R v Chalabian

Supreme Court of NSW|2021-12-14|Before: Johnson J

Judgment

JOHNSON J: The Accused, Sevag Chalabian, is charged on an indictment containing a single count under s.400.3(1) Criminal Code (Cth) in the following terms: "Between about 1 February 2017 and about 18 May 2017 at Sydney in the State of New South Wales and elsewhere, [he] did deal with money or property that was, and that [he] believed to be, proceeds of crime, and at the time of dealing the value of the money or property was $1,000,000 or more."
The trial is scheduled to commence at the Supreme Court in Sydney on 21 February 2022.
The parties have undertaken case management steps in accordance with what was said by the Court of Criminal Appeal in Roach v R (2019) 344 FLR 429; [2019] NSWCCA 160 at [128]-[141].
In advance of the trial, the parties have complied with case management orders including undertaking a pretrial conference under s.140 Criminal Procedure Act 1986. In accordance with s.140(8) of that Act, the Court has been provided with a Certificate dated 16 December 2021, signed on behalf of the Crown and the Accused, reporting upon the outcome of the pretrial conference (see [20] below).

Brief Overview of Crown Case Against Accused

Broadly speaking, the Crown case is that between 1 February 2017 and 18 May 2017, the Accused, a practising solicitor in the firm Lands Legal, dealt with $24,244,740.64 by receiving into his law firm trust account, and disposing of, money derived from the commission of blackmail offences, fraud or conspiracy to commit fraud offences and/or money laundering or conspiracy to commit money laundering offences said to have been committed by Daniel Hausman, Daniel Rostankovski, Adam Cranston, Dev Menon, Jason Onley and others. These various offences arise, directly or indirectly, from what has been called the Plutus tax fraud.
The Crown will allege that the Accused was acting substantially on the instructions of, and to benefit, Daniel Hausman and Daniel Rostankovski, who had engaged in blackmail offences directed to Adam Cranston, Dev Menon and Jason Onley arising from the Plutus tax fraud.
A principal issue in the trial will be whether the Crown has proved beyond reasonable doubt that the Accused believed the money he dealt with was the proceeds of crime. The Crown case as to the Accused's knowledge is, in part, circumstantial.
An Amended Crown Case Statement ("ACCS") dated 20 August 2021 sets out in detail the way in which the Crown puts its case against the Accused. It is not necessary, for the purposes of this judgment, to set out in detail the various components of the Crown case.
The Crown case includes the calling of Mr Hausman, Simon Anquetil and others, to give evidence together with the tender of a wide range of documents and electronic recordings of conversations captured by surveillance device or telephone intercept, as well as emails and other electronic communications, including WhatsApp messages.
The Crown alleges that, on 30 January 2017, the Accused sent Mr Hausman a WhatsApp message containing the Accused's legal firm's trust account details (paragraph 39, ACCS).
Thereafter, it is alleged that there were various communications to and from the Accused concerning his trust account, including WhatsApp messages between the Accused and Mr Hausman on 1 February 2017 in which the Accused was told by Mr Hausman that his client would be Anthony Palumberi with a direction that the Accused was not to mention Mr Hausman. Mr Palumberi was one of a number of "straw" or "shadow" nominal directors of second-tier companies utilised for the purpose of the Plutus tax fraud.
The Crown anticipates that Mr Hausman will give evidence that he sent the WhatsApp messages to provide "the cover up details for the blackmail" by providing a version of events for the Accused to use when dealing with others about the identity of his client and whom he was representing for the purpose of receiving money in his trust account as, according to Mr Hausman, Mr Palumberi was not the real client (paragraphs 44-45, ACCS).
The Crown says that, between 1 and 15 February 2017, the sum of $4,822,278.38 was received into the Lands Legal trust account operated by the Accused's legal firm (paragraph 91, ACCS).
