R. v. DONNELLY; R. v. TROTH [2001] NSWCCA 125

R. v. DONNELLY; R. v. TROTH [2001] NSWCCA 125 - NSWCCA 2001 case summary — Zoe

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JUDGMENT 1 POWELL JA: On 26 June 2000, the Appellants, John Bernard Donnelly ("Donnelly") and John Charles Troth ("Troth"), were jointly indicted before Shillington DCJ at the Sydney District Court on the following charge: "That they between 1 July 1993 and 1 July 1995 at Sydney in the State of New South Wales did conspire to cheat and defraud Cementaid (NSW) Pty. Limited." 2 To that charge the Appellants pleaded not guilty and they were tried before his Honour and a jury of twelve. 3 On 10 July 2000, following a trial which occupied a little over eleven days, the jury returned verdicts of guilty against each of the Appellants. 4 On 6 October 2000, Shillington DCJ sentenced each of the Appellants to imprisonment for a period of 3 years comprising a non-parole period of 2 years and 3 months to commence on 6 October 2000 and to expire on 5 January 2003, with a parole period of 9 months to commence on 6 January 2003 and to expire on 5 October 2003. 5 Cementaid (NSW) Pty. Limited ("Cementaid") - which was a subsidiary of a company known as Aldred & Co. Pty. Limited ("Aldred") - and which occupied factory premises at Lilyfield was, at all material times, a manufacturer of chemicals for use as ad-mixtures and additives for cement and concrete and as surface treatments for coating concrete and other building materials. The function of the chemicals manufactured by Cementaid was to alter the properties of cement and concrete so as to make the cement and concrete water-proof, or corrosion proof, or dust proof, or to stop oil or grease being absorbed into concrete, or to stop mould growing on brick work. All told, Cementaid made some thirty-three different products, most of which were made in the factory at Lilyfield. 6 The raw materials required by Cementaid took varying forms, some being in powder form and others being in a liquid form, some of the chemicals produced by Cementaid being water based and others using petroleum solvents such as xylene. Those raw materials were supplied by a variety of suppliers such as Orica Australia Pty. Limited (formerly called ICI Operations Pty. Limited) and Shell Chemicals (Australasia) Trading Pty. Limited. When delivered, the raw materials came in a variety of forms, some in bags, some in 20 litre pails, some in 200 litre drums and others, such as xylene, which came in bulk, in tankers which were then pumped out into underground tanks at the factory premises. 7 When required for manufacturing products, the raw materials were taken out of storage and placed into large vats, up to 9000 litres in capacity, where they were mixed. Once mixing was completed, the products were "drummed off" or decanted into various sized containers, such as 5 litres pails, 20 litre drums and 200 litre drums, the latter being the size of drum most commonly used. Because the 200 litre drum was the size of the drum most commonly used, and because of the nature of some of the chemicals supplied in such drums, some of the drums when returned to the factory could not be reused, or could not be reused without being refurbished, so that Cementaid was obliged to obtain regular supplies of refurbished 200 litre drums. Although Cementaid was capable of manufacturing thirty-three chemicals, two such chemicals, Caltide and 3CC which is similar to Caltide but incorporates one less component, represented 70% of Cementaid's business. It was usual to produce two batches of those products per week, each batch producing forty-four 200 litre drums of product. 8 The Appellant Troth was employed by Cementaid between 1988 and August 1995 as the senior factory operator. In that capacity he had two sets of duties, the first, as a factory operator, to run the factory, and the second, as the senior factory operator, to advise and assist other factory operators in other Cementaid factories around the country. 9 In his capacity as a factory operator, Troth was required to liaise with those members of Cementaid's staff who were selling product so as to ensure that, at all times, there was product available to fulfil orders; he was to purchase whatever raw materials and reconditioned drums might be needed from time to time in order that product might be manufactured to fulfil such orders as might from time to time be obtained; he was required to keep records of raw materials and refurbished drums supplied to the factory, of product manufactured, and of product delivered to interstate branches of Cementaid and, as well, was required, on a monthly basis, to conduct a physical stock-take of raw materials, refurbished drums and product in the factory premises, the results of which stock-take, together with the other records, were to be provided to Cementaid's accountancy staff in order that the information might