R v Dickson; R v Issakidis

Background

1. To address Mr Gross QC's contention it is necessary to describe the Crown case. Pursuant to directions given by the Court, the Crown filed a detailed statement of facts. For present purposes it is only necessary to refer to the introduction, which sets out an overview of at least some aspects of the Crown case's concerning the events which happened in furtherance of the conspiracies the subject of counts 1 and 6: "1. The [accused] entered into arrangements with the ANZ Bank that resulted in the [accused's] company, Neumedix Health Australasia Pty Limited (Neumedix), receiving substantial income distributions from four unit trusts: Thistle Unit Trust, Walton Unit Trust, Phosco Unit Trust and the Sulphco Unit Trust. Each trust received income from leasing arrangements with various ANZ Bank clients. Neumedix was the holder of the income units in each trust and was liable to pay the relevant tax on each trust's assessable income. 2. Neumedix received cash distributions in the nature of fees from the four trusts, amounting to a total of $68,405,000 in the 2007 to 2012 income tax years. 3. When the [accused] caused Neumedix to file its annual tax returns for 2007 (in February 2009), for 2008 (in September 2009), for 2009 (in March 2010) and for 2010 (in September 2011) and its amended returns for those years submitted on 2 December 2011, they claimed depreciation expenses, as capital allowance deductions under Division 40 of the Income Tax Assessment Act 1997. 4. The claimed depreciation expenses related to the purported purchase of intellectual property by Neumedix from Athena Health Patents Inc (Athena). Athena had earlier acquired the intellectual property from the inventors or owners of the intellectual property. 5. Neumedix purported to have paid significantly more for the intellectual property than Athena had paid the inventor or owner of the intellectual property. Neumedix supported the increase in the acquisition cost with valuations provided by Karkalla International Holdings Limited (Karkalla). 6. [The accused] intended to cause a loss or a risk of a loss to the Commonwealth by Neumedix falsely bringing to account purported depreciation deductions against the assessable income arising from the trust arrangements, referred to in [1] above, in the 2007, 2008, 2009 and 2010 financial years. 7. The payment of the fees under the arrangement was a result of [the accused] causing Neumedix to become a party to the transactions which gave rise to the trust arrangements referred to at [1] and [2] above. Those transactions were in turn part of the means by which [the accused] would cause a loss or a risk of loss pursuant to the arrangements between them referred to in [6] above."
2. In addition it should also be noted that the Crown's statement of facts sets out the detail of a series of steps said to have been taken by the accused to effect the purchase of the intellectual property by Athena from offshore entities referred to in [4] of the above extract. Apparently the transaction documents suggest that the cost of the acquisition was substantial. Material concerning those transactions and valuations said to support to support the alleged acquisition cost was provided to the Australian Taxation Office in support of the returns noted in the above extract. Broadly, the Crown contends that these offshore entities were controlled by the accused, that the purchase price paid was effectively a sham and the valuations were bogus. The Crown contends that the income from the leasing arrangement referred to in [1] of the extract was transferred to entities controlled by the accused in circumstances that involved some subterfuge.