The Crown says that, between 16 February 2017 and 26 April 2017, a total of approximately $19.4 million was deposited into the Lands Legal trust account with this money said to have been derived as proceeds of crime (paragraph 136, ACCS).
The Crown alleges that the total sum of $24,244,740.64 credited to the Lands Legal trust account constituted the proceeds of crime flowing from the Plutus tax fraud and two blackmail offences committed by Mr Hausman and Mr Rostankovski.
The Crown alleges that, on 16 February 2017, Mr Hausman sent the Accused a message confirming that the Accused would be paid $20,000.00 for each million dollars received in the Lands Legal trust account (paragraph 147, ACCS).
It is the Crown case that the Accused made disbursements from the Lands Legal trust account on the instructions of Mr Hausman, and with the agreement of Mr Rostankovski, from February 2017. The destination of the funds disbursed by the Accused involved entities which Mr Hausman, Mr Rostankovski or the Accused controlled or were connected with, including overseas entities. No monies were paid from the Lands Legal trust account to the Australian Taxation Office in payment of any outstanding tax obligations of the second-tier companies (paragraphs 154-159, ACCS).
The Crown alleges that, by the date that the Accused received funds into the Lands Legal trust account (and in any event by such times as he was to receive an amount exceeding the statutory threshold of $1 million), he believed that the money was the proceeds of crime. The Crown will seek to establish that the Accused knew the following facts: 1. by 1 February 2017, in exchange for a "deal" with Mr Rostankovski, the Accused would pretend to act for a client named "Palumberi" and receive funds into his solicitor's trust account deriving from a "labour hire scam" committed by Adam Cranston and Jason Onley, with the assistance of Dev Menon, involving the use of the "straw" or "shadow" directors; 2. this "scam" was of interest to the Australian Taxation Office; 3. the Accused would engineer creditors thereafter in order to "rip the money out" of his trust account for the benefit of himself, Mr Hausman and Mr Rostankovski; 4. by 3 February 2017, those responsible for the "scam" had no choice but to pay money into his solicitor's trust account (and were "over a barrel") due to Mr Rostankovski's actions; 5. further, by at least 16 February 2017, Mr Hausman and Mr Rostankovski had information they were threatening to release to a journalist (Stephen Barrett) which could send Mr Cranston, Mr Onley and Mr Menon to "Long Bay" gaol if they did not pay another $15 million - $20 million into the Accused's trust account beyond the $5 million already paid; 6. the purpose of the Deed of Acknowledgement was to create the pretence that Plutus and the second-tier companies would meet (and were meeting) outstanding tax obligations; 7. the Deed of Acknowledgement was a sham designed to conceal the blackmail of the people controlling Plutus and the Plutus tax fraud (or "labour hire scam"); 8. neither the second-tier companies nor their "straw" or "shadow" directors (including Mr Palumberi and Ashley Mills) were his true clients and no true legal obligations arose under the Deed of Acknowledgement in relation to them - in particular, there was no plan to pay any of the monies received from Plutus to the Australian Taxation Office; 9. the monies received in the Lands Legal trust account were to be transferred and used for the personal benefit (either directly or indirectly) of Mr Hausman, Mr Rostankovski and others, rather than to discharge any taxation obligations owed by the second-tier companies or Plutus; 10. any transfers made to the second-tier companies' nominal directors were made pursuant to compensation arrangements made with them by Mr Rostankovski for their co-operation in signing the Deed of Acknowledgement, but these amounts were very minimal compared to the amounts transferred for Mr Rostankovski's and Mr Hausman's benefit; and 11. the Accused would be receiving a cut of the money dispersed from his trust account, not as genuine fees for legal services, but as a "deal" for dealing with the proceeds of crime.