be entered into the company's computer so that a monthly report might be produced - it would appear the computer had been so programmed as to produce a theoretical stock-sheet relating to raw materials, packages, drums and finished product held at the factory to enable there to be a reconciliation with the results of the monthly physical stock-take. 10 As the person responsible for ordering raw materials and refurbished drums, Troth had control of Cementaid's purchase order books. As supplies were required he would telephone suppliers, obtain a quote for delivery of the supplies in question, write out a purchase order and send it to the supplier or hand it to the supplier when the order was delivered. When supplies arrived at the factory premises, Troth was required to check the supplies which had been delivered against the order and against the supplier's delivery docket to ensure that what had been ordered had in fact been supplied and that the quantities recorded on the supplier's delivery docket had in fact been supplied and then, if the check were satisfactory, to stamp the supplier's delivery docket and sign it. The receipt of those materials was then to be entered by Troth in a Material Inwards Report. Either at the time of delivery or later the supplier would forward an invoice for the goods the subject of the delivery docket which invoice appears then to have been approved for payment by Troth. 11 When he produced product, Troth was required to prepare a production report listing the product he had produced on a day to day basis and showing the size of the container in which the product which had been produced had been stored. When product was transferred interstate, Troth was required to prepare a "Stock Transfers" record. 12 Although the materials which are before the Court are not entirely clear, it would appear that, prior to October 1993, the relevance of which date will shortly appear, Cementaid had but one supplier of refurbished 200 litre drums, that supplier being a company known as A1 Drums Pty. Limited ("A1 Drums"), which company, in addition to supplying refurbished drums to Cementaid seems also to have been used by Cementaid to remove from its premises for disposal or destruction, drums which were no longer able to be reused by Cementaid in its operations. A1 Drums, however, did not purchase from Cementaid for refurbishment drums which had previously been used by Cementaid because of its operations. 13 As from October, or, perhaps it was November, 1993 a company known as Drum Distributors NSW Pty. Limited ("Drum Distributors") commenced to supply Cementaid with refurbished drums and from time to time to remove from Cementaid's factory for disposal or destruction, drums which had previously been used but which were no longer capable of being used by Cementaid in the course of its operations. Despite this, A1 Drums continued its relationship with Cementaid as before, a situation which appears to have continued until about the end of June 1995. In addition, so the Appellants claimed, during that period of one year and eight months, Drum Distributors acquired from Mr. Troth for refurbishing drums which had been used by Cementaid in the course of its operations but which needed to be refurbished before they could be reused, those drums being paid for by cheques drawn to cash on Drum Distributors' bank account and deposited to the credit of Troth's personal bank account. 14 It was the dealings between Drum Distributors and Cementaid and the payments made by Drum Distributors to Troth in the period from late October, or early November, 1993 to the end of June 1995 which formed the basis for the charge upon which the Appellants were indicted and later convicted. Reduced to its most simple form, the Crown's case was that, as the result of an agreement between Troth and Donnelly, on some thirty occasions during that period:

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(j) the total amount of the cheques so drawn and paid to the credit of Troth's bank account was $49,433.00. 15 I record below the evidence which was tendered on behalf of the Crown for the purpose of establishing that case. 16 The first witness who was called was Mr. Bargwanna, an accountant who, in 1995, was employed by Aldred & Co which, as I have earlier recorded, was Cementaid's holding company, as an assistant accountant. In that capacity, so it would seem, he was also involved with the accounting and other records kept by Cementaid. 17 Mr. Bargwanna first summarised what were Mr. Troth's duties, in particular those relating to the keeping of records, and indicated that through the course of each month the information which was produced would be entered into Cementaid's computer which was so programmed as to produce an interim stock report which recorded what, on the basis of such information, the stock should be, which stock figure could be compared with the result of the physical stock check taken at the end of each month. 