R v Campbell; R v Waters

District Court of NSW|2023-06-21|Before: Mr P

JUDGMENT on the crown application to rely on tendency evidence in the prosecution of tristan waters

On 15 May 2023 the co-accused were arraigned on the following counts on the Indictment:- 1. Count 1 that between about 18 January 2017 and about 24 October 2017, at Sydney in the State of New South Wales and elsewhere, they did conspire with each other, Rohan Peter Arnold and divers others to import a substance, the substance being a border controlled drug, namely cocaine, and the quantity being a commercial quantity. 2. Count 2 that between about 24 October 2017 and 16 January 2018, at Sydney in the State of New South Wales and elsewhere, did conspire with each other, Rohan Peter Arnold and divers others to possess a substance, the substance being a border controlled drug, namely cocaine, and the quantity being a commercial quantity and the substance having been unlawfully imported.

Evidence on the application

Exhibit A on the voir-dire comprised the amended tendency evidence notice together with the evidence identified in that notice as the substance of the tendency evidence which the prosecution intended to adduce. That evidence fell into different categories and was identified behind 18 separate tabs, numbered 1 to 18.
Exhibit B on the voir-dire comprised the revised documentary evidence which the Crown seeks to adduce as tendency evidence. Included in that Exhibit were documents already adduced into evidence in the Crown case. They were identified as comprising items B, C, H-K and L in the index to Exhibit B which were relied on by the Crown as relevant matters for consideration as to whether the balance of the evidence was admissible as tendency evidence.
Exhibit C on the voir-dire comprised a bundle of seven documents which the Crown wished to adduce into evidence for a non-tendency purpose, namely as relationship evidence as between the accused Waters and Rohan Arnold.
Exhibit D on the voir-dire were agreed facts pursuant to s191 of the Act. The relevant facts are as follows:- "On 14 September 2017 Tristian Waters checked into the Grandior Hotel Prague. He used his Australian Passport to check-in. On 15 September 2017, Tristan Waters checked out of the Grandior Hotel Prague. Later on 15 September 2017 Tristan Waters and Rohan Arnold were at a coffee shop together for approximately 25 minutes. While there they discussed future and past business matters. Sian Waters owned 15 Mulga Street, O'Connor from 25 July 2015 to 26 June 2017."
Exhibit E on the voir-dire was a USB device from which a number of Ciphr voice messages identified in Exhibit B were contained. Those messages being items Fb, La, Lb and Ld were played to the court.

