R v Agius; R v Abibadra; R v Jandagi; R v Zerafa

Background 7At relevant times three of the accused, Ms Carol Abibadra, Ms Deborah Jandagi, and Mr Kevin Zerafa, were accountants who worked, either as employees or partners, in a firm of accountants (Owen T Daniel & Co - hereafter "OTD"), the principal of which was Mr Owen Trevor Daniel. Mr Daniel, who is named in the indictment as an alleged co-conspirator, is dead. It will be convenient to refer to Ms Abibadra, Ms Jandagi and Mr Zerafa collectively as "the OTD accused". 8Mr Agius is resident in Vanuatu, and is involved in a number of companies registered in that country. He was an acquaintance, or associate, of Mr Daniel. 9An arrangement ("the Scheme") was devised by Mr Agius, or at least promoted by him, pursuant to which client companies of OTD were invited to "minimise" ("evade") tax. The arrangement involved companies controlled by Mr Agius invoicing the OTD client companies for "consultancy services", the invoices being paid by the OTD client companies, and recorded and claimed for taxation purposes, as deductible expenses. No consultancy services were, or were intended to be, provided. The invoices were false. The claims for deduction were fraudulent. The Scheme involved money paid by the OTD client companies being returned to them (subject to a deduction for "management"), but entered in their records as loans. Again, this was false. The "loans" were never intended to be repaid, and represented a return of the funds provided in so-called payment of the false invoices. (There were many more steps involved in the Scheme than is contained in the above sketch, which merely purports to establish an outline of the Scheme. Nor was it always the case that the false deductible expenses were attributed to consultancy services; on at least one occasion, a fabricated insurance policy was created.) 10As I presently understand the Crown case, it is that Mr Agius maintained overall supervision and management of the scheme - and his companies collected the "management fees". 11The evidence to be adduced by the Crown falls into a number of categories. It includes a large amount of documentary material, being financial and banking records identifying the chains of payments, and email and other communications. It will also include oral evidence from various directors or executives of the OTD client companies (many, if not all or most, of whom have been charged, pleaded guilty, and sentenced). 12Against that background I deal now with those documents to which specific objection has been taken. Many more objections were notified than those which follow. The parties have sensibly resolved many issues among themselves; others were resolved in the course of argument; in some cases, I delivered ex tempore rulings. The following items are those that remained, after argument, for determination. The company name which heads each of the following items is the name of the OTD client company to which the evidence relates.