18 Mr. Bargwanna said that, in July 1995, he did a reconciliation of the computer produced stock figure with the result of the physical stock count and noted that there was a variance or a discrepancy in relation to the empty 200 litre drum stock. Having done so, and with a view to ascertaining the possible cause of that variance or discrepancy, Mr. Bargwanna went back to Cementaid's records to obtain Drum Distributors' invoices for the month of June 1995. He located Drum Distributors' delivery docket No. 3958 dated 3 June 1995 with an invoice from Drum Distributors bearing the same date and same number, the delivery docket having been stamped and signed by Mr. Troth. Despite that fact the Material Inwards Report for the week ending 9 June 1995 contained no record of the receipt of the drums the subject of that delivery docket and that invoice. Mr. Bargwanna found two further Drum Distributors' delivery dockets for the month of June 1995, No. 3831 dated 10 June 1995 and No. 3974 dated 17 June 1995 with corresponding invoices, the receipt of the drums the subject of each of those delivery docket not being recorded in the relevant Material Inwards Reports. 19 In the light of the discrepancies which he had thus far discovered, Mr. Bargwanna continued to check further into Cementaid's records. As the result of his doing so, he discovered that, in the period from the beginning of November 1993 up to and including the end of May 1995, there were a further twenty-seven Drum Distributors' delivery dockets and associated invoices, the drums the subject of which delivery dockets were not recorded in the relevant Material Inwards Reports as having been received at the factory at Lilyfield. 20 Mr. Bargwanna produced a schedule of the thirty orders from Cementaid and the related Drum Distributors' delivery dockets and invoices, the drums the subject of which had not been recorded in related material inwards reports, the total amount of the invoices being $116,990.00. 21 In the course of Mr. Bargwanna's cross-examination by counsel for Troth, it was suggested to him that one of the terms of Troth's employment was that, if he (Troth) were able to find someone willing to purchase 200 litre drums which could not be reused without first being refurbished, he was entitled to sell them and to keep the proceeds of sale for himself, a suggestion with which Mr. Bargwanna was unable to agree. 22 The next witness who was called in the Crown case was Mr. Pearce who, in 1995 and 1996, was the accountant for Aldred & Co. and Cementaid and, as such, was responsible for the financial administration of Cementaid. 23 In the course of recording the system for the ordering, receipts and payment for raw materials and stock, Mr. Pearce said of the Material Inwards Report: "It's a very important document from an accounting point of view. It's used to highlight the stock coming into the warehouse if it's going into stock and that's the way the information is recorded. As stocks coming in and going out and it's needed for matching the issuing invoices that we received from suppliers if we ever needed to go back and refer back to the particular date from the delivery point of view." 24 Mr. Pearce said that, on 11 July 1995, Mr. Bargwanna spoke to him and advised him of the stock discrepancies concerning 200 litre drums for the month of June which he had discovered and that, as the result of that conversation, he spoke to Troth and asked him to recheck his figures and to see if there were some reasonable explanation for the discrepancy which Mr. Bargwanna had discovered. 25 On 13 July 1995, there was a meeting between Mr. Pearce, Mr. Bargwanna and a Mr. Bruce, another accountant, who, at that time, had been retained by Aldred & Co. as a consultant for the purpose of preparing the year-end accounts, reconciliation accounts and the year end financial reports for Aldred & Co. and its various subsidiary companies. As the result of that meeting, it was decided that Mr. Pearce and Mr. Bruce should conduct a full audit in respect of the 200 litre drums purchased by Cementaid for the year 1 July 1994 to 30 June 1995. For that purpose, Mr. Pearce and Mr. Bruce obtained the orders delivered to both A1 Drums and Drum Distributors during that period, the delivery dockets and invoices delivered to Cementaid by each of those two companies, the Material Inwards Reports prepared by Troth for that period and the record of material produced by Troth. 26 On 14 July 1995, Troth spoke to Mr. Pearce and told him that he had discovered the reason why there was an imbalance in the numbers of 200 litre drums, the reason being that he had signed for a delivery of drums that the company had not received. On the following Monday, 17 July 1995, Troth saw Mr. Pearce again and showed him a delivery docket and invoice, both numbered No. 3974 and dated 17 June 1995 which delivery docket and invoice he said related to the drums in question. When asked why he had signed for drums which had not been delivered Troth replied to the effect that the drums were going to be delivered later that day and that "the paperwork had in fact turned up earlier than the drums." 