Areas of Agreement and Dispute Arising from the Pretrial Conference

The Certificate dated 16 December 2021 signed by the parties reported the following matters to the Court arising from the pretrial conference: "3 The Accused consents to the tender at the trial of the accused of a summary pursuant to section 50 of the Evidence Act 1995 (NSW) of various communications between the accused and relevant parties, or between relevant parties, including, emails, whatsapp chats, telephone intercept and surveillance device recording transcripts and the underlying bundle of documents, subject to proposed inclusions or omissions to be agreed between the parties. 4 The Accused noted that there were pre-trial legal arguments which included: a. The admissibility of the evidence of Anthony Lean and Jim Sofiak, each of the Law Society of NSW. b. The Crown's proposed directions relating to solicitors conduct rules and solicitors' obligations. c. Some of the proposed edits to telephone intercept recordings and surveillance device recording transcripts. 5. In advance of the pre-trial hearing the parties had exchanged Agreed Facts pursuant to section 191 of the Evidence Act 1995 (NSW) and Admissions pursuant to section 184 of the Evidence Act 1995 (NSW). Each of these documents is substantially agreed and are expected to be finalised shortly."

The Pretrial Hearing on 14 December 2021 and 1 February 2022

The principal issue requiring determination by the Court relates to the manner of presentation to the jury of information concerning the operation of a solicitor's trust account and the legal duties of a solicitor in that respect.
The remaining issue for decision relates to the Crown's proposal to edit certain recordings and transcripts of telephone intercept conversations between Mr Hausman and Mr Rostankovski, principally on the grounds of relevance. The Court heard submissions on 14 December 2021 concerning this topic.
At the commencement of the hearing on 14 December 2021, a further controversial issue related to the Crown's proposal to edit, on the grounds of relevance, the recording and transcript of discussions which took place on 1 February 2017 at the office of Clamenz Lawyers (Mr Menon's firm) between a number of persons including Adam Cranston, Jason Onley, Dev Menon, Daniel Rostankovski, Stephen Barrett, Simon Anquetil and others. This discussion (which occupied some three hours) was recorded under a surveillance device warrant issued to officers of the Australian Federal Police as part of the investigation of the Plutus tax fraud.
Following submissions made to the Court on 14 December 2021, having had an opportunity to hear submissions from Mr Brady SC, for the Accused, as to the suggested relevance of the parts of the 1 February 2017 transcript under debate, the Crown withdrew its submission that those parts should be omitted for the purpose of the trial (PT48). Part of the recording and transcript of 1 February 2017 is to be deleted by agreement between the parties (PT46-47, 50). Accordingly, there is no remaining controversy with respect to that issue for the Court to determine.
It remains necessary for the Court to rule on Crown objections to parts of conversations between Mr Hausman and Mr Rostankovski recorded under telephone intercept warrants. Subject to certain exceptions, the Accused submitted that the entirety of the conversations ought be admitted with the Crown submitting that parts ought be rejected on the ground of relevance under s.55 and s.56 Evidence Act 1995, or in the exercise of discretion under s.135 of that Act.