The Crown submissions

The Crown relied on a written outline of submissions in which it relevantly set out the elements of the offence in Count 1 as follows:- 1. "Section 11.5(1) of the Code: Conspiracy 1. An agreement between 2 or more persons to commit an unlawful act or "non-trivial offence" (physical conduct element); 2. With the intention of carrying out the agreement (fault element); and 3. An overt act must have been committed pursuant to the agreement by at least one party to it. 1. Section 307.1(1) of the Code: Importing commercial quantity of unlawfully imported border controlled drugs 1. A person imports a substance (conduct element); and 2. The substance is a border controlled drug (fault element is recklessness); and 3. The quantity imported is a commercial quantity (absolute liability)."
The Crown noted that once the evidence has passed the relevance threshold set by s 55 of the Act, ss 97 and 101 of the Act govern the admissibility of evidence as tendency evidence. The Crown correctly set out that there are three questions to be answered:- 1. Has reasonable notice been given? (s 97(1)(a)) 2. Does the evidence have significant probative value? (s 97(1)(b)) 3. Does the probative value of the evidence outweigh the danger of unfair prejudice to the defendant? (s 101(2))
The Crown submitted that tendency evidence has significant probative value if it could rationally effect the assessment of the probability of the existence of a fact in issue to a significant extent, relying on IMM v The Queen (2016) 257 CLR 300; [2016] HCA 14. The assessment of probative value is undertaken without consideration as to whether the evidence is credible or reliable, but rather by taking the possible use to which the evidence might be put at it highest. The Crown referred to Hughes v The Queen (2017) 263 CLR 338; [2017] HCA 20 where at [40] the High Court held that the test posed by s 97(1)(b) was as stated by the NSWCCA in R v Ford (2009) 201 A Crim R 451; [2009] NSWCCA 306:- "The disputed evidence should make more likely, to a significant extent, the facts that make up the elements of the offence charged".
The Crown submitted that the existence of "similarities" is not essential to tendency reasoning and that tendency evidence is to be assessed together with all of the other evidence adduced, relying on Hughes at [56] and [90] and R v Bauer (a pseudonym) (2018) 266 CLR 56; [2018] HCA 40 at [49] and [59]. In Hughes, the High Court held that there are two matters that must be considered in determining whether tendency evidence has significant probative value:- 1. "What is the extent to which the evidence supports the tendency (at [61])?, and 2. What is the extent to which the tendency makes more likely the elements of the offence charged (at [64])?"
In support of the first tendency outlined above, the Crown relied on Ciphr messages between Waters and "Big Boy" on 14 January 2018 (Item A in Exhibit B) where on 14 January 2018 the accused responded "Bro can get China white on tick for 15k each delivered to me in Europe. They will give me 500kgs to start".
The Crown also relied on Ciphr messages between Waters and "Sunseeker" between 14 and 16 January 2018 (Item Ba in Exhibit B) in which the person identified as "Sunseeker" referred to matters including "work", "minimum 800 and they put 50% of the work" and "another 300kegs for another job".
The Crown submitted that taken at its highest the evidence proves involvement in a number of large-scale drug transactions over a short period of time. This body of evidence clearly established the asserted tendency and assists in establishing the accused's participation in "each conspiracy". The Crown submitted that the accused's involvement in large-scale drug transactions makes it more likely that he was an active participant in the charged conspiracy and increases the likelihood of a conclusion that he was aware that the transaction concerned a border controlled drug. It therefore increased the likelihood of a conclusion that he was involved in a conspiracy to import a border controlled drug as alleged in Count 1.
In relation to the second tendency outlined above, namely a tendency to be involved in large cash transactions, the Crown submitted that could be conveniently analysed in categories. The first category were the cash deposit receipts and exchange tax invoice referred to in Items D and E in Exhibit B. The cash deposit receipts recorded a total of deposits of $746,500 United Arab Emirates dirham (equivalent to approximately $250,000 AUD). There were 22 transactions over a period of some 3 weeks and that period ended approximately a month before the accused met with the UCOs in Belgrade. The exchange receipt recorded the exchange of $35,000 dirham (equivalent to $7,760 euros) on 12 January 2018, a few days prior to the meeting in Belgrade on 16 January 2018.
The Crown submitted that the accused's possession of these documents established he was involved in large cash transactions, despite the absence of any material suggesting that he personally made the deposits or the exchange.
The next category of documents were Ciphr messages in items F, Fa and G, and La-Le in Exhibit B. Those messages between the accused and "Selfish@" included the other person referring to "Need 137500 paid in hamburg please" and "Token" and the accused responding, "The other 500k Holland what's happening bro?"
In the Ciphr messages at Fa the accused Waters referred to "Work cost 960k", "Total 4,460m", "Paid 3m aed 3rd jan", then "Paid 1m euro 12th Jan" and "Work cost 30k euro each = 1,154m aus" and "Total 4,934m", "Paid 500k" and "Paid 1m".
The Crown relied on the Ciphr voice messages in Exhibit E. In Fb in Exhibit B the accused said "that's everything we have paid so far mate. We also - so we also need to finish them off, obviously. Um, I gotta pay my German kid ah 150 euro and I gotta pay my uncle obviously".
In item G in Ciphr messages between the accused and "Procyon" the other person stated, "Did you confirm the 750k i handed over in lots of 250k all good?" and the accused responded:- "Yes bro all good thank you. U got another 1m ready for tomorrow for the mezzi guys".
In the Ciphr voice message La in Exhibit B the Crown relied on the accused Waters stating "I think I'm short about 900k Aussie. But you will have it back pretty quick, obviously".
In the Ciphr voice message Lb the Crown relied on the accused Waters stating "if everything goes well here I won't be short at all. Its just im - I just need your backup just in case I need it for a few weeks or a month or so".
In item Lc in Ciphr voice messages between the accused and "Betelguese New" that person stated:- "yes Haji. 1.7mill 500k + 500k + 650k = 1.7mill."
In item Ld the Ciphr voice message relied on by the Crown was the accused stating "1.7's for menzi ones".
In item Le, Ciphr messages between the accused and "Sunseeker", "Sunseeker" stated "hey bro i done group to organize token and drop of wen u can please" and the Crown relied on the accused's response, "Ok bro".
The Crown submitted that these references demonstrated the accused's involvement in large cash transactions in the period immediately before the meeting in Belgrade on 16 January 2018. They therefore increased the probability of a finding that the accused was a willing participant in that meeting. The evidence supported a conclusion that he was versed in methods of exchanging large quantities of cash in European and Australian cities and also that he had connections with people who could achieve those exchanges.
Item Lf in Exhibit B was a short video of a man using a cash counting machine that was downloaded from the accused's iPhone. The Crown submitted his possession of such a video increased the probability of a finding that he has been involved in large cash transactions despite there being no evidence of the identity of the man in the video or of the person who recorded the video. The Crown submitted that taken at its highest the evidence proves involvement in a number of large cash transactions over a short period of time.
The Crown submissions were prepared prior to the accused Waters pleading guilty to Count 2 on arraignment. The Crown submitted that the accused's tendency to be involved in large cash transactions increased the probability of the jury being satisfied of the accused's participation in both conspiracies. It was submitted that the accused was involved in obtaining and depositing cash in the period leading up to 16 January 2018. It was further submitted, "that conduct shows that he had a direct interest in the cocaine that was the subject of that exchange, and therefore that he was also involved in the conspiracy to import that cocaine".
In relation to the third tendency to be involved in illicit shipments, including in items concealed in metal, the Crown submitted that the relevant items being items M-V in Exhibit B were admissible for the non-tendency purpose of relationship evidence. The evidence informed both the interaction of Waters and Arnold relevant to the current charges and the material relied upon solely for a tendency purpose. Evidence referred to as the "Campbell/Arnold Czech evidence" was not relied upon by the Crown for a tendency purpose but rather as relationship evidence.
The Crown referred to the Ciphr messages contained in items Pa, Q and R in Exhibit B which concerned messages with "Sunseeker" referring to a subsystem capable of delivering, inferentially, drugs to international destinations, messages with "C" concerning metal sleeves that were done "in Bruno" and messages with "Procyon" concerning "guys in Germany" and a shipment from Holland to Australia including a statement by "Procyon", "This guys in Germany have put at least 6 people in jail".