27 In the course of his evidence at the trial, Mr. Pearce read from a written statement which he had made in August 1995: "… On Monday 17 July 1995 John came into my office. He was holding a number of invoices. John said, 'We didn't get the drums at all. Out of all of the invoices that we are charged for by Drum Distributors we did get (sic) one delivery which was invoice No. 3974.' John then showed me the invoice No. 3974. I said, 'Why did you sign a delivery docket that you didn't receive?' He said 'The girl from Drum Distributors had come in with the paper work prior to the drum being delivered. I stamped them and signed the delivery docket and invoice because both paper work (sic) arrived at the same time. I spoke to the company and they told me that didn't have drums to supply which is why I didn't get the drums which were on the invoice.' John then told me that he shouldn't have put the paper work for the non-deliveries through to be approved by his manager for payment as it was an accident that had got through to the accounts department for processing." 28 Although, at the meeting which was held on 13 July 1995, it was agreed that Mr. Pearce and Mr. Bruce would carry out a full audit for the financial year 1 July 1994 to 30 June 1995, Mr. Bruce was later to extend his investigations to cover the period from 1 July 1993 to 30 June 1994. Various documents which were examined by Mr. Bruce in the course of his inquiries were described by him in his evidence at trial as including: "Invoice, original invoice, the original material inward reports, records, sales reports, sales information would have come from an inventory profit report, I believe it was, as with some sampling, back to original documents to make sure giving a good indication, the stock records came in a summarised form from the inventory status report with again, a sampling and verification back to the originals of that. It was easier to get out of the status report than the original stock-take sheets." and as including stock transfer sheets, production schedules, and stock-take records. 29 As a result of his inquiries, Mr. Bruce confirmed that the drums the subject of the thirty delivery dockets and invoices which had earlier been identified by Mr. Bargwanna were not recorded in the relevant Material Inwards Reports. Further, as the result of his inquiries, Mr. Bruce was later able to prepare a number of spread sheets, to some of which I will later refer, which were tendered at trial. 30 The order forms relating to those thirty delivery dockets and invoices were then assembled and discussed by Mr. Pearce with Mr. Aldred, the two of whom interviewed Troth in the afternoon of 2 August 1995. The nature of the conversation is sufficiently indicated by the following passages in Mr. Aldred's evidence in chief at trial: "I asked John to come into my office. I said to him, 'I have a problem here and if I have a big problem here that means you've got a very big problem'. I then said to him, 'I have been looking at the accounts and I have had the accounts checked for drum purchases' and I said, 'It appears that we have purchased some 7000 drums that were never ever delivered here'. And John said, 'Well, I don't know what you mean'. So then I showed John these documents in front of me. ……… I had heaps of them. I started with the first one which was the one that we first found out there was trouble … ……… He did say, he said to me 'I don't know what you're talking about, I can't explain it'. So I said, 'Here' and I explained. I said, 'Here is the purchase order you have signed. Here's the delivery docket you have signed as telling me the drums came in. Here is an invoice you have signed saying yes, we received the goods, we should pay and you signed'. And I said, 'Here's a material inwards thing and it says, it doesn't say I got the drums John and I've already paid money. Where are the drums'? He said, 'I don't know, I can't explain'. Just about every question I asked for three hours … I asked again, I said, 'I want to know what's happened to these drums'. He said, 'I don't know, I can't explain'. ……… I asked him, I asked him about the June orders where there was supposedly 400 drums delivered. I said, 'Where are the 400 drums'? I was told by Mr. Pearce that - 'You told him that the drums were coming, one truck broke down so it turned around and went back for something and you then asked to sign the driver's receipt which you signed. Why did you do that'? And he said, 'Well, because they were going to give us a credit note'. I said, 'Where is the credit note'? He said, 'I don't know, I can't explain; I don't know, I can't explain'. That went on till 3.30, 'I don't know, I can't explain'. At the end of this period I said to John, 'I will get to the bottom of this. We will stay here, we will do this till we find out'. He said, 'I've got to go home now'. And I said, 'It doesn't matter if you go home. Tomorrow morning when you come to work we'll start with the same question, what happened'? 