Duties of Solicitors Concerning Trust Accounts

The Crown submitted that proof of the Accused's knowledge at trial (as an element of the charged offence) is informed by his status as a solicitor and knowledge of his duties and obligations as a solicitor. With this in mind, the Crown proposed initially to call as witnesses at the trial: 1. Anthony Lean, Director, Legal Regulation, Law Society of New South Wales; and 2. Jim Sofiak, Chief Trust Account Investigator, Law Society of New South Wales.
Mr Lean has made a statement dated 21 August 2020 and Mr Sofiak has made statements dated 20 August 2020 and 17 August 2021.
In the Crown submission, the evidence of Mr Lean and Mr Sofiak is relevant because it outlines the contents of pertinent solicitor's duties known to the Accused which bear upon his knowledge that the money received into and disbursed from his trust account was the proceeds of crime. In particular, it was submitted that the knowledge of the Accused of those duties is relevant to prove that he was not acting for, or on the instructions of, any legitimate client in dealing with those funds and that he knew this to be the case.
As an alternative to calling Mr Lean and Mr Sofiak at the trial, the Crown sought to have directions of law given to the jury as to the content of relevant laws regarding solicitors' duties. In this respect, the Crown proposed that directions be given to the jury in the following form (Annexure A, PTMFI 1): "DIRECTIONS CONCERNING A SOLICITOR'S LEGAL DUTIES 1. To practise as a solicitor in New South Wales, a person must be admitted as a solicitor in the Supreme Court of New South Wales and hold a practising certificate. 2. A solicitor's ethical duties are contained in Conduct Rules under legislation. 3. A solicitor must comply with the following Conduct Rules and duties: (a) A solicitor must act in the best interests of a client in any matter in which the solicitor represents the client. (b) A solicitor must not act for a client where there is a conflict between the duty to serve the best interests of a client and the interests of the solicitor. (c) A solicitor must follow a client's lawful, proper and competent instructions. (d) A solicitor must not disclose information to a third party without the client's consent. 4. A solicitor cannot accept instructions from a third party, unless the client has authorised the third party to give the solicitor instructions: (a) As the client's attorney under a power of attorney, or (b) As the client's financial manager appointed by the court, or (c) As a person otherwise authorised by the client. Solicitor's Trust account obligations 5. A solicitor also has obligations under legislation concerning the receipt, holding and disbursement of trust money. 6. 'Trust money' is money entrusted to a law practice in the course of or in connection with the provision of legal services by the law practice. Money is only trust money if it is for the provision of a legal service by that law practice. A 'law practice' is defined to include either a solicitor or a law firm. Both are a 'law practice' for the purpose of these rules. 7. A law practice must not mix trust money with other money. Only trust money is permitted to be deposited into a law practice's trust account. 8. A law practice's trust account cannot be used as a banking facility to deposit funds that are not trust money. 9. A law practice must keep, in a permanent form, trust records in relation to trust money received. A law practice must keep trust records: (a) in accordance with the legislation; and (b) in a way that at all times discloses the true position in relation to trust money received for or on behalf of any person; and (c) in a way that enables the trust records to be conveniently and properly investigated or externally examined; and (d) for a period of 7 years after the last transaction entry in the trust record, or the finalisation of the matter to which the trust record relates, whichever is the later. 10. A solicitor must not knowingly receive money or record receipt of money in the law practice's trust records under a false name. 11. Once any trust money is handed over by a client, a law practice is required to: (a) Prepare a trust account receipt and give the trust account receipt to the person from whom the trust money was received; (b) Open a trust ledger and record the particulars of all receipts and payments in the trust ledger; (c) Deposit the money into the trust bank account if it has not already been deposited electronically; (d) Hold the trust money exclusively for the person on whose behalf if it is received and disburse the money only in accordance with a direction given by that person; (e) Withdraw money for payment to the law practice's account for legal costs owing to the law firm if certain procedures are complied with. These are that the law firm must: i. make a costs disclosure to the client, which means providing an estimate of total legal costs and information that enables the client to make informed choices about costs; ii. give the client a costs agreement; and iii. provide a bill to the client before taking costs. 12. A solicitor must comply with the above rules and obligations regardless of the business structure in which or in connection with which he or she provides legal services. 13. A principal of a law practice is responsible for ensuring that reasonable steps are taken to ensure that the above rules and obligations are complied with by all legal practitioner associates of the law practice. 14. Failing to comply with applicable regulations is not in itself indicative of a belief that the funds in question are the proceeds of crime."
It was submitted for the Accused that it was premature to determine the scope of any directions to be given to the jury so that the defence opposed the giving of detailed directions as sought by the Crown, certainly at an early point in the trial.