The Crown submitted that the evidence of the accused's involvement in illicit shipments including in metal increase the probability of the jury concluding that he was involved in the conspiracy to import the border controlled drugs. There was a similarity between the shipments described in the tendency evidence and the conspiracy to import which increased the probability that the accused was involved.
In relation to the test in s 101(2) the Crown submitted that in the absence of any prejudicial effect being identified by the accused, beyond a generic prejudice inherent in tendency evidence, the accused has not demonstrated that the test under s 101 is satisfied. If the only risk was that of the jury reasoning in an impermissible manner then the Crown submitted that the usual direction on tendency evidence, tailored to the tendencies demonstrated in this case would sufficiently safeguard against any improper use of the evidence by the jury.
It was further submitted that the tendency evidence was not misleading, confusing, nor was there a danger of undue waste of time (ss 135 and 136 of the Act).
In his oral submissions the Crown submitted that it was not relying on each individual piece of evidence to determine any tendency but rather it was bringing a circumstantial case to prove the tendency. The Crown conceded that each of the pieces of evidence in and of themselves would not establish the tendency alleged but when put together with the other pieces of evidence the Crown says that that is achieved.
The Crown referred to the fundamental dispute between the parties being whether or not, during the conversation recorded at the Metropol Hotel on 16 January 2018, Waters was lying when he said words that the Crown relies upon as being admissions to his involvement in the importation. The Crown identified the admissions it relies on contained in the transcript which is already in evidence.
The Crown referred to the Ciphr messages between Waters and "Sunseeker" concerning a submarine system, submitting that it was clear that the discussion concerned the use of a submarine for a drug transaction and in particular a large-scale drug transaction given the reference by "Sunseeker" to "work" and the minimum being "800". The Crown submitted a clear available inference was that the discussion was about drugs and a quantity of 800kgs.
In a further message "Sunseeker" referred to a kitchen man organising "another 300kegs". Further references in the communications referred to "tokens" which in a further statement Federal Agent Murphy explained were used as a way for criminal entities to prove that they are the person who has been dealing with another criminal entity. They were therefore a form of identification.
The Crown drew a distinction between the High Court decision in McPhillamy v The Queen (2018) 92 ALJR 1045; [2018] HCA 52 where the gap in relation to the tendency evidence was a period of 10 years, and the present case where there was a 10 month delay between the importation and the meeting in Belgrade in January 2018. The Crown submitted that the material relied on by the Crown as tendency evidence showed intense activity over a short duration which highlighted "the fact of the existence of the tendency because it is so intense in its nature".
The Crown submitted that all of the material can be used to determine each of the individual tendencies that have been identified because it is a necessary part of being involved in large-scale drug transactions that there are large movements of cash, that they involve importation, that there will attempts to conceal the importation in some manner and in this particular case the evidence the Crown relies on suggests the illicit shipment of some other item.
The Crown referred to the cash deposit receipts which took place between 19 November 2017 and 10 December 2017 which totalled approximately $250,000 AUD. It was not the Crown case that the Crown could say that Waters undertook these deposits but even being in possession of these receipts is evidence that shows that he had an interest in the deposits. Similarly the exchange transaction document dated 12 January 2018 concerned an amount approximating 7,500 euros.
The Crown referred to Exhibit B item F, which were Ciphr messages between Waters and "Selfish@" in which sums of 137,500 and 500k were referred to. This led to a clearly available inference that there was a large-scale cash transaction occurring and the use of a token was indicative of criminal activity.
Similarly the Ciphr messages in items Fa between the accused and "Big Boy" referred to large amounts of money, i.e. $4.93 million.
In the Ciphr voice message item Fb the Crown submitted that the reference by Waters to 150 euros being paid could not be a reference to that sum but "it must be something more than that, being 150,000 Euros".
The Crown submitted that the Ciphr messages in item G between the accused and "Procyon" was not material otherwise admissible in the trial however in that material "Procyon" referred to "750k i handed over in lots of 250k all good?" to which Waters replied "Yes bro all good thank you". In a further reference "Procyon" stated "are we doing this 1mil tomorrow??", to which Waters responded "Yes pgp guy. I'll have token today". The Crown submitted this was a clear inference that there was to be a large cash transaction occurring and that tokens are going to be used in relation to it. The balance of the messages between Waters and "Procyon" provided context to the entirety of their communications, referring to items H, I, J and K in Exhibit B.
The Crown relied on several audio files being items La, Lb and Ld which were played to the court. In the Ciphr voice message item La Waters stated "I think I'm short about 900k aussie. But you'll have it back pretty quickly, obviously."
In the Ciphr voice message item Lb Waters stated "if everything goes well here I won't be short at all. Its just um - I just need your back up in case I need it for a few weeks or a month or so".
In the Ciphr voice message item Ld Waters stated "1.7's for the menzi ones". The voice messages occurred on 16 January 2018. The Crown rehearsed its submissions that these demonstrated the accused's involvement in large cash transactions in the period immediately before the meeting in Belgrade on 16 January 2018 and increased the probability of a finding that the accused was a willing participant in that meeting.
The Crown rehearsed its submission that each of the pieces of evidence individually would not establish the tendency the Crown is alleging but when looked at in combination the necessary tests in s 97(1)(b) and s 101 of the Act were satisfied.
The Crown submitted that the transcript of conversation of the meeting that took place between Arnold and Waters in Prague on 15 September 2017 concerned steel products. It was not the Crown case that this was steel products to be used for any illegal importation. It was to establish that they both had a mutual interest in steel products. The Crown submitted in those circumstances it made it more likely that steel products would be used in the importation notwithstanding that the conversation took place well after the importation in this case. The material included an image of steel products, the image having been taken on 19 June 2017.
In relation to the evidence the Crown sought to adduce for a non-tendency purpose being the documents contained in Exhibit C the Crown submission is that the entirety of that material showed a relationship between, or an interest in steel manufacture being shown by Waters in conjunction with Arnold. The documents establish that Arnold was a member of the company "Omilex sro" that he held a post of corporate agent since 11 August 2016 and that another corporation Bruno sro was the owner of Omilex. Further evidence demonstrated that the two corporations shared premises in the Czech Republic. The Crown submission was that the evidence supports a conclusion that Waters was interested in steel fabrication and that he was interested in that as an aspect of his relationship with Arnold. The evidence established that an image on Waters' phone was taken at the premises of the business in the Czech Republic showed that he had an interest in purchasing the company and that Waters wanted to purchase Bruno Holdings.
A further document relied on by the Crown for a non-tendency purpose was an invoice between a company "Optimal Facility sro" and "Omilex sro".
The Crown accepted that the Ciphr messages in items Q and R in Exhibit B, namely messages between the accused Waters and "C" and "Procyon", were not otherwise admissible, rather they demonstrated illegal activity being illicit shipments and large-scale drug transactions. The statement from "Procyon" that "This guys in Germany have put at least 6 people in jail" confirmed they were talking about some sort of illicit shipment.
In response to the written submissions of the accused Waters, the Crown conceded that in the non-tendency evidence concerning manufacture of steel products in the Czech Republic, there was no identifiable reference to any drugs being imported nor secreted in steel products.
The Crown submitted that the characterisation by the accused of evidence as "uncharged matters", involved an assessment of the credibility or reliability of the evidence, whereas when assessing the evidence as tendency evidence the authorities were clear that the court was to look at the evidence at its highest rather than assessing its reliability.