'I don't know, I can't explain, I've got to go home now'. I allowed him to leave, it was nearly 3.30 which is roughly the time he goes home anyway and he left the premises." 31 On the following day Troth saw Mr. Pearce and handed him the keys to the factory saying "I'm leaving the company" and then left the premises. 32 On the following day, Mr. Aldred received in the mail a handwritten note by Troth resigning his employment. 33 Later that day Mr. Aldred, accompanied by his father, who was the governing director of Aldred & Co., went to the premises of Drum Distributors at Bankstown where he spoke to Donnelly. The general nature of his conversation then, and of a later telephone conversation, sufficiently appears from the following passage in Mr. Aldred's evidence in chief at trial: "I introduced myself, I said, 'I am the Michael Aldred'. I said 'I am the managing director of Cementaid New South Wales'. I introduced my father Peter Aldred as the governing director. I said I was at his offices to discuss the matter of thousands of missing drums. He said, 'Come in', took us into the office. I said to him, 'I have a problem with John Troth in that he has ordered drums, signed for drums that were supposed to be delivered, okayed invoices for drums that were supposedly delivered, but these drums never came to our premises'. And I said, 'I am missing about 7000 drums'. John Troth (sic) said, 'No, I don't know anything about that'. He said that everything, he said 'I have books and receipts and invoices showing everything that has been ordered I delivered and it's all been signed for by members of your company'. And I said, 'That may be but it doesn't gel with my books. I am missing 7000 drums'. I said, 'I want to particularly ask you about deliveries in June where John Troth told me you were to deliver 400 drums and that a truck broke down and you only delivered 200 and they never turned up'. And he told me, 'John Troth', he said 'is a liar'. He said, 'I have always delivered what was ordered' and I said, 'Well, it tells me you didn't deliver this'. He said, 'John Troth is a liar'. I said, 'Well, well, I need to get to the bottom of this'. I said, 'There's a lot of money at stake'. Then Donnelly offered to show me his books and he did produce an account book, he showed it to me at the premises at the time, the deliveries, and he had dockets signed by John Troth. I said, 'I can't reconcile your account books right here and now. I don't have the documents. I don't know, I don't have the papers but I assure you I'm going to get to the bottom of this matter'. He said, 'I didn't pinch anything, it's nothing to do with me, you talk to John Troth', and was the last I saw of John Donnelly until this matter. ……… I never saw him but Donnelly did ring up and ask me for payment of money that he said that we owed him. I said, 'Well, it's in the hands of the police', and I said, 'I'm not going to pay you anything until the police tell me. I can't pay you anything until its clear and until I know you haven't been stealing'. He said, 'Well, when will that be'? And I said, 'When the police are ready they will tell me'. He said, 'Well, you know, what I did was okay. What I did was right'. I said, 'I'm missing 7000 drums. I'm not going to pay you anything until I get it'. And he said, 'Well, the only thing I did was pay for used drums'. I said, 'I had no idea'. He said, 'We paid him cash, $8.00 a drum'. I said, 'Why are you paying him money'? He had said, 'Because the trade does that'. I said, 'Why don't you give it to the company'? He said, 'The traders did'. I said, 'I'm certainly not going to pay anybody any money who buys off my workers'. So then he said, 'I've done nothing wrong'. And I said, 'Well, until I get clearance from the police I won't pay you'. And he said, 'I will give you a statutory declaration that I haven't done anything'. I said, 'Good, send me one'. He actually sent a stat dec which didn't really say he hadn't done anything wrong." 34 As I have previously recorded, Mr. Bruce produced a number of spread sheets to illustrate what was shown by a detailed analysis of the information contained in the documents which he examined during the course of his inquiries. A reference to three of those spread sheets will sufficiently indicate what they disclosed. 