was income "matters nothing", and that the opinion of the ATO or Mr Barns did not affect the jury's task.
The direction referred to in (3) above that the jury should use their common sense did not suggest to the jury that "the Commissioner must have been right".
Mr Pratten's complaint that the "Superman" remark by the trial judge conveyed to the jury that there was no need to consider further the essential element of each offence relating to financial advantage ignored (1) the context of that remark, (2) the trial judge's directions immediately following the remark concerning the limited nature of Mr Barns' evidence, and (3) the direction that the issue of the amended assessments was a very different task to the proof of the Crown case. This aspect of the directions bears repeating: … In this courtroom, the Crown bears the onus, and has to prove that there was income and, therefore, your task and my task is very different from anything the Tax Commissioner is involved in. And that is why the evidence has been given, to explain to you the documents, to explain to you the process, but ultimately, whether something is income, should have been declared, was known to have been declared, and was dishonestly done for the purpose of obtaining a financial advantage, they are matters that the view of the Tax Commissioner matters nothing in relation to any of that. And that is why I'm telling you at this stage so you don't have a false impression of what it is Mr Barns is talking about.

[36]

2002 amended assessment

Mr Pratten's complaint that the Crown Prosecutor erroneously referred to the tax years 2002 to 2009 instead of 2003 to 2009 in his examination-in-chief of Mr Barns ignored two matters.
First, the Crown Prosecutor acknowledged this error a short time later and there was no objection by defence counsel to the Crown's response that the judge would direct "[t]he jury … in no uncertain terms what the charge periods are". Second, Mr Pratten's notice of assessment of the 2002 tax year was admitted into evidence with a direction that the jury should assume it was accurate.
At the outset of his closing address, the Crown Prosecutor told the jury that the income years in issue were 2003 to 2009. No reference was made to Mr Pratten's 2002 tax return having come under scrutiny of the ATO. The trial judge also directed the jury that the charges related to the 2003 to 2009 tax years. The jury would not have been mistaken as to the charge years, or misled by the Crown Prosecutor's single reference in examination-in-chief to an amended assessment in 2002.
Again, r 4.15 applies. I would not grant leave to raise this issue. In any event, no prejudice arose from the Crown Prosecutor's slip in referring to an amended assessment for the 2002 tax year.

[37]

Conclusion on grounds 1 and 1A

Accordingly, the only aspect of these grounds that is upheld is the contention that the evidence of Mr Barns set out at [206] above was inadmissible and should not have been admitted. Consistent with GBF that is, or at least may be, sufficient to constitute a miscarriage of justice. However even if it is, this ground will not be made out if the Crown can satisfy the "proviso" to s 6(1) of the Criminal Appeal Act 1912. This is addressed at [308] to [321] below.

[38]

Ground 6: Control of CPI, failure to give a Shepherd direction and unreasonable verdict

Ground 6 contends: There was insufficient evidence on which for the jury to conclude the appellant controlled 'Commercial Pacific Insurance Limited'; the trial judge erred in failing to give a 'Shepherd direction'; and mislead the jury as to law; the verdicts on all counts are unreasonable and cannot be supported having regard to the evidence.
This ground raised several issues concerning the asserted insufficiency of evidence that Mr Pratten controlled CPI, and whether this asserted insufficiency affected proof of the Crown case beyond reasonable doubt. Although no reference was made in Mr Pratten's submissions to the principles to be applied, this ground also invokes the power of the Court, conferred by s 6 of the Criminal Appeal Act, to set aside a jury verdict on the ground that it is "unreasonable, or cannot be supported, having regard to the evidence".

[39]

Submissions

The principal submissions advanced by Mr Pratten were as follows: 1. Mr Pratten's 25 per cent interest in the profits of CPI upon the winding up of the company was an interest "in the final outcome of the business affairs of CPI, not an interest in CPI or of its property", and was no more than a mere expectancy; 2. the Crown was required to prove that CPI was a "controlled foreign entity" for the purposes of s 340 of the ITAA 1936, and had not done so; 3. the jury was not properly instructed on the law as to whether Mr Pratten had the "requisite threshold" interest in CPI to have required him to disclose this interest when answering questions 18 and 19 in his tax returns; 4. in order for the Crown to prove that Mr Pratten controlled CPI, it was necessary to establish that BDO and PKF were "immutably bound" to execute Mr Pratten's directions to make the payments on behalf of CPI, and that this was an aspect of the Crown case that required proof beyond reasonable doubt and should have attracted a Shepherd direction; and 5. the Court should entertain a doubt that the jury reasoned to its verdicts on a properly directed and considered basis, and to the criminal standard beyond reasonable doubt.