Count 1

1. As noted, this count charged each accused with an offence under s 135.4(5) of the Code, which provides: "(5) A person is guilty of an offence if: (a) the person conspires with another person to dishonestly cause a loss, or to dishonestly cause a risk of loss, to a third person; and (b) the first-mentioned person knows or believes that the loss will occur or that there is a substantial risk of the loss occurring; and (c) the third person is a Commonwealth entity. Penalty: Imprisonment for 10 years."
2. Further, s 135.4(9) provides: "(9) For a person to be guilty of an offence against this section: (a) the person must have entered into an agreement with one or more other persons; and (b) the person and at least one other party to the agreement must have intended to do the thing pursuant to the agreement; and (c) the person or at least one other party to the agreement must have committed an overt act pursuant to the agreement."
3. The course of argument concerning prayer 1 referred to, but did not seek any definitive resolution by the Court of, the elements of an offence under this section and the matters that the Crown must otherwise prove. It suffices to note that the reference to the "thing" in s 135.4(9)(b) appears to be a reference to "dishonestly caus[ing] a loss, or to dishonestly caus[ing] a risk of loss, to a third person" as referred to in s 135.4(5)(a) of the Code. I say "appears" at this stage because the Crown has provided a document concerning this offence which refers to the accused intending "that an offence would be committed pursuant to the agreement". This appears to be derived from s 11.5(2)(b) of the Code. Otherwise I note that "dishonest" is defined in s 130.3 of the Code in terms that correspond to the test stated in R v Ghosh [1982] QB 1053 (cf Peters v R [1998] HCA 7; 192 CLR 493).
4. At the request of the Court the Crown produced a particulars document setting out the critical particulars of count 1. Thus the scope of the alleged conspiracy was defined as follows: "During the charge period Dickson and Issakidis agreed: a. to cause Neumedix to enter into arrangements with the ANZ Bank under which Neumedix would receive assessable income; b. to arrange the purchase, by Athena Health Patents Inc (Cayman Islands) (Athena), of intellectual property which had been developed by third parties, specifically: i. a potential cancer vaccine developed by Dr Stephen Ralph and known as 'Genvax'; ii. a surgical device developed by C G Surgical Pty Limited and known as 'CG Surgical Clip' or 'Neumedix Expanding Cervical Solution' (C G Surgical Clip); and iii. a cancer diagnostic test developed by Dr Paul Jenkins and known as 'Cologene'; c. to cause the said intellectual property to be assigned by Athena to Neumedix at falsely inflated costs of acquisition; d. to cause income tax returns to be prepared and lodged on behalf of Neumedix claiming depreciation deductions pursuant to Division 40 of the Income Tax Assessment Act, 1997 (Division 40), in respect of the 2007, 2008, 2009 and 2010 financial years, such deduction being calculated on the falsely inflated costs of acquisition."
5. Further, the document identified that the accused intended to cause a loss or risk of loss to the Commonwealth by reason of Neumedix being assessed for taxation purposes in the 2007 to 2010 years on the basis of substantial losses derived by deducting the Division 40 depreciation expenses referred to in (d) of the above extract. It is also stated that the relevant state of mind of each accused said to meet the definition of "dishonest" in s 130.3 of the Code (and "dishonestly" in s 135.4(5)(a)) is their alleged knowledge that Neumedix was ineligible to claim the Division 40 depreciation expenses. The particulars also specifies fifty-seven overt acts in furtherance of the conspiracy.

Ground 6

1. Sections 11.5 and 400.3 of the Code relevantly provide: "11.5 Conspiracy (1) A person who conspires with another person to commit an offence punishable by imprisonment for more than 12 months, or by a fine of 200 penalty units or more, is guilty of the offence of conspiracy to commit that offence and is punishable as if the offence to which the conspiracy relates had been committed. Note: Penalty units are defined in section 4AA of the Crimes Act 1914. (2) For the person to be guilty: (a) the person must have entered into an agreement with one or more other persons; and (b) the person and at least one other party to the agreement must have intended that an offence would be committed pursuant to the agreement; and (c) the person or at least one other party to the agreement must have committed an overt act pursuant to the agreement. … 400.3 Dealing in proceeds of crime … (1) A person is guilty of an offence if: (a) the person deals with money or other property; and (b) either: (i) the money or property is, and the person believes it to be, proceeds of crime; or (ii) the person intends that the money or property will become an instrument of crime; and (c) at the time of the dealing, the value of the money and other property is $1,000,000 or more. Penalty: Imprisonment for 25 years, or 1500 penalty units, or both."
2. The phrase "proceeds of crime" is defined in s 400.1 and the phrase "deals with money" is defined in s 400.2. They respectively provide: "proceeds of crime means any money or other property that is wholly or partly derived or realised, directly or indirectly, by any person from the commission of an offence against a law of the Commonwealth, a State, a Territory or a foreign country that may be dealt with as an indictable offence (even if it may, in some circumstances, be dealt with as a summary offence). … A person deals with money or other property if the person does any of the following: (a) receives, possesses, conceals or disposes of money or other property; (b) imports money or other property into Australia; (c) exports money or other property from Australia; (d) engages in a banking transaction relating to money or other property."
3. Again the argument touched upon the elements of count 6 and the other matters the Crown must prove but, in the absence of fuller argument, it is not appropriate to address them. It suffices to state that the Crown has repeatedly stated that the basis upon which the proposed dealings, the subject of this count, involved or would involve the "proceeds of crime" was that the relevant property, being the proceeds of various bank accounts, was to be "wholly or partly derived or realised, directly or indirectly" from an offence namely, count 1. Thus, on any view, there is an overlap between counts 1 and 6.
4. The Crown has also provided particulars of this count. The scope of the conspiracy was described as follows: "2. Dickson and Issakidis agreed: a. to cause the transfer of funds (ie export, engage in banking transactions) from Neumedix's National Australia Bank bank account controlled by Issakidis and Dickson to the overseas Barclays Bank bank accounts of Dampier Finance Asia Pacific Ltd (Dampier Finance); b. to conceal these transfers of funds as payments for intellectual property when they were not; c. to conceal these transfers of funds by holding out that Dampier Finance was an entity outside of the control of Dickson and Issakidis when it was in one or both of their control; d. to cause the transfer of their 'share' of these funds (ie import, dispose, receive, engage in banking transactions) to bank accounts effectively controlled by Dickson and Issakidis, their family members and associates to be used to acquire or finance the purchase of assets for Dickson and Issakidis or family members directly or for their use; e. to conceal the transfer of their 'share' of these funds as referred to at (d) sometimes as loans from, and also between, entities controlled by Dickson and Issakidis."
5. It can be seen that each of these matters appears to fall within the definition of "deals with money or other property" in s 400.2. The particulars document also specified thirty three overt acts of this count. Some, but not many, of the overt acts overlap with the overt acts specified in relation to the first count.
6. A comparison of the scope of the two conspiracies as described in [12] and [17] reveals that each conspiracy deals with a separate aspect of the overall scheme that it is alleged was put in place by the accused, namely an agreement to pursue a finance deal to derive income which was not to be subject to taxation because it would be offset by false deductions (count 1) and the receipt and dissipation of that income by various means that included concealment (count 6). While the events and evidence concerning those two features are undoubtedly related, and even overlap, if established, they appear to involve different criminality.