In response to a request from the Court made in the course of submissions on 14 December 2021 (PT34-35), counsel for the Accused furnished on 16 December 2021 a document containing what the Accused submitted the jury could be told early in the trial by way of "ground rules" concerning trust accounts (PTMFI 5): "1. A solicitor is a kind of lawyer. 2. A solicitor is 'admitted' to practice by the Courts. 3. To practise a solicitor needs to hold a 'practising certificate' that is issued by the Law Society. 4. A solicitor may maintain accounts called trust accounts. 5. Money put into such an account is called trust money. 6. Trust money is money that has been entrusted to a law practice (such as a solicitor or a firm of solicitors) in the course of or in connection with providing legal services by the legal practice. 7. There are rules and regulations applicable to the operation of a trust account by a solicitor. You may hear more about the rules and regulations through the course of the trial. 8. The question of whether those rules have been complied with or not does not determine the question of whether a person believed that the funds in question are the proceeds of crime."
The Crown submitted that the defence proposed directions in PTMFI 5 were inadequate and insufficient for the purposes of the trial. On 12 January 2022, the Crown provided alternative draft directions (PTMFI 6), which were amended in a further draft provided by the Crown on 28 January 2022 (PTMFI 9) which stated: "1. In NSW a solicitor is admitted to practise by the Supreme Court and is required to hold a practising certificate. 2. When acting for a client, a solicitor must comply with a number of legal and ethical obligations which include the following. 3. A solicitor must act in the best interests of a client in any matter in which the solicitor represents the client. 4. A solicitor must follow a client's lawful, proper and competent instructions. 5. A solicitor must not disclose information to a third party without the client's consent. 6. You may hear more about a solicitor's legal and ethical obligations through the course of the trial. Trust Accounts 7. A Law practice (such as a solicitor or a firm of solicitors) may maintain an account called a trust account. 8. Money or funds put into a trust account is called trust money. 9. Trust money is money that has been entrusted to a Law practice in the course of or in connection with providing legal services by the Law practice. 10. There are rules and regulations applicable to the operation of a trust account by a Law practice. You may hear more about the rules and regulations through the course of the trial but they include: (a) A Law practice must keep, in permanent form, trust records of trust money received and disbursed (paid) from a trust account. (b) A Law practice must hold the trust money exclusively for the person on whose behalf it is received and disburse (pay out) the money only in accordance with a direction given by that person. 11. The question of whether those rules have been complied with or not does not determine, but may be relevant to, the question of whether a person believed that the funds in question are the proceeds of crime."
Further oral submissions were made at the resumed pretrial hearing on 1 February 2022 with respect to the competing drafts of directions to be given to the jury concerning the role of a solicitor, including with respect to trust accounts.
The Crown submitted that, at an early point in the trial, the jury ought be given directions, either orally or in writing, in terms of PTMFI 9 (see [32] above). Mr `Williams, counsel for the Accused, submitted that the directions to be given to the jury after opening addresses ought be confined to the matters contained in PTMFI 5 (see [31] above).
After discussion with counsel in the course of submissions on 14 December 2021 and 1 February 2022, it was the common position of the parties that the Court ought give certain directions to the jury early in the trial concerning these topics, with the question of what further detailed directions ought be given to the jury to be considered later in the trial after the evidence had been given. In this respect, counsel for the Accused accepted that the proposed directions identified by the Crown in Annexure A to PTMFI 1 (PT78) were accurate as a matter of law. The defence position was that some of these directions may not arise in light of evidence to be adduced at the trial so that the Court should not determine, before the trial has commenced, that all these directions should be given to the jury.
The remaining question is what should be said by the Court to the jury, at an early point in the trial, to introduce the concepts of the role of a solicitor and trust accounts in brief and uncontroversial terms.
It was accepted that it was appropriate for the Court to give the jury certain directions in this respect after opening addresses, where a number of these concepts may have been mentioned by counsel, so that the directions from the Court, whether delivered orally or in writing, may serve the purpose of providing early assistance to the jury concerning this issue.
It may be observed that there is significant overlap between the Crown and the defence draft directions. The particular areas of controversy lie in paragraphs 3, 4 and 5, 10(a) and (b) and part of paragraph 11 of PTMFI 9.
Mr Williams did not submit that any part of these directions was wrong. Rather, the submission was that there was prejudice to the Accused as directions of this type, when introduced to the jury early in the trial, may be argumentative or tendentious in their operation in limiting the attention of the jury to these particular concepts. It was submitted that, if these particular concepts are relevant to issues in the trial, then the directions could be given later in the trial after the evidence was complete so that the directions would be understood by the jury against the background of the evidence adduced in the trial.
The Crown submitted that paragraphs 3, 4, 5, 10(a) and (b) are accurate and are clearly relevant to issues in the trial. It was submitted that these directions are not controversial and would arise in the opening address for the Crown and perhaps the opening address for the Accused, so that there would be some context for the direction or explanation to be provided by the Court after opening addresses on these matters.

Decision Concerning Directions About Solicitors and Trust Accounts

It is the responsibility of the trial Judge to give directions to a jury concerning issues of law arising in a criminal trial.
It was common ground between the Crown and counsel for the Accused that the jury ought be given certain directions concerning the role of a solicitor and trust accounts with those directions being based upon law, including the Legal Profession Uniform Law (NSW) and the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015.
Given the offence charged and issues in the trial concerning the use of a solicitor's trust account, I accept that legal directions on these topics are relevant to issues including the mental element of the offence charged against the Accused.
The present question involves directions to the jury concerning domestic law, namely the law of New South Wales with respect to solicitors and trust accounts. Section 143 Evidence Act 1995 states: "143 Matters of law (1) Proof is not required about the provisions and coming into operation (in whole or in part) of - (a) an Act, an Imperial Act in force in Australia, a Commonwealth Act, an Act of another State or an Act or Ordinance of a Territory, or (b) a regulation, rule or by-law made, or purporting to be made, under such an Act or Ordinance, or (c) a proclamation or order of the Governor-General, the Governor of a State or the Administrator or Executive of a Territory made, or purporting to be made, under such an Act or Ordinance, or (d) an instrument of a legislative character (for example, a rule of court) made, or purporting to be made, under such an Act or Ordinance, being an instrument that is required by or under a law to be published, or the making of which is required by or under a law to be notified, in any government or official gazette (by whatever name called). (2) A judge may inform himself or herself about those matters in any way that the judge thinks fit. (3) A reference in this section to an Act, being an Act of an Australian Parliament, includes a reference to a private Act passed by that Parliament."
The Australian Law Reform Commission ("ALRC"), in Report 26, "Evidence", 1985, paragraph 973, stated that the proposal upon which s.143 is based "reflects existing law but simplifies it".
In ALRC Report 102, "Uniform Evidence Law", 2005, s.143 was considered in paragraphs 17.7 and 17.8: "17.7 Section 143 covers judicial notice of legislation. Legislation in this context means statutes, subordinate legislation and executive government proclamations and orders. Parties do not need formally to prove that such laws exist, or the process by which such legislation came into operation. Under s 143, a judge may take 'judicial notice' of the legislation's legitimate content and operation. The Commissions' view 17.8 In DP 69, no proposal is made for amendment of s 143. This elicited no submissions or consultations in response to DP 69. The Commissions consider that s 143 is operating satisfactorily and make no recommendation for change."
Clearly, no proof (in the evidentiary sense) of domestic law is required: Le v McElwee [2008] ACTSC 55 at [34], [44]. The provision in s.143(2) for the Judge to inform himself or herself about matters in any way that the Judge thinks fit makes clear that the rules concerning admissibility of evidence do not apply, and that the Court may proceed to inform itself concerning domestic law subject to compliance with procedural fairness: Attorney General (Cth) v Foster (1999) 84 FCR 582 at [35]; Le v McElwee at [44]; cf Director of Public Prosecutions v El Mawas (2006) 66 NSWLR 93; [2006] NSWCA 154 at [74].
The Crown does not seek to tender the evidence of Mr Lean and Mr Sofiak as expert opinion evidence. I observe that the Accused does not object to certain parts of Mr Lean's statement touching on issues other than the present topics.
With respect to paragraphs 3, 4 and 5 of PTMFI 9 (at [32]), I accept that these paragraphs contain accurate and uncontroversial propositions concerning the role of a solicitor. The Court understands that an issue in the trial will be the identity of the "client" of the Accused and the circumstances in which the "client" could provide instructions to the Accused.
It does not seem to me that paragraphs 3, 4 and 5 give rise to any prejudice to the Accused in the context of this trial. The Court would inform the jury, either orally or in writing, after the opening addresses that these are not controversial propositions and are some of the concepts which will be referred to in the trial, as to which further and more detailed directions would be given later in the trial. An explanation of that type, provided after the opening addresses, will assist the jury in understanding this aspect of the trial without, in my view, giving rise to any prejudice to the Accused.
I propose to include in any early direction or explanation to the jury, the matters contained in paragraphs 3, 4 and 5 of PTMFI 9.
The parties agree that the opening part of paragraph 10 of PTMFI 9 is appropriate to be stated to the jury, but with the Accused submitting that the explanation should cease after the word "trial" and with the Crown submitting that the particular features concerning trust accounts set out in paragraph 10(a) and (b) ought be included as well.