[40]

Consideration

The Crown case that Mr Pratten had a beneficial interest in CPI was one of the ways in which the Crown alleged that Mr Pratten had an ability to direct the payments of monies from CPI to himself or to third parties for his benefit. Directions were given to the jury as to the meaning of the concept of "beneficial interest", both in the general written directions (pars [2]-[4]), and orally. The trial judge stated in summing up that "it would be impossible to come to a view on the evidence that Mr Pratten's beneficial interest, if he were to have one, in CPI was more than 25 per cent". There is no challenge to the adequacy of these directions or this aspect of the summing up.

[41]

The trial judge's remarks on sentence

Although Mr Pratten gave evidence at trial describing his "beneficial interest" in CPI as "my future equitable interest" and denied that this was a current interest in CPI, the Crown characterised his interest as a beneficial interest in CPI. Mr Pratten submitted that the Crown's characterisation of his interest in CPI was wrong, given the remarks of the trial judge on sentence referring to Mr Pratten's email of 17 December 2017 to his accountant, Mr Greer, in which Mr Pratten stated that he had a 25 per cent interest in the profits of CPI upon winding up of the company (see [49] above): R v Pratten (No 25) at [69].
Mr Pratten's submission relying upon the trial judge's remarks on sentence is flawed. The fact-finding exercise undertaken by the trial judge for the purpose of sentence is not relevant to the conviction appeal. The finding on sentence says nothing as to the sufficiency and quality of the evidence adduced at trial and whether it was capable of establishing the Crown case beyond reasonable doubt.

[42]

Controlled foreign company

Mr Pratten's contention that the Crown was required to prove that CPI was a "controlled foreign company" for the purposes of income tax law, was a reference to Part X of the ITAA 1936, specifically, s 316(1) which provides for certain amounts to be included in a taxpayer's assessable income in respect of, relevantly, the attributable income of a "CFC" (controlled foreign company).
A company is a "CFC" at a particular time if, at that time, the company is a resident of a listed country or of an unlisted country, and any of the specified paragraphs in s 340(a)-(c) apply: ITAA 1936, s 340. The specified paragraphs list the degree of control interests in the CFC required of a group of 5 or fewer Australian entities (in aggregate not less than 50 per cent), together with some other requirements. Where a CFC has attributable income for a statutory accounting period in respect of an attributable taxpayer, the taxpayer's attribution percentage of the attributable income is included in the assessable income of the taxpayer of the year of income in which the end of the statutory accounting period occurs: ITAA 1936, s 456(1).
The Crown correctly submitted that it was not required to prove that CPI was a "controlled foreign company" for the purposes of Part X of the ITAA 1936 to make good its submission that Mr Pratten had a sufficient interest in, or control of, CPI to direct payments be made to him or to third parties for his benefit. That was because it was not part of the Crown case that Mr Pratten's assessable income included the attributable income of a foreign entity such as CPI.

[43]