35 The first of those spread sheets (Exhibit "AU") recorded and compared 200 litre drums invoiced and 200 litre drums recorded on Materials Inward Sheets for the period of 30 months commencing 1 July 1993 and ending 31 December 1995, the ratios between the two figures being compared on a six monthly basis. For the first four months from 1 July 1993 to 31 October 1993, there was a very close correlation between the number of drums invoiced and the number of drums recorded on the Materials Inward Sheets. However, in November 1993, drums invoiced totalled 540 while drums recorded on the relevant Materials Inward Sheets totalled only 260. The ratio of between drums invoiced and drums recorded on the Materials Inward Sheets for the six months ended 31 December 1993 was 1.159. In the six months to 30 June 1994 there were only two months in which there was a close correlation between drums invoiced and drums recorded on Materials Inwards Sheets, they being March and June 1994. The ratio between drums invoiced and drums recorded on Materials Inward Sheets for that period of six months was 1.321. In not one of the six months to 31 December 1994 was there a significant correlation between drums invoiced and drums recorded on Materials Inwards Sheets. Thus, in July 1994, drums invoiced totalled 904 whereas drums recorded totalled only 370; in August 1994, drums invoiced totalled 720 while drums recorded totalled only 200; in September 1994, drums invoiced totalled 1140 while drums recorded totalled only 360; in October 1994, drums invoiced totalled 930 while drums recorded totalled only 510; in November 1994 drums invoiced totalled 490 while drums recorded totalled only 130; in December 1994, drums invoiced totalled 580 while drums recorded totalled only 160; the ratio between drums invoiced and drums recorded during that period of six months being 2.754. The following six months to 30 June 1995 revealed an even greater disparity of which March 1995, in which drums invoiced totalled 1140 while drums recorded totalled only 60 provides a sufficient example; the ratio of drums invoiced to drums recorded in that period of six months was 5.076. By contrast, in the following six months to December 1995, the figures for drums invoiced and drums recorded were identical in five of the months in question, the ratio between drums invoiced and drums recorded being 0.928. The total of drums invoiced over that period thirty months was 14513 while the total of drums recorded on Materials Inwards Sheets for the same period was only 7325. 36 The second of the three spread sheets (Exhibit "AV") recorded drums invoiced and drums used in production for the same period of thirty months. In a fashion similar to that recorded in Exhibit "AU" there were recorded on a six or seven monthly basis the ratios between drums invoiced and drums used in production over that period. Thus, in the six months to 31 December 1993, there were some 2400 drums invoiced and 1229 drums used in production, the ratio between the two being 1.953. In the period of seven months to 31 July 1994, the ratio of drums invoiced to drums used in production was 2.13; in the six months to 31 January 1995, the ratio of drums invoiced to drums used in production was 3.179; in the five months to 30 June 1995, the ratio of drums invoiced to drums used in production was 2.527. There was a dramatic change in the ratio for the six months to 31 December 1995, the ratio of drums invoiced to drums used in production being 0.48. Over the whole period of thirty months, the total of drums invoiced was 14513 while the total of drums used in production was 8892. 37 The third of those spread sheets (Exhibit "AY") depicted, in graph form at two monthly intervals, for the period 1 July 1992 to 30 June 1996 drums purchased, drums signed in, drums used in production and sales and transfers. The pattern which is revealed by the figures prior to November 1993 - on only one occasion did drums purchased exceed 400 - and after June 1995 when drums purchased on no occasion exceeded 200 - is to be contrasted with the period during which Drum Distributors supplied Cementaid with drums - when on only two occasions did drums purchased fall below 400 while on eight occasions drums purchased exceeded 600, six of those occasions being 800 or more, up to 1140 on two of those occasions. 38 The last witness called in the Crown case was Det. Sgt. Power, who, in 1996, had been a plain clothes Senior Constable attached to Balmain Police Station and who, in January 1996, took over the investigations from Det. Prescott, who had commenced the investigations at an earlier time but who was being transferred. 39 Det. Sgt. Power said that, on 18 February 1996, he and Det. Rhodes, who was also stationed at Balmain Police Station, went to Troth's home at East Ryde and there spoke to Troth and asked him to accompany them to Balmain Police Station for the purposes of an interview, in which request Troth acquiesced. 40 In the interview room at the Balmain Police Station Det. Sgt. Power told Troth: "We are making inquiries in relation to a number of inconsistencies in delivery of products whilst you were employed by Cementaid."