The accused's submissions

Learned Senior Counsel for Waters relied on two sets of written submissions, the first dated 12 April 2023 and the second 19 June 2023. The first set of submissions were prepared prior to the accused Waters pleading guilty to Count 2 on the Indictment. In those submissions counsel noted that the evidence relied on by the Crown included evidence already admitted in the trial, namely, items B, H-K and L in Exhibit B on the voir-dire. Otherwise it was submitted that other categories sought to be adduced by the Crown were speculative as to having any relevance to any importation of prohibited drugs, were of such low probative value so as to not pass the test is s 97 of the Act or would otherwise not be admissible pursuant to s 101 of the Act. Further, the purported inferences that the Crown sought to draw from material such as the cash deposits and exchange receipts, Ciphr messages and video files were speculative "to the effect that it relates to illegal activities let alone drug importations to Australia".
Counsel further submitted that it was anticipated that evidence would be adduced in the Crown case that the accused had legitimate building development interests in Australia and also where he then lived in Dubai which highlighted the interpretation sought by the Crown as these items of evidence being speculative. Ultimately it was submitted that the items would not have significant probative value so as to pass the test pursuant to s 97 of the Act.
It was submitted that the video in item Lf in Exhibit B of the man operating a cash counting machine was of tenuous relevance, of low probative value and is unfairly prejudicial.
To the extent that the Crown sought to use material as tendency regarding access to the drugs overseas (items A-Ba, Fa and Le being the Ciphr messages between the accused and "Big Boy", and "Sunseeker") it was submitted that they should be characterised as "potential uncharged acts involving drug trafficking in other countries". This was not like cases such as Geraghty v R [2023] NSWCCA 47 and El-Haddad v R (2015) 248 A Crim R 537; [2015] NSWCCA 10 at [60] - [83] where previous convictions were held to have significant similarities. Further these items of evidence do not involve importations of drugs to Australia. It was submitted "the reasoning in the High Court of Australia in McPhillamy v The Queen [2018] HCA 52 at [26] - [32] regarding the admissibility of uncharged acts that do not demonstrate the specific conduct the subject of the relevant charges applies accordingly".
In the second set of written submissions counsel submitted that, having pleaded guilty to Count 2 on the Indictment, to pass the s 97 test regarding significant probative value the evidence would have to be found to be significantly probative that the accused was involved in a conspiracy to import the prohibited drugs the subject of Count 1.
It was submitted that this was not a case like Geraghty v R where the significant probative value of a previous importation conviction was quite clear. Here the material sought to be adduced all relates to alleged conduct after the dates of Count 1 (18 January 2017 - 24 October 2017) and was consistent within the date range for Count 2 and/or was speculative with respect to prospective conduct after 16 January 2018. It was submitted that the operation of s 97 of the Act relates to a "tendency that a person has or had" at the time of the subject offence or offences. Here the tendency could have developed after the event. Nor are the allegations of criminal conduct sought to be relied upon by the Crown charged acts on an Indictment that are claimed to be cross-admissible with each other such as in El-Haddad v R.
Ultimately it was submitted that the evidence sought to be adduced had little or no significant probative value being retrospective to the alleged offence, particularly as the accused had admitted becoming involved in subsequent prohibited drug activity and the asserted items of tendency are related in time to that conduct which is the subject of Count 2. There was otherwise no evidence of prior conduct relevant to such offences other than the evidence regarding Count 1.
Senior Counsel relied on McPhillamy v The Queen [2018] HCA 52 to submit that evidence must be clear and specific in order to make the assessment that it has significant probative value. He further relied on Marsh v The Queen [2018] ACTCA 55 where the majority upheld a conviction appeal in part on the ground that tendency evidence had been wrongly admitted.
Counsel submitted that the evidence sought to be adduced by the Crown that predated the end of the date range for Count 1, being 24 October 2017, was intrinsically of little weight. It was noted there was an agreed fact concerning the accused meeting Arnold in Prague in September 2017 and that they discussed past and future legitimate business interests. The transcript of their conversation was of low probative value and not capable of satisfying the threshold requirement pursuant to s 97 of the Act, let alone any considerations pursuant to s 101 of the Act. The same applied to what were characterised as the "Omilex" and "Bosmet One" documents.
Similarly the evidence regarding money transactions post dated the date range for Count 1 and therefore was of little relevance to a tendency that the accused had during that period. The interpretations that the Crown sought to draw from this material are speculative to the effect that they relate to a willingness on the part of the accused to be involved in illegal activities, let alone to importations of border controlled drugs into Australia.
Counsel further referred to the judgment of N Adams J in R v Sheard [2022] NSWSC 735 at [82]-[93] regarding the admissibility of uncharged acts that do not demonstrate the specific conduct the subject of the relevant charges. As to the application of s101 of the Act, and the types of prejudice that can be created by the use of tendency evidence, Senior Counsel referred to [95]-[98] where her Honour referred to the High Court decision in Hughes at [17] as to the types of prejudice that may occur which included:- "The jury may fail to allow that a person who has a tendency to have a particular state of mind, or to act in a particular way, may not have had that state of mind, or may not have acted in that way, on the occasion in issue. Or the jury may underestimate the number of persons who share the tendency to have that state of mind or to act in that way. In either case the tendency evidence may be given disproportionate weight. In addition to the risk arising from tendency reasoning, there is the risk that the assessment of whether the prosecution has discharged its onus may be clouded by the jury's emotional response to the tendency evidence. And prejudice may be occasioned by requiring an accused to answer a raft of uncharged conduct stretching back, perhaps over, over many years".
In his oral submissions learned Senior Counsel for Waters referred to the Crown concession that none of the individual items of evidence of their own would be sufficient to pass the test required for tendency evidence to be adduced, but what the Crown submitted was a circumstantial case with regards to tendency. Counsel submitted that this circumstantial case goes no higher than that the accused was involved in an international drug transaction in December 2017 and or January 2018 and he had pleaded guilty to the events in Count 2 in relation to that very circumstantial case.
Senior Counsel submitted that this was an attempt at retrospective tendency and the Crown was relying on evidence that at its highest demonstrated that he was involved in a drug transaction in December 2017 to January 2018 which gave rise to a possibility that he might have been involved in the actual importation predating that period from January 2017 to October 2017. No authority had been produced by the Crown to support a tendency of that nature passing the significant probative test.
Counsel referred to the Crown's reliance on McPhillamy and submitted that was not a situation where the alleged tendency evidence post-dated the offence.
It was submitted that the Crown had not sought to identify a clear link between the various items of evidence and the offending in Count 1 on the Indictment. The first tendency alleged was that he was involved in large-scale drug transactions and he had pleaded guilty to being involved in a large-scale drug transaction in Count 2. None of the evidence had significant probative value that he was otherwise involved in Count 1. In relation to the third tendency asserted, namely the tendency to be involved in illicit shipments including items concealed in metal, the Crown had disavowed the tendency in relation to the association evidence involving the accused and Mr Arnold in a corporation in the Czech Republic. It was submitted that what the Crown was attempting to do was to use the association evidence as tendency evidence so that the jury could surmise that there were illegal importations of drugs in metal products out of the Czech Republic.
Senior Counsel referred to Marsh v The Queen per Wigney J at [145]-[163] and Mossop J at [64] concerning the need for caution regarding generality of an asserted tendency. Counsel conceded there was no implausibility argument available to Waters on the basis that he had pleaded guilty to Count 2 on the Indictment. Similarly, he relied on the decision of R v Sheard regarding the need to be cautious of generality in the alleged tendency. Learned Senior Counsel rehearsed his submissions regarding the individual documents in Exhibit B. It was submitted that the references to drug transactions in the Ciphr messages did not provide evidence of significant probative value to whether he was involved in the importation in January to October 2017, those conversations having come much later.
In respect of the submarine communications with "Sunseeker", Counsel conceded the evidence was a very damaging conversation but that it was capable of being interpreted in a facetious manner and of being quite unbelievable, but it any event, the conversation took place at a time during the period specified for Count 2 to which he had pleaded guilty. It was submitted that in the conversation he was talking prospectively about something that they might look into in the future. This highlighted the danger of attempting to use this evidence as a retrospective tendency, and it was highly speculative as to whether or not he may or may not have involved himself in conduct the subject of these messages. In those circumstances no direction given to the jury would protect the accused against unfair prejudice.
Senior Counsel rehearsed his submissions regarding the cash transactions submitting that it may be that they are not illegal activities by reference to his legitimate business interests in the ACT and Dubai.
Counsel rehearsed his submissions regarding the Ciphr messages with "Procyon" submitting that other than being speculative, the communications were consistent with the accused's involvement in Count 2.
Senior Counsel characterised the Crown application as being "a mashup of all this very prejudicial material and, in those circumstances, speculative so that the jury will be left in this situation is that the accused is an international drug dealer as of late December 2017 and early January 2018, and therefore, it is most likely that he was involved in the importation." It was submitted that there were no directions that could fix that unfair prejudice, in a sense it involved circular reasoning because the Crown was asking them to make a leap that because he had this tendency in late 2017 and early 2018 he therefore was involved in the importation at the beginning of January through October 2017.
In relation to the relationship or association evidence in Exhibit C, learned Senior Counsel submitted the material should be excluded pursuant to s 137 of the Act on the basis that its probative value is outweighed by the unfair prejudice. The unfair prejudice is that it would invite the jury to be involved in tendency reasoning. It was accepted that Arnold and Waters were associated, and that Waters had legitimate businesses and legitimate reasons to be interested in steel products.

Submissions in reply

The Crown submitted that in relation to the accused's submission the tendencies were too general, relying on R v Sheard, it was not just the idea of whether or not there was a broad scope to the nature of the tendency but "its also whether or not in the circumstances of this case, it informs a number of people, the circumstances in which its occurring". Here the Crown's submission is that it was very uncommon to be involved in the types of the matters that these tendencies go to which involve serious criminality. In those circumstances, the generality test is met by the particular tendencies that are being put forward.
In relation to the submission made on behalf of the accused that the messages with "Sunseeker" could have alternative interpretations including being facetious, the Crown relied on Bauer v The Queen to submit that the Court must take the evidence at its highest and see whether or not it is capable of the interpretation that is being propounded by the Crown. At [69] the High Court had said that in this context reference to competing inferences is unhelpful and likely to lead to error. That principle extended to inferences that may arise from evidence that may be put forward by the defence. The Crown rehearsed its previous submission that whilst there was no authority for the proposition, the court could look at all of the single bits of evidence and take the cumulative effect of them in terms of the test to be applied pursuant to ss 97 and 101 of the Act. There was no logical reason why the tendency evidence should be treated any differently from any other circumstantial case.

Determination

Relevant evidence is defined in s 55 of the Act as 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". The High Court has made it clear that in determining the rational effect of the evidence does not invite consideration of its veracity or weight, and the Court is not to have regard to whether it is credible or reliable (see IMM at [38]-[39]). Rather the issue is to be determined on the assumption the jury will accept the evidence.
In respect of the tendency rule the Act provides as follows:- "97 The tendency rule (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. (2) Subsection (1) (a) does not apply if - (a) the evidence is adduced in accordance with any directions made by the court under section 100, or (b) the evidence is adduced to explain or contradict tendency evidence adduced by another party. Note - The tendency rule is subject to specific exceptions concerning character of and expert opinion about accused persons (sections 110 and 111). Other provisions of this Act, or of other laws, may operate as further exceptions."
In this case it is conceded that reasonable notice of the intention to adduce the evidence was given by the Crown. Therefore the question that arises pursuant to s 97(1)(b) is whether 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.
In Hughes, the majority at [40] said:- "The test posed by s 97(1)(b) is as stated in Ford: "the disputed evidence should make more likely, to a significant extent, the facts that make up the elements of the offence charged". The only qualification to this is that it is not necessary that the disputed evidence has this effect by itself. It is sufficient if the disputed evidence together with other evidence makes significantly more likely any facts making up the elements of the offence charged…"
The Court went on to hold that the assessment of whether the evidence has significant probative value involves consideration of two inter-related but separate matters at [41]:- "The first matter is the extent to which the evidence supports the tendency. The second matter is the extent to which the tendency makes more likely the facts making up the charged offence."
In El-Haddad v R Leeming JA at [70] said in relation to s 97:- "Significant" is directed to the probative value of the evidence. One way in which tendency evidence possesses significant probative value turns on the degree of generality or specificity with which the "tendency" is stated. A tendency which is stated with too high a level of generality will prove a handicap to its having significant probative value."
If the test in s 97 is satisfied then the Court must consider s 101 of the Act which provides as follows:- "101 Further restrictions on tendency evidence and coincidence evidence adduced by prosecution (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 outweighs the danger of unfair prejudice to 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."
Before considering each item of evidence alleged by the Crown to constitute tendency evidence "either by itself or having regard to other evidence adduced or to be adduced" by the Crown some general observations must be made. First, the Crown amended tendency notice was served at a time when the accused Waters had indicated that he would plead not guilty to both Counts 1 and 2 on the Indictment. He adhered to those pleas prior to trial when other pre-trial issues were determined but changed his plea in respect of Count 2, only before empanelment of the jury.
Secondly, all of the alleged tendency evidence (with the exception of the September meeting in Prague between Waters and Arnold, which is the subject of agreed facts in Exhibit D on the voir-dire) occurred after the time period particularised in Count 1 on the Indictment, namely, 18 January 2017 until 24 October 2017. Of the balance of the evidence, the cash deposit receipts (item D in Exhibit B) and exchange tax invoice (item E) took place approximately 1 month prior to the meeting in Belgrade on 16 January 2018 and the bulk of the Ciphr messages occurred between 14 and 16 January 2018 and therefore within the time period particularised for Count 2, for which the accused has admitted his guilt. Therefore it was not a fact in issue to be taken into account here that the accused intentionally entered into an agreement to possess a large commercial quantity of a border controlled drug, namely cocaine. Rather, the question arises as to whether this post-Count 1 conduct, either by itself or having regard to other evidence adduced or to be adduced by the Crown is relevant to any fact in issue concerning Count 1. For that reason it is important to have regard to the elements of the offending alleged in Count 1 in determining first, whether the evidence individually or cumulatively is relevant, secondly whether it has significant probative value pursuant to s 97(1)(b), and if so, whether the probative value of the evidence substantially outweighs any prejudicial effect it may have on the defendant pursuant to s 101(2).
Having regard to the elements of the offence in Count 1, the three tendencies alleged by the Crown may be characterised as being in very general terms although tendencies (a) and (c) are relevant to allegations of importation of large commercial quantities of border controlled drugs.
I am not persuaded to accept the accused's submission that the words "has or had" as they appear in s 97(1) mean that post-event evidence of a character, reputation or conduct of a person may not be admitted as tendency evidence. Usually, bearing in mind that most of the authorities involved sexual assault or child sexual assault cases, the tendency evidence predates the offending conduct, but there may be circumstances where it does not. The Crown submission concerning the distinction between the present case and the circumstances in McPhillamy where the delay was 10 years compared to the difference of 10 months here is misconceived because in McPhillamy the alleged tendency evidence predated the conduct charged.
In relation to the submission made on behalf of Waters that the submarine communications with "Sunseeker" were capable of an alternative explanation inconsistent with the accused's guilty, I have regard to El-Haddad v R where Leeming JA said at [79]:- "The question is whether there is a real possibility of an alternative explanation inconsistent with the appellant's guilt, based on the evidence together with the other evidence in the Crown case. If there is such an alternative possibility, then that may rob the evidence of its significant probative value, in the manner described by Bathurst CJ and Whealy JA in DSJ at [10] and [78]-[81]. But this was a case where, unless some exculpatory evidence was adduced in the defence case, it was overpoweringly probable that the appellant was involved in the conduct relating to each of the counts."
I also bear in mind what the plurality said in Hughes at [64]:- "The assessment of the significant probative value of the proposed evidence does not conclude by assessing its strength in establishing a tendency. The second matter to consider is that the probative value of the evidence will also depend on the extent to which the tendency makes more likely the elements of the offence charged. This will necessarily involve a comparison between the tendency and the facts in issue. A tendency expressed at a high level of generality might mean that all the tendency evidence provides significant support for that tendency. But it will also mean that the tendency cannot establish anything more than relevance."
That passage was referred to by Wigney J in Marsh v The Queen. His Honour also referred to O'Keefe v The Queen [2009] NSWCCA 121 where Howie J (with whom McColl JA and Grove J agreed) said at [60]:- "The more general the tendency relied upon, the less likely it is to have sufficient probative value to outweigh the prejudicial effect arising from propensity evidence generally."
His Honour also referred to the words "unfair prejudice" in s 101(2) as meaning "the risk that the fact-finder will misuse the evidence in an unfair way by giving it more weight than it logically deserves, or by responding emotionally to the inflammatory content of the evidence, where the risk cannot be cured by direction" (at [141]). His Honour referred to the judgment of Gageler J in Hughes where at [71] his Honour referred to tendency reasoning as "a form of inferential or inductive reasoning" which involved "admeasuring the probability or improbability of the fact… in issue… given the fact or facts sought to be adduced in evidence". In that process there was inherently a very real risk of attaching "too much importance" to the tendency evidence or of giving it "too much weight" (see also, per Wigney J at [142]).
I now turn to deal with the evidence the subject of the Crown application contained in Exhibit B. I intend to deal with that evidence in 12 separate categories.