No abuse of process

1. Mr Gross QC submitted that count 6 was an abuse of process because it was only seeking to punish Mr Dickson for an agreement to deal with funds, in circumstances where such dealing was "necessarily or inherently involved in giving effect to the agreement" that is the subject of count 1 (transcript 4/08/2014 at p 14). In his oral and written submissions he referred to a number of decisions of the Court of Criminal Appeal expressing concern about the prosecution of offenders for both a predicate and money laundering offence, where the criminality involved in the money laundering offence is encompassed by the predicate offence (eg Thorn v R [2009] NSWCCA 294; 198 A Crim R 135 at [27] to [31]; Nahlous v R [2010] NSWCCA 58; 77 NSWLR 463 at [15] to [16] ("Nahlous"); and Schembri v R [2010] NSWCCA 149 at [11] to [16]; and Redfern v R [2012] NSWCCA 178; 228 A Crim R 56 at [17]).
2. All of these decisions were sentencing decisions. Care needs to be taken in taking discussions of double punishment in a sentencing context and applying them to a consideration of whether there is an attempt at double prosecution (Pearce v R [1998] HCA 57; 191 CLR 610 at [15] per McHugh, Hayne and Callinan JJ) ("Pearce"). Thus, with one exception, the disapprobation in these cases of the overcharging involved did not state that what had occurred was an abuse of process. The one exception was Nahlous where an offender was sentenced for selling "decoders" contrary to ss 135ASB(1) and 135ASC(1) of the Copyright Act 1968 (Cth), and then a money laundering offence under s 400.6(1) of the Code for dealing with the proceeds of those sales.
3. In Nahlous the Court stated (at [16] to [17]): "[16] In the present case we can see no justification whatever for the applicant being charged with the Code offence. In relation to the 50 decoders the criminality was in the sale as a result of which the owners of the services were deprived of their financial entitlement to rental charges for their use. The concept of a 'sale' necessarily involves the seller obtaining some financial gain from the transaction. The receipt of the money was merely an element of the offence under s 135ASB(1). [17] We appreciate that a person can by the one act commit two offences and, where the two offences address different aspects of the criminal conduct, there is nothing wrong with prosecuting the two offences or, subject to the principle of totality, with imposing separate sentences for the two offences. But in our view the receipt of the money as a result of the sale did not result in a separate act of criminality that warranted a separate charge and a separate penalty. We do not believe that there is anything in Pearce v R [1998] HCA 57; 194 CLR 610 that conflicts with the view that we have taken as to the inappropriateness of the prosecution of the Code offence as well as the decoder offence; see particularly at [31]. We believe that in the circumstances of this case it was oppressive to charge the applicant with both the sale of the decoders and the receipt of the money as a result of the sale. That is because in our view the offence of sale encompassed the criminality of possessing the proceeds of the sale." (emphasis added)
4. The Crown Prosecutor submitted that the scope of the two conspiracies in this case was such that the elements of each were not encompassed by the criminality of the other. The Crown referred to Pearce. In Pearce the offender pleaded guilty to charges under s 33 and s 110 of the Crimes Act 1900 (NSW), both of which had, as an element of the offence, the infliction of grievous bodily harm. The charges arose out of a course of criminal conduct involving the infliction of grievous bodily harm upon the one victim. At [28] to [32], McHugh, Hayne and Callinan JJ discussed the availability of a plea in bar and stay as an abuse of process, stating: "[28] Inevitably, any test of the availability of the pleas in bar which considers the evidence to be given on the trial of the second prosecution except in aid of an enquiry about identity of elements of the offences charged would bring with it uncertainties of the kind identified by Scalia J. The stream of authorities in this country runs against adopting such a test and there is no reason to depart from the use of the test which looks to the elements of the offences concerned. Each of the offences with which the appellant was charged required proof of a fact which the other did not. It follows that no plea in bar could be upheld. Stay of proceedings [29] Confining the availability of the plea in bar in this way does not deny the existence of the inherent powers of a court to prevent abuse of its process. That there may be cases in which the repeated prosecution of an offender in circumstances where that offender has no plea in bar available would be an abuse of process is illustrated by Rogers v The Queen (1994) 181 CLR 251. [30] The decision about what charges should be laid and prosecuted is for the prosecution. Ordinarily, prosecuting authorities will seek to ensure that all offences that are to be charged as arising out of one event or series of events are preferred and dealt with at the one time. Nothing we say should be understood as detracting from that practice or from the equally important proposition that prosecuting authorities should not multiply charges unnecessarily. [31] There was, however, no abuse of process in charging this appellant with both counts 9 and 10. The short answer to the contention that the charging of both counts was an abuse of process is that because the offences are different (and different in important respects) the laying of both charges could not be said to be vexatious or oppressive or for some improper or ulterior purpose. To hold otherwise would be to preclude the laying of charges that, together, reflect the whole criminality of the accused and, consonant with what was held in R v De Simoni [(1981] HCA 31; 147 CLR 383), would require the accused to be sentenced only for the offence or offences charged, excluding consideration of any part of the accused's conduct that could have been charged separately. [32] It follows that the primary judge was right to conclude that the proceedings on the indictment (or counts 9 and 10 in particular) should not be stayed."
5. It can be seen from [29] their Honours accepted there are cases where a plea in bar is not available, yet a stay may be granted. However, such cases are relatively rare and it was not suggested that this was one.
6. An example of the application of Pearce in a context similar to the present is Delaney v R [2013] NSWCCA 150 ("Delaney"). In Delaney, Hoeben CJ at CL (with whom Harrison J and I agreed) held that there was no abuse of process in prosecuting the appellant for demand money with menaces in company contrary to s 99(2) of the Crimes Act 1900, and dealing with the proceeds of crime contrary to s 193B(2) of the Crimes Act 1900 where the relevant dealing was receiving monies yielded as a consequence of the demand (at [31] to [39]). Relying on the above passage from Pearce, Hoeben CJ at CL noted that the elements of the two offences were different and that "[n]either offence is wholly included in the other" (at [36]). Delaney was not a case involving "repeated prosecutions" or any other circumstance that might fall within Pearce at [29].
7. The discussion in Nahlous referred to an abuse of process arising if there was no "separate act of criminality that warranted a separate charge and a separate penalty". As this passage was stated to be consistent with Pearce, I do not understand the concept of "act of criminality" as used in Nahlous to be different to elements of the offence. Thus this analysis leads to a conclusion that an abuse of process will occur in such cases where there is no element of the further offence which is separate and distinct from the predicate offence. However, if there is some element of overlap, even if not of a substantial nature, then without more it will not amount to an abuse of process. To the contrary, to conclude otherwise may result in the charges laid not fully reflecting the criminality of the conduct said to have been engaged in.
8. I have already described in [16 ] above one area of overlap between the elements of the two offences. However it follows from the above discussion that one area of overlap does not lead to the conclusion that there is an abuse of process. An additional and potentially complicating feature of this case compared to the cases relied on by Mr Gross QC is that this case involves two conspiracies rather than two substantive offences. It maybe that, in a particular case of which this is one, that the "agreement" referred to in s 11.5(2)(a) and s 135.4(9)(a) of the Code may be the same agreement, although it could embrace the objects in s 11.5(2)(b) and s 135.4(9)(b) so as to constitute two different conspiracies. The Crown Prosecutor disclaimed that in this case. He submitted that the Crown case is that there are two different agreements. However, even if there was only one agreement, it still means that there are different elements to the offences notwithstanding there is some overlap as well. Consistent with Pearce, the outcome is that there is no abuse of process.
9. For the sake of completeness I note that, even if the reference in Nahlous to "a separate act of criminality", was not a reference to the elements of the offence but instead concerned some wider concept of criminality, it would not assist Mr Dickson. It is evident from the discussion at [19] that the Crown alleges significant further criminality in the formation and execution of the conspiracy the subject of count 6 compared to count 1.
10. It was for these reasons that I dismissed prayer 1 of Mr Dickson's notice of motion on 5 August 2014.

Amendments 14 June 2016 - Restriction lifted. 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: 14 June 2016