Questions 18 and 19 of the tax returns

The Crown relied upon the chronology of evidence relating to the preparation of the 2006 and 2007 draft tax returns by Mr Greer for an inference that Mr Pratten changed accountants in late 2008 in order to avoid disclosing in his tax returns his foreign interests and assets (see [49]-[52] above). This was relevant to the Crown's circumstantial case that Mr Pratten's state of mind was that he did not want to draw attention to his interest in assets in Vanuatu. The answers to questions 18 and 19 in the tax returns were not relied upon by the Crown as a particular of the alleged offences.
No direction was sought by defence counsel on the legal requirements in relation to questions 18 and 19 of the tax returns or the law about controlled foreign companies. As such, r 4.15 applies.
In closing address, the focus of the defence case on this issue was that the jury should accept Mr Pratten's evidence for the change in accountants and Mr Greer's evidence in cross-examination. Defence counsel submitted that: (1) the change in accountants was not in relation to questions 18 and 19 in the tax returns, "it was about primary production" and Mr Pratten's preference to use Mr Berry as his accountant given the long-standing relationship between them, Mr Berry's experience with primary production and because Mr Berry was "cheaper" than Mr Greer (see [61] above); and (2) Mr Greer accepted in cross-examination that Mr Pratten's description of his interest in CPI as an entitlement to receive 25 per cent of the profits of a company after it was wound up within ten years of operation would not be sufficient to change the response to questions 18 and 19 from no to yes.
Given the way the defence case was put in closing address, it is likely that defence counsel made a forensic decision not to seek a direction on the matters now complained of. To have done so had the potential of highlighting to the jury the converse of the defence case, namely, as the Crown alleged, that Mr Pratten had a beneficial interest in CPI and did not want to draw attention to his interests in assets in Vanuatu. Leave to raise these matters should be refused under r 4.15.

[44]

Whether Shepherd direction was required

At the conclusion of the evidence, and immediately before closing addresses, defence counsel sought a Shepherd direction in relation to Mr Pratten's control of CPI and ability to direct BDO and PKF to make payments to him and third parties. Ultimately, this request was not pressed, and no comment was made or redirection sought by defence counsel following the trial judge's summing up on circumstantial evidence which did not include a Shepherd direction. As such, r 4.15 applies.
Mr Pratten submitted in this Court that a Shepherd direction should have been given because, if control of CPI was removed from the list of facts relied upon by the Crown to prove its case, then "at least to a large part", one was "left with an empty shell", adopting the language of Ipp JA in R v Zaiter [2004] NSWCCA 35 at [8].
In the well-known passage in Shepherd v The Queen (1990) 170 CLR 573; [1990] HCA 56, Dawson J said at 579-580: … it may sometimes be necessary or desirable to identify those intermediate facts which constitute indispensable links in a chain of reasoning towards an inference of guilt. Not every possible intermediate conclusion of fact will be of that character. If it is appropriate to identify an intermediate fact as indispensable it may well be appropriate to tell the jury that that fact must be found beyond reasonable doubt before the ultimate inference can be drawn. But where - to use the metaphor referred to by Wigmore on Evidence … the evidence consists of strands in a cable rather than links in a chain, it will not be appropriate to give such a warning. It should not be given in any event where it would be unnecessary or confusing to do so. It will generally be sufficient to tell the jury that the guilt of the accused must be established beyond reasonable doubt and, where it is helpful to do so, to tell them that they must entertain such a doubt where any other inference consistent with innocence is reasonably open on the evidence. … But the jury may quite properly draw the necessary inference having regard to the whole of the evidence, whether or not each individual piece of evidence relied upon is proved beyond reasonable doubt, provided they reach their conclusion upon the criminal standard of proof. Indeed, the probative force of a mass of evidence may be cumulative, making it pointless to consider the degree of probability of each item of evidence separately. (Emphasis added.)

[45]

Whether the verdicts are unreasonable

A ground of appeal which asserts that the verdicts are unreasonable or cannot be supported having regard to the evidence requires that the Court address "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": M v The Queen (1994) 181 CLR 487 at 493; [1994] HCA 63; MFA v The Queen (2002) 213 CLR 606; [2002] HCA 53 at [25], [58]; SKA v The Queen (2011) 243 CLR 400; [2011] HCA 13 at [11]-[12]. In answering this question, an appeal Court must bear steadily in mind the jury's advantage in resolving conflicts in the evidence of various witnesses. The question is one of fact which requires this Court to make "an independent assessment of the evidence, both as to its sufficiency and its quality": SKA at [14]; and disclosing in its reasons its assessment of the capacity of the evidence to support the verdicts: BCM v The Queen [2013] HCA 48; (2013) 88 ALJR 101 at [31]. It is not simply a matter of deciding whether as a matter of law there was evidence to support the verdict. This Court must determine whether, in all the circumstances, it would be dangerous to permit the verdict to stand: SKA at [14], citing M v The Queen at 492-493. These principles were confirmed in Pell v The Queen (2020) 268 CLR 123; [2020] HCA 12 at [43]-[45].
In a circumstantial case such as the present, it is important to consider the totality of the evidence; the evidence is not to be looked at in a piecemeal fashion. As the joint judgment observed in The Queen v Baden-Clay at [47] "all of the circumstances established by the evidence are to be considered and weighed in deciding whether there is an inference consistent with innocence reasonably open on the evidence" (emphasis in original). A doubt that may be felt when considering one part of the evidence in isolation may be resolved when considering that evidence in the context of the evidence as a whole.

[46]

Sufficiency and quality of the evidence that the payments were income

In accordance with the principles referred to above, I have undertaken an independent assessment of the evidence, both as to its sufficiency and to its quality. In approaching this task I have had regard to the elements of the offence; the accused's defence; the issues in contest at the trial; the manner in which the trial was conducted; the way in which the case was ultimately left to the jury; and the particulars of this ground of appeal, relevantly, the asserted insufficiency of the evidence of Mr Pratten's control of CPI.
The jury had to determine whether the payments made from the VITCO and IFTCO accounts to Mr Pratten or to third parties at his direction were (1) by way of loan, (2) by way of reimbursement to Mr Pratten of expenses paid by him on another's behalf, or (3) by way of distribution of the profits of CPI or remuneration for his services.
There was no issue at trial as to the source of the payments to Mr Pratten or to third parties for his benefit. The evidence established that in each of the tax years in question monies were paid by RGIB to VITCO or IFTCO as premiums due to RGII/CPI and that subsequently lesser amounts were paid out of those accounts either to RGIB, to Mr Pratten, or to or for the benefit of third parties at his direction. The payments back to RGIB were principally for commissions due under the agency agreement. The evidence included the formal admissions made by Mr Pratten in Ex 2 and the forensic analysis by Ms Celona. The amounts of these various payments are set out in the table below: Tax Year ending 30 June RGIB to CPI (VITCO/IFTCO) VITCO/IFTCO to RGIB VITCO/IFTCO to Mr Pratten VITCO/IFTCO to third party 2003 1,463,592 820,558 389,898 678,808 (see [284] below) 2004 2,449,990 1,231,015 269,117 6,250 2005 2,190,000 738,307 89,859 242,633 2006 3,883,464 1,522,857 645,022 350,388 2007 4,673,000 2,053,284 1,000,427 380,780 2008 4,378,000 2,314,360 422,369 400,014 2009 11,000 38,410 96,314 37,854

[47]

As indicated, the Crown case was confined to payments sourced from CPI and did not include the first five payments from the VITCO account in the 2003 tax year (totalling $458,825) for the purchase of Skallet. Thus, of the payments to third parties from the VITCO account for the 2003 tax year, totalling $678,808, only part of this amount ($219,983) was sourced from CPI; these payments from CPI related to the purchase of the Stroud hardware store: see [42] above.
As to the character of the payments, there was evidence supporting Mr Pratten's contention that the payments were by way of loan. That evidence included the accounts of CPI which showed CPI having made loans for the years ending 31 December 2003 ($797,110), 31 December 2004 ($853,577), 31 December 2005 ($1,516,657), 31 December 2006 ($4,464,000), and for the further period of 1 January 2007 to 30 June 2009 ($6,361,126). All loans were recorded as unsecured, except for the year ended 31 December 2006 which recorded the loans as secured. The borrowers were only identified in the accounts for the period ending 30 June 2009, which included Mr Pratten ($2,559,427) and PPI ($826,760).
The accounts of CPI for the relevant years are all dated and signed as audited by Mr Kym Butler: the year ending 31 December 2003 are dated August 2004; the year ending 31 December 2004 are dated August 2005; the year ending 31 December 2005 are dated June 2008; the year ending 31 December 2006 are dated June 2008; and the accounts for the 30-month period ending 30 June 2009 are dated 21 May 2012. The audit opinions for the years ending 31 December 2005, 31 December 2006 and the period ending 30 June 2009 are qualified. The 2005 and 2006 accounts contain a note that CPI did not provide details in relation to debts due from RGIB and commissions payable to it. The accounts for the period ending 30 June 2009 noted a post-balance date event in January 2011 that Mr Pratten sold two ordinary shares in 71 Cowper Street to CPI for $876,456 "to reduce the existing Unsecured Loan" owing from Mr Pratten.
There was evidence that in the period BDO was "administering" the affairs of CPI and PPI, the sole director of RGII/CPI signed written resolutions to make a loan to Mr Pratten of $75,000 on 6 January 2003 and $126,750 on 9 December 2003, and that there was an unsigned loan agreement between RGII/CPI and Mr Pratten dated 9 December 2003 for $126,750.