Category 1 - Ciphr Messages

This category concerns the evidence in items A, Ba, F, Fa, Fb, G, La, Lb, Lc, Ld and Le. The Ciphr messages occurred between 14 and 16 January 2018 when the accused was arrested in Belgrade. Some of the material relates to Count 2 in relation to the exchange of money for drugs that was to take place in Belgrade, of which there is voluminous Ciphr device evidence already before the jury in the five volumes that comprise Exhibit A in the trial. In these messages there are selective references to other drug matters, for example expressions such as "work", "china white", large volumes for example "500kgs" and large sums of money "total 4.934m paid 500k", similarly "need 137,500 paid in Hamburg please" and "token". There is also reference to a shipment from Hamburg and "this guys in Germany have put at least 6 people in jail". They are all indicative of an active involvement in the international drug trade and the generalised tendency to be involved in "large-scale drug transactions", "large cash transactions" and "illicit shipments".
However given the time the communications took place, none of the evidence increases the likelihood of the commission of the offence in Count 1 by way of proof of the elements of that offence. I therefore find that the evidence does not pass the test of relevance in respect of Count 1 pursuant to s 55 of the Act. If I am wrong in that finding then each part of the evidence could not be characterised as having significant probative value so as to satisfy the test in s 97(1)(b), as conceded by the Crown.

Category 2 - statement of Federal Agent Murphy dated 22 March 2022 - item C1

This statement provides explanation for terms used in criminal drug matters such as "china white" and "token" so as to explain some of the content of the Ciphr messages. Following my ruling in respect of the first category of documents, it is not admissible on grounds of relevance.

Category 3 - cash deposit receipts and exchange tax invoice

These receipts and invoice concern some 23 transactions that took place in November and December 2017 and the Crown concedes that it cannot establish that the accused Waters made the deposits or organised the exchange. I find that it is irrelevant to Count 1 as it could not rationally effect (directly or indirectly) the assessment of the probability of the existence of any fact in issue relating to that count. If I am wrong in that finding whilst it may establish tendency (b) to be involved in large cash transactions, given the generality of the tendency it could not be characterised as having significant probative value. If I am wrong in that finding then I find that the evidence fails the test in s 101(2), namely, the probative value does not substantially outweigh the prejudicial effect of this evidence on the accused Waters.

Category 4 - video of man operating cash counting machine

This is item Lf and the video, which was of very short duration, is not relevant to any fact in issue in Count 1, could not be characterised as having significant probative value and could only be unfairly prejudicial to the accused Waters.

Category 5 - test report from Franklet Pty Ltd

This one page document, item M in Exhibit B on the voir-dire, was undated and appeared to be a report on a temporary roof edge protection system which was found as a PDF file on the accused's iPhone. It is, other than referring to a metallic structure, irrelevant to any fact in issue and could not possibly be characterised as being of significant probative value for the purpose of s 97(1) of the Act.

Category 6 - transcript of audio from the meeting between Waters and Arnold in Prague in September 2017

This was item N in Exhibit B. It is common ground that the transcript does not refer to drug transactions or money and the fact of their meeting is to be an agreed fact put before the jury. Whilst it may go to the accepted relationship between Waters and Arnold, it is not relevant to any fact in issue in respect of Count 1.

Category 7 - screenshot from iPhone of Waters of metal fabrications

Item O in Exhibit B on the voir-dire comprised a screenshot from the iPhone of the accused Waters which on Cellebrite examination was discovered to have been created on 12 January 2018. It is not relevant to any fact in issue in respect of Count 1 and in any event could not be characterised as having significant probative value.

Category 8 - message from Arnold to Waters on Ciphr device concerning the corporation Bruno Holdings Limited

This comprised item P in Exhibit B on the voir-dire. An offer to buy the corporation Bruno Holdings Limited was not relevant to any fact in issue in respect of Count 1 and could not be characterised as having significant probative value pursuant to s 97(1)(b) of the Act.