1. Australian Safety Specialists Pty Limited ("ASS"). 13The principals of ASS were David Waller and Philip Waller. They began participating in the Scheme in about April 1998. 14The single document in relation to ASS to which objection is now taken on behalf of Mr Agius (but not on behalf of the OTD accused) is the print of a chain of four emails of 6 and 7 October 2004, between an employee of OTD (Ms Georgina Kalache, who has not provided a statement, but who the Crown anticipates calling as a witness), Ms Jandagi and Mr Zerafa. Each email bears the subject line: "Returned your call Debbie: Ken Matwejev on [mobile phone number] ... he would like to talk to you". In the second email of this chain, sent by Ms Jandagi to Mr Zerafa and Ms Kalache, Ms Jandagi refers to a client (unnamed, but it may be assumed to have been Mr Matwejev) asking about setting up an offshore company, and proposes a meeting with "Robert". (There is no dispute that "Robert" is Mr Agius.) In the next email, Mr Zerafa asks Ms Kalache to "keep a list of clients which want to see Robert next time he is here." He provided three names of individuals and one of a company to be included on the list. Against that are handwritten eight or nine names, one of which is crossed out. It is not known who handwrote the names, or when. One of the names is "Phil Waller", another is "Toni Hili". Mr Hili was also, on the Crown case, involved in companies that participated in the scheme, and was prosecuted. Other names are of individuals who do not feature in the Crown case. That, as I understand it, was the basis of the objection taken on behalf of Mr Agius. The objection was expressed in the following way, as recorded in the transcript of argument: "We don't know whose writing it is? More importantly, there are an assembly of names about which we know very little. There is a reference to an appointment. Unless one assumes that everything Mr Agius said and did was criminally inclined or pursuant to a conspiracy, one has to look at the documents assuming, with respect, his innocence. The Crown seems to be turning this on its head. For all we know, there is no evidence to the contrary, these visits were or the visits contemplated here were for entirely innocent purposes." The objection was characterised as one of relevance. 15I am satisfied that the document is relevant and has probative value, and that the inclusion of the names of individuals that are not expected to feature in the evidence is unlikely to cause any prejudice. Certainly the reference to Mr Waller and Mr Hili is of significance. If it were to appear that the inclusion of other names was the occasion of prejudice, consideration could be given to excising those names, although that suggestion was not embraced by senior counsel. 16I will admit this document.
2. Gladesville Bridge Marina Pty Limited 17The directors of Gladesville Bridge Marina were Mr Philip and Ms Eva Southcombe. Mr and Ms Southcombe became involved in the Scheme in about March 1998. The documents to which objection is taken on behalf of all accused are copies of two newspaper articles, published on, respectively, 15 February 2003, under the heading "Tax Office Eyes Dodgy Vanuatu Tax Schemes", and 13 June 2005, under the heading "Big End of Town Caught in Tax Raids". 18The first article commences: "Australian authorities are targeting a swag of tax avoidance schemes operating in Vanuatu, the Tax Commissioner, Michael Carmody, revealed yesterday, as Labor accused the Federal Government of inaction in the face of a proliferation of offshore tax havens". It went on to say: "In Vanuatu's case, about half of the $295 million that left Australia last financial year for the South Pacific island state came from small business taxpayers. About 2,000 Australian residents were involved in the schemes, Mr Carmody said. This is an area where we have some concerns with promoters of schemes,' he said. One of the Vanuatu scams was a so-called debit-credit card scheme." 19The second article had a subheading: "$300 m offshore schemes exposed" This article referred to "raids" on multiple homes and offices in four states of Australia, some in Sydney. It then quoted the then Minister for Justice describing the offshore operations the subject of the "raids" as "a massive attempt to evade tax". The Minister was then quoted as saying: "The Crime Commission said in some cases deductions were claimed for payment for fictitious expenses and services, while in others, income derived overseas was not accounted for in Australia. The Tax Office said the income was secretly returned to Australia disguised as a loan, an inheritance, a gift, or through credit and debit cards." Later in the article, it was claimed that two of the "Sydneysiders" involved in the investigation were: " ... a prominent lawyer and an accountant. The lawyer works at a large law firm and the accountant has his own practice." 20The objections to these articles are said to be based on "relevance, hearsay and unfair prejudice". The last is a reference to s 137 of the Evidence Act . 21It is clear that each article contains some material that is significantly prejudicial to the accused. It is equally clear that, on their own, they could not remotely be considered to be admissible. 22However, the Crown contends that they become admissible when regard is had to other evidence. It does not suggest that they ought to be accepted as evidence of the truth of what is asserted therein. The other evidence that, on the Crown case, makes them admissible is the evidence of Ms Eva Southcombe. In her statement Ms Southcombe states that she saw the first article and was concerned that it might be a reference to the Scheme in which she was involved. She telephoned Ms Jandagi, who assured her that the article had nothing to do with Mr Agius or his company. 23When Ms Southcombe saw the second article, she was again concerned that it referred to the Scheme in which she and her husband were involved. She emailed the article to Mr Agius (apparently without comment). He replied on the same day in the following terms: "Thanks Eva I believe you are doing the right thing paying back the loan. Kind regards Rob" Ms Southcombe also says that she subsequently had a conversation with Mr Agius in which he said: " ... this has got nothing to do with us. What we are doing is not related to this at all. You certainly don't need to worry about it." 24The Crown submits that the articles are made admissible by the responses of Ms Jandagi and Mr Agius, when the articles were brought to their attention. 25I accept that, in that context, they have some probative value, although the weight they can or will carry I am not in a position at this stage to ascertain. I also accept, as I pointed out in argument, that the articles are capable of conveying significant prejudice. It would be possible to ameliorate that prejudice by agreement between the parties to a form of words that would explain to the jury that Ms Southcombe raised with Ms Jandagi and with Mr Agius the existence of newspaper articles concerning tax avoidance or evasion schemes in Vanuatu (and elsewhere), in such a form as to enable the jury to understand the responses made in each case. While senior counsel for the OTD accused was willing to entertain that suggestion, senior counsel for Mr Agius was not. It is not a compromise that I can impose upon an unwilling party, and it is, therefore, necessary to rule on the objection. 26I am satisfied that in the overall context of the Crown case, the responses are of sufficient importance to warrant their admission, and that they can only be explained by the jury being made aware of what was the subject of the communication in each case by Ms Southcombe. I am also satisfied that the jury will be able to be directed and to understand that the articles are not evidence of the truth of what is contained in them, but that they are merely admitted to enable them to consider the responses made. In the circumstances I will admit those articles. It remains open to the parties to agree on a means of explaining the responses that does not involve the tender of the articles themselves. 27I add, for completeness, that the Crown tendered a further article, dated 18 June 2005, under the headline "Top Names in Tax Haven Client Lists". While that article also is apparently about tax avoidance (or evasion) and an investigation of the kind that led to the present proceedings, it appears to be remote from the issues now under consideration. Further, although Ms Southcombe said that she emailed that article, too, to Mr Agius, there is no evidence of any response by him. I accordingly rejected the third article.

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