[48]

The proviso

The Crown submitted that, notwithstanding the wrongful admission of evidence of Mr Barns, its case against Mr Pratten was very strong and that the proviso applies.
Section 6(1) of the Criminal Appeal Act provides, in effect, that this Court shall allow an appeal against conviction if: (1) the verdict of the jury is unreasonable or cannot be supported having regard to the evidence; (2) the judgment of the court of trial is wrong by reason of a wrong decision of a question of law; or (3) for any other ground where there has been a miscarriage of justice, provided that the Court may dismiss the appeal if it considers that no substantial miscarriage of justice has actually occurred.
The proviso directs attention to whether the error identified as having occurred at trial is not such as to have occasioned any substantial miscarriage of justice. The proviso is capable of applying to the wrongful admission of evidence: Wilde v R (1988) 164 CLR 365 at 373; [1988] HCA 6; Kalbasi v State of Western Australia (2018) 264 CLR 62; [2018] HCA 7 at [12] (Kiefel CJ, Bell, Keane and Gordon JJ). The onus of proof for dismissal of an appeal under the proviso lies on the prosecution: GBF v R [2020] HCA 40; (2020) 384 ALR 569 at [24], citing Weiss v The Queen (2005) 224 CLR 300; [2005] HCA 81 at [18] (Gleeson CJ, Gummow, Kirby, Hayne, Callinan and Heydon JJ).
Three propositions which are fundamental to the application of the proviso are stated in Weiss at [39]. First, the appellate court must itself decide whether a substantial miscarriage of justice has actually occurred. Second, the task is objective and is to be performed regardless of the advantages and disadvantages of an appellate court deciding an appeal on the record of the trial. Third, the standard of proof of criminal guilt is beyond reasonable doubt.
There is "[n]o single universally applicable description of what constitutes 'no substantial miscarriage of justice'" (emphasis in original): Weiss at [44]. However, as was pointed out in Weiss at [44]: It cannot be said that no substantial miscarriage of justice has actually occurred unless the appellate court is persuaded that the evidence properly admitted at trial proved, beyond reasonable doubt, the accused's guilt of the offence on which the jury returned its verdict of guilty. (Emphasis added.)
In Filippou v The Queen (2015) 256 CLR 47; [2015] HCA 29, French CJ, Bell, Keane and Nettle JJ said at [15] that what is meant by "substantial miscarriage of justice" is that the possibility cannot be excluded beyond reasonable doubt that the applicant has been denied a chance of acquittal which was fairly open to him or her or that there was some other departure from a trial according to law that warrants that description.

[49]

Application of principles

In this case, the question is whether there has been a substantial miscarriage of justice by reason of the wrongful admission of Mr Barns' evidence. An assessment of the nature and effect of that error directs attention to the significance of Mr Barns' evidence to the issues that the jury were required to determine and the directions given to the jury concerning that evidence.
As indicated, the issues the jury were required to determine included the proper characterisation of the payments from the VITCO and IFTCO accounts to Mr Pratten, or to third parties at his direction, specifically, whether or not the payments were loans (as Mr Pratten said in his evidence and some contemporaneous documents suggest), or the return of Mr Pratten's share of profits of CPI or remuneration for his services, being income that should have been declared in Mr Pratten's tax returns in the years in question (as the Crown alleged).
The evidence which was wrongfully admitted was opinion evidence; it was not relied upon by the Crown for proof of the charges. It was admitted on a very limited basis to show "formally" that the Commissioner of Taxation did not agree with Mr Pratten when he said that he did not owe any money and to show that the prosecution was not academic. In closing submissions, both the Crown and the defence treated Mr Barns' evidence accordingly; neither party referred to Mr Barns' evidence as irrelevant, which was wrongly admitted.
The jury was correctly directed that the opinions of the Commissioner of Taxation, the ATO and Mr Barns were not relevant to the elements of the offences, namely, "whether something is income, should have been declared, was known to have been declared, and was dishonestly done for the purpose of obtaining a financial advantage". The jury was also correctly directed that it was for them to determine whether the Crown had established beyond reasonable doubt whether an amount was income and had not been declared in Mr Pratten's tax returns.
In these circumstances, the jury's assessment of the evidence on the issues they were required to determine in order to arrive at verdicts of guilt would not have been affected by Mr Barns' evidence that the Commissioner of Taxation had issued amended notices of assessment for 2003 to 2009, which the jury had been told, correctly, did not affect their task.

[50]

Conclusion

I propose the following orders: 1. Extend the time for filing of the notice of application for leave to appeal to 12 June 2019. 2. Grant leave to appeal against conviction on grounds 1, 1A, 4 and 6. 3. Refuse leave to appeal under r 4.15 of the Supreme Court (Criminal Appeal) Rules 2021 (NSW) on grounds 2, 3, 5 and 6 (insofar as ground 6 challenges directions, or omission to direct the jury). 4. Appeal dismissed.
JOHNSON J: I have had the considerable advantage of reading the judgment of Gleeson JA concerning this appeal. I agree with his Honour's reasons and proposed orders.
With respect to the question whether the verdicts are unreasonable (at [278]-[306]), I have reviewed the evidence adduced at the trial (excluding the evidence of Mr Barns which was wrongfully admitted) and find that it was open to the jury to be satisfied beyond reasonable doubt of the guilt of Mr Pratten on each of the counts where a verdict of guilty was returned.
Concerning the application of the proviso (at [308]-[321]), I am well satisfied that this is a proper case for application of the proviso. As Gleeson JA has explained, this was a very powerful Crown case. After placing to one side the wrongly admitted evidence of Mr Barns, I am satisfied that the evidence proved beyond reasonable doubt the guilt of Mr Pratten of each of the offences upon which he was found guilty by the jury.
BEECH-JONES J: At the commencement of the hearing of this appeal, Mr Pratten applied for my disqualification on the basis of apprehended bias. When it is said that one member of an appellant court should be disqualified on the grounds of actual or apprehended bias, then the application is determined by the individual judge and not the Court as a whole (see Barton v Walker (1979) 2 NSWLR 740 at 756; Bainton v Rajski (1992) 29 NSWLR 539; see for example DJ Singh v DH Singh and Others (No 2) [2018] NSWCA 31 and Waterhouse v Independent Commission Against Corruption (No 3) [2016] NSWCA 134). After hearing Mr Pratten, I declined to disqualify myself. I stated that I would provide reasons at the time the Court published its substantive judgment. I now do so.
The basis for the application that I disqualify myself is my appearance as Counsel for the defendant in proceedings in August 2011 which were resolved by a judgment of Hall J delivered in April 2012 some six weeks after my appointment to this Court: Rural and General Insurance v Goldsmiths Lawyers [2012] NSWSC 358. In those proceedings, I acted for the former solicitor to Rural and General Insurance Broking Pty Ltd ("RGIB"). The solicitor had acted for RGIB in defamation proceedings against the Australian Prudential Regulatory Authority ("APRA") in the Supreme Court of the Australian Capital Territory (at [4]). In the proceedings before Hall J, RGIB was successful in reviewing the decision of a costs assessor who had declined to review the costs charged by the solicitor defendant to RGIB (at [75]). RGIB was also successful in obtaining an order under s 728 of the former Legal Profession Act 2004 (NSW) for the provision of an itemised bill costs ([81]). Thus, the subject matter of the proceedings was the decision of a costs assessor and the exercise of the discretion conferred by s 728 of the LPA 2004. I did not appear in the defamation proceedings and have no recollection of what they related to.

[51]

Amendments 25 October 2021 - See [332]; Charisteas v Charisteas [2021] HCA 29 added to Coversheet. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 October 2021

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (51 paragraphs)

Parties

Legislation Cited (10)

Cases Cited (99)

Cited By (6)