Clause 147 of the Legal Profession Uniform Law (NSW) provides (PTMFI 2, page 24): "147 Keeping trust records (1) A law practice must keep in permanent form trust records in relation to trust money received by the law practice. Civil penalty: 50 penalty units. (2) The law practice must keep the trust records - (a) in accordance with the Uniform Rules; and (b) in a way that at all times discloses the true position in relation to trust money received for or on behalf of any person; and (c) in a way that enables the trust records to be conveniently and properly investigated or externally examined; and (d) for a period of 7 years after the last transaction entry in the trust record, or the finalisation of the matter to which the trust record relates, whichever is the later. Civil penalty: 50 penalty units. (3) A law practice must not knowingly receive money or record receipt of money in the law practice's trust records under a false name. Civil penalty: 100 penalty units. (4) If a law practice is aware that a person on whose behalf trust money is received by the law practice is commonly known by more than one name, the law practice must ensure that the law practice's trust records record all names by which the person is known. Penalty: 50 penalty units. (5) In this section, a reference (however expressed) to keeping trust records includes a reference to making and keeping backup copies of trust records."
The term "permanent form" is defined in Clause 128 of the Legal Profession Uniform Law (NSW) as follows (PTMFI 2, page 16): "permanent form, in relation to a trust record, means printed or, on request, capable of being printed, in English on paper or other material."
Mr Williams submitted that there was tension between the words "permanent form" and the requirement in Clause 147(2)(d) of the Legal Profession Uniform Law (NSW) for trust records to be retained for a period of seven years. In response, the Crown drew attention to the definition of "permanent form" in Clause 128.
I do not see any prejudice to the Accused in the explanation being given to the jury as contained in paragraph 10(a) of PTMFI 9 using the definition of "permanent form" in place of those words. In this way, paragraph 10(a) would provide: "A Law practice must keep, in printed form or in a form capable of being printed, trust records of trust money received and disbursed (paid) from a trust account."
This would see a clearer explanation of the legal requirement in Clause 147 being provided to the jury in circumstances where that concept is pertinent to issues in the trial and is otherwise uncontroversial.
With respect to paragraph 10(b) of PTMFI 9, it is appropriate to note the terms of Clause 138 of Legal Profession Uniform Law (NSW) which states (PTMFI 2, page 21): "138 Holding, disbursing and accounting for trust money in general trust account (1) Except as otherwise provided in this Part, a law practice must - (a) hold trust money deposited in the law practice's general trust account exclusively for the person on whose behalf it is received; and (b) disburse the trust money only in accordance with a direction given by the person. Civil penalty: 50 penalty units. (2) Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law. (3) The law practice must account for the trust money as required by the Uniform Rules. Civil penalty: 50 penalty units."
It will be observed that paragraph 10(b) of PTMFI 9 uses the language of Clause 138(1). Paragraph 10(b) is an accurate statement of the law and the concept is relevant to issues in the trial. I do not consider that the Accused will be prejudiced by giving the jury an explanation of this sort at an early point in the trial. I am satisfied that it is appropriate to provide a direction or explanation to the jury, after opening addresses, in the terms of paragraph 10 of PTMFI 9.
Paragraph 11 of PTMFI 9 is agreed between the parties except for the words "but may be relevant to" as inserted by the Crown (see [32] above). Mr Williams submitted that it is not necessary to insert those words. He argued that it is sufficient to state that the question of compliance with the rules does not determine the question whether a person believed that the funds in question are the proceeds of crime. The Crown submitted that it is appropriate that the jury receive a direction or explanation which states that, although not determinative, material of this type may be relevant to the question whether the Accused had the necessary state of mind by way of a belief that the funds in question are the proceeds of crime.
In my view, the Crown formulation is accurate and not controversial. It states that the question whether rules have been complied with is not determinative, but may be relevant to a trial issue concerning the state of mind of the Accused and the existence of a belief that the funds in question are the proceeds of crime.
The jury will receive directions early in the trial concerning the elements of an offence under s.400.3(1) Criminal Code (Cth) which will include the necessity for the Crown to prove that the Accused believed the money to be proceeds of crime. There is no prejudice to the Accused in stating that the question of compliance may be relevant to the question whether the Accused had the necessary mental element for the charged offence.
I propose to include the Crown formulation in paragraph 11 of PTMFI 9 in any direction or explanation to be given to the jury after opening addresses.
The effect of this ruling is that a direction or explanation in accordance with PTMFI 9 (with the modification to paragraph 10(a) at [5] above) will be given to the jury after the opening addresses. I will hear counsel further as to whether the direction should be given in writing or orally, a topic to which counsel can give attention in light of the present ruling.
The parties are aware that more detailed directions concerning the role of a solicitor and trust accounts may be given to the jury later in the trial, drawing upon relevant parts of Annexure A of PTMFI 1 in light of the evidence adduced at the trial.
It will be a matter for the Court to rule upon what directions ought be given at that stage of the trial in circumstances where there is no expectation that the Crown would be required to adduce evidence of these matters. As s.143 Evidence Act 1995 makes clear, evidence of the law in this respect is not required (see [43]-[48] above).

Objections by Crown to Parts of Conversations Recorded by Telephone Intercept

The Crown objected to parts of conversations recorded by way of telephone intercept warrants as contained in Volume 1 of PTMFI 3 as follows: 1. conversation between Mr Hausman and Mr Rostankovski on 16 November 2016 (pages 58-62, 63-66); 2. conversation between Mr Hausman and Mr Rostankovski on 14 December 2016 (pages 157-162, 165-175); 3. conversation between Mr Hausman and Mr Rostankovski on 16 December 2016 (pages 184-193).
It will be observed that the conversations between Mr Hausman and Mr Rostankovski took place in late 2016, prior to the offence alleged to have been committed by the Accused between about 1 February 2017 and about 18 May 2017. The parties accept that the conversations are relevant for the purposes of the trial subject to particular areas of objection.
In this case, it is the Crown which objects to parts of these conversations upon the grounds of relevance (s.55 and s.56 Evidence Act 1995) or seeking discretionary exclusion under s.135 Evidence Act 1995.
I take as a starting point that the mere fact that a conversation took place, upon which the Crown seeks to rely in part, does not render the entire conversation admissible. The test of relevance is to be applied to parts of the conversation, keeping in mind that a conversation may be fluid in content so that a bright-line test of relevance cannot be applied easily. A range of topics may be discussed in a conversation which includes matters relevant to the trial and entirely extraneous matters. Where objection is taken as to relevance, the Court should have regard to the material to which objection is taken, applying relevant principles in determining whether the evidence should be allowed.
Sections 55 and 56 Evidence Act 1995 state: "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. (2) In particular, evidence is not taken to be irrelevant only because it relates only to: (a) the credibility of a witness, or (b) the admissibility of other evidence, or (c) a failure to adduce evidence. 56 Relevant 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."
Sections 135 Evidence Act 1995 states: "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, or (b) be misleading or confusing, or (c) cause or result in undue waste of time."
The term "probative value" is defined in the Dictionary to the Evidence Act 1995 as meaning "the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue".
The test of relevance is a relatively undemanding one. The enquiry for the purpose of s.55 concerns how the evidence might affect findings of fact. The possible use to which the evidence might be put is to be taken at its highest: IMM v The Queen (2016) 257 CLR 300; [2016] HCA 14 at [43]-[44]. No assessment of the credibility or reliability of the evidence is required: IMM v The Queen at [39].
Evidence which is relevant according to s.55 and admissible under s.56 is, by definition, probative. But neither s.55 nor s.56 requires that evidence be probative to a particular degree for it to be admissible. Evidence that is of only some (even slight) probative value will be prima facie admissible: IMM v The Queen at [40].
Section 135 is based upon an assumption that the evidence is otherwise admissible. It confers a power to refuse to admit such evidence if the particular statutory opinion is formed. A discretionary process is involved, with the formation of the relevant opinion requiring a balancing exercise. The power to reject evidence will only be engaged if the probative value of the evidence is "substantially outweighed" by a "danger" of the kind identified in s.135(a), (b) or (c): Dyldam Developments Pty Limited v Jones [2008] NSWCA 56 at [78].
In considering the objections taken by the Crown to parts of these conversations, I have had regard to the submissions made at the hearing on 14 December 2021 by the Crown (T16-23), by Senior Counsel for the Accused (T41-46) and by the Crown in reply (T49-50).
In oral submissions, Mr Brady SC acknowledged that a number of areas of these conversations were susceptible to objection where the conversation strayed into areas concerning what he described as "social issues" or "social aspects" (T43). With respect to other parts of the conversations where the names of persons were mentioned, Mr Brady SC submitted that there was sufficient relevance noting that a number of the names that were mentioned in the conversations between Mr Hausman and Mr Rostankovski were also persons involved (or mentioned) in parts of the conversation on 1 February 2017.
I propose to deal with these objections in a short-form fashion, noting my rulings as to relevance.
With respect to the conversation on 16 November 2016 between Mr Hausman and Mr Rostankovski, I propose to allow that part of the recording contained in pages 58-62 of Volume 1, PTMFI 3. Although the conversation is somewhat rambling, there is reference to persons mentioned elsewhere in recordings to be admitted including "Jay", whom I take to be Jason Onley. There is some force, as well, in the defence submission that the following part of that conversation (to which the Crown does not object) is of a similar type to that which has drawn the objection.
With respect to the next part of the conversation to which objection is taken (pages 63-66), Mr Brady SC acknowledged that the subject matters being discussed were remote from the issues in the present trial and I am not persuaded that that portion satisfies even the relatively low threshold of relevance contained under the Evidence Act 1995. That portion will be rejected.
With respect to the conversation between Mr Hausman and Mr Rostankovski on 14 December 2016, I am not persuaded that the parts objected to at pages 157-158 are relevant, with topics being discussed which are far removed from the subject matter of this trial.
In light of the submissions of Mr Brady SC, I accept that the matters contained in pages 159-162 are sufficiently relevant to be admitted as evidence in the trial. Parts of this conversation shed some light upon the business dealings of Mr Hausman and Mr Rostankovski, with reference to names of persons which feature elsewhere, so that the evidence ought not be excluded and will be allowed.
With respect to the same conversation, I propose to allow the conversation at pages 165-175. Although the precise subject matters being discussed may be less than clear at times, there are references to "Adam" (Adam Cranston) and "Dev" (Dev Menon) so that, in my view, the relatively undemanding test of relevance is satisfied.
With respect to the final part of this conversation to which objection is taken by the Crown, I accept that pages 184-193 are sufficiently relevant with references being made to a number of persons including "Dev" (Dev Menon) and "Balls" (apparently a nickname for Adam Cranston). Although the subject matter is not of clear and direct relevance to the subject matter of the trial, Mr Hausman and Mr Rostankovski are discussing a range of business issues in a manner which, I am satisfied, is sufficiently relevant and ought not be excluded. I have considered whether the probative value of parts which are relevant is substantially outweighed by the danger that the evidence might be "misleading or confusing" or "cause or result in undue waste of time" for the purpose of s.135(b) and (c). I am not persuaded that the Court should reject parts which are otherwise relevant on either or both of these bases under s.135.
In making these rulings, I have kept in mind that parts of the conversations are to be relied upon by the Crown and that the parts to which objection is taken by the Crown are capable of shedding some light upon the relationship between Mr Hausman and Mr Rostankovski and their business interests, even if some of the subject matters under discussion appear somewhat remote from the context of the present trial.
The effect of these rulings is that the Crown objections are overruled with the exception of the objections to pages 63-66 and 157-158 of PTMFI 3, where the objection is upheld.

Conclusion

In summary: 1. I propose to give directions to the jury with respect to the role of solicitors and trust accounts in accordance with an amended form of PTMFI 9, with those directions to be given after opening addresses in the trial; 2. I overrule the Crown objection to parts of the telephone intercept conversations at pages 58-62, 159-162, 165-175 and 184-193 of PTMFI 3; 3. I uphold the Crown objection to part of the telephone intercept conversations at pages 63-66 and 157-158 of PTMFI 3.

Amendments 21 March 2023 - Publication restriction lifted - judgment published. 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: 21 March 2023

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