Category 9 - documents relating to dealings in the Czech Republic

This category concerns the evidence in items S, T, U, V and V1 in Exhibit B on the voir-dire. These documents concerned the corporation Omilex sro of which Arnold was a member and documents which comprised translations of the Czech trade register, a statement from the General Directorate of Customs concerning consignments sent by another company Bosmet One to the company Solutions4Steel Pty Ltd together with numerous other consignments, an official record being an extract from the land registry concerning Omilex sro, photos of an office building and warehouse site where Omilex and Bosmet One sro were identified as occupiers, photographs of what appeared to be steel fabrication processing together with the statement of Federal Agent Murphy identifying metadata on the Apple iPhone of Waters identifying the location of the property.
I find none of the documents relevant to any fact in issue, nor could they rationally effect (directly or indirectly) the assessment of the probability of the existence of a fact in issue relating to Count 1 on the Indictment. Nor could the evidence be characterised as having significant probative value pursuant to s 97(1).

Category 10 - Cellebrite report in relation to the accused's mobile phone

The only purpose of the Cellebrite report relied on by the Crown was to identify the images which have been referred to above. It is not therefore relevant evidence pursuant to s 55 of the Act.

Category 11 - Ciphr messages between the accused and "Sunseeker"

These messages being item Va concerned "Sunseeker" advising Waters in January 2018 of a submarine delivery system for drugs. I accept the submissions by learned Senior Counsel on behalf of the accused that the communications could only be regarded as speculative as to some prospective illegal activity and I find that it is not relevant to any fact in issue in respect of Count 1 and could not be characterised as having significant probative value pursuant to s 97(1) of the Act. The evidence would otherwise be highly prejudicial to the accused, and the probative value would not outweigh that unfair prejudice.

Category 12 - Ciphr messages between the accused, "C" and "Procyon"

This comprised items Q and R and for the same reasons outlined in respect of item 1 above, I find the messages are not relevant to any fact in issue relating to Count 1 and it could not be characterised as having significant probative value pursuant to s 97(1) of the Act, as conceded by the Crown.
Given my findings as set out above in relation to relevance, the lack of significant probative value and prejudice to the accused I am not persuaded that when taken together all of the evidence sought by the Crown to be adduced as tendency evidence could pass the test in s 97(1), even if it was all relevant evidence, of having significant probative value. I find that none of the alleged tendency evidence was capable of affecting the assessment of the likelihood that Waters committed the offence in Count 1 to a significant extent. Like the finding of the plurality in McPhillamy at [32], I find that the evidence rose no higher in effect than to insinuate that Waters was the kind of person who was more likely to have committed the offence in Count 1 as alleged. The tendency evidence therefore did not meet the threshold requirement in s 97(1)(b) of the Act.
If I am wrong in that finding, I find that the probative value of the evidence when taken together with other evidence adduced or to be adduced does not substantially outweigh the significant prejudicial effect this evidence would have on the accused. The accused Waters has pleaded guilty to Count 2 and that at that time, namely in December 2017 and January 2018, he was involved in a large-scale drug transaction and this evidence which the Crown seeks to tender as tendency evidence would likely establish that he was involved in other uncharged illegal activities concerning drug transactions at that time. Other evidence in the Crown case, including admissions the Crown relies on alleged to have been made by the accused Waters at the meeting at the Metropol Hotel in Belgrade on 16 January 2018 does not clothe the evidence in Exhibit B on the voir-dire with significant probative value so as to pass the threshold test in s 97(1)(b) of the Act.
For these reasons I refused the Crown application to rely on tendency evidence outlined in the amended Tendency Notice on 22 June 2023.

Crown application regarding relationship evidence

The relationship evidence sought to be adduced by the Crown in Exhibit C on the voir-dire comprised the following documents:- 1. Tab 1 - a waybill from Bosnet One sro to Solutions4Steel Pty Ltd shipped from Hamburg on 28 January 2017. 2. Item 2 comprised an email from the co-accused Campbell dated 5 March 2017. 3. Item 3 comprised an email trail between Campbell and Bosmet One sro. 4. Item 4 comprised an email from Bosmet One to Campbell concerning documents relating to the shipment together with a waybill for a further shipment from Hamburg dated 21 March 2017 and an invoice to a German shipping company to Bosmet One. Further documents concerning a Packing List and Invoice for steel panels forwarded from Bosmet One sro to Solutions4Steel Pty Ltd dated 9 March 2017, which included a number of attachments. 5. Item 5 comprised the email from Bosmet One to Campbell together with a further copy of the invoice dated 9 March 2017. 6. Item 6 comprised a declaration as to the contents of a consignment from Bosmet One sro to Solutions4Steel Pty Ltd. 7. Item 7 comprised a document in a foreign language from Optimal Facility sro addressed to Omilex sro.
Given that Waters accepted by his counsel that he had a relationship with Arnold these seven categories of documents, either alone or in combination reflected no further on that relationship. They were not relevant to any other fact in issue in the proceedings and any probative value the documents may have had is outweighed by the unfair prejudice to Waters by linking him in some way to the steel production activities the documents relate to. There would be a high risk of impermissible use of this material by the jury. Therefore the Crown application to rely on them as relationship evidence was refused pursuant to s137 of the Evidence Act.
I hereby order:- 1. The Crown application based on the amended Tendency Evidence Notice pursuant to s97 of the Evidence Act 1995 (NSW) is refused. 2. The evidence of the asserted tendency of the accused is not to be adduced into evidence at the trial of the accused Waters. 3. The Crown application to adduce evidence for a non-tendency purpose, namely as relationship evidence, is refused. 4. The relationship evidence contained in Items 1 to 7 is not to be adduced into evidence at the trial of the accused Waters. 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: 07 May 2024

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (19 paragraphs)

Legislation Cited (1)

Cases Cited (14)