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to which Donnelly replied: "Yeah, no problems." 45 As it was during the course of Det. Sgt. Power's oral evidence that the video tapes of the electronically recorded interviews of Donnelly and Troth and the transcripts of those interviews were tendered, as also were a number of documents - such as the cheques and cheque butts which had been obtained by Det. Sgt. Power pursuant to the search warrants which he had executed - the cross-examination of Det. Sgt. Power was not extensive. However, as, on the hearing of the appeal, counsel for Donnelly sought to make a point of it, it is as well that I record here the relevant part of Counsel's written submission on the matter and the evidence to which that submission related. 46 The relevant part of counsel's written submission was as follows: "The Crown further relied on a recorded interview (ERISP) between the police and the appellant wherein the appellant allegedly lied to the police (the Crown says the appellant was being truthful), but in any event wherein the appellant said he did not remove orange (Cementaid's colour) drums from Cementaid to be reconditioned or refurbished but rather only raw material drums that were used by suppliers of Cementaid to deliver solvents. These too could be reconditioned by Drum Distributors. The Crown says that the number of such raw material drums that Cementaid could possibly sell to Drum Distributors would not satisfy the total amount paid by it to Troth. In evidence it became known that the appellant contacted the police a few days after his interview and advised them that he had listened to the audio tape of the ERISP and wished to correct what he had said and that in fact he had purchased the used orange drums to be reconditioned." 47 The relevant passage in the cross-examination of Det. Sgt. Power, which passage occurred in the course of counsel dealing with what occurred when Donnelly went to Balmain Police Station on 9 March 1996 and handed a number of documents to Det. Sgt. Power, so far as is relevant was as follows: "Q. Did he also say to you with respect to the interview that was recorded that we saw that he made a serious mistake in it? A. Yes. Q. Just to refresh your memory if I might, did he say to you that he misunderstood a question that he had thought when you were questioning him there was something implicit in that he bought reconditioned drums along, put them down on the ground, picked them up and carted them off thus charging for them and being paid to carry them away, something along that line? A. He did make an off the cuff remark in relation to some confusion he felt … Q. It wasn't off the cuff, it was made face to face with you, he came and you (sic) brought your documents and said look, I may a serious mistake? A. That's correct but the … HIS HONOUR: Q. But what? A. I was going to say sir that the conversation I had with him could be classified as off the record. It was unofficial. WETMORE: Q. I am not suggesting it was recorded, you didn't take notes of it? A. No. Q. You just recalled it? A. That's correct. Q. Nobody is criticising you, do you understand that? A. Yes. Q. With respect to the area that we are talking about, it may assist you if you have a copy of Exhibit BB the recorded interview with Mr. Donnelly, I am not suggesting this is implicit but if you go to the bottom of page 49 (shown) - are you able to hear me through this cold can you hear me? A. Reasonably well, yes. Q. I am sorry, I got (sic) this cold. At the bottom of page 49 above question 280, I just read this out loud, the question is: 'Q. Now the drums that you got from Cementaid and paid money to John Troth for? A. Yeah.' Question 281 at the top of page 50: 'Q. Were they the same orange drums? A. No. Q. As it had been? A. That's just what I explained to you then.' He went on to say that he didn't buy orange drums from Cementaid, do you recall that area? A. Yes, that's correct. Q. That was the area that he wanted to correct with you wasn't it? A. I can't remember the detail of the exact conversation but that was the general nature. Q. The gist of it was, look, I did buy orange drums and I was confused and I misunderstood you? A. I can't remember the exact nature of the conversation but it was in that area yes. Q. That was all that he brought up with you I suggest apart from chit chat and bringing the documents on the Saturday after the Tuesday interview, there was no great moment was there? A. Not that I am aware of, no." 48 The evidence that was tendered at trial on behalf of the Appellants comprised the oral evidence of Troth, who gave evidence first, Donnelly and Donnelly's two daughters Melissa Donnelly and Brooke Donnelly. 49 Troth's evidence in chief was short. Insofar as he dealt with the absence of any record in the Material Inwards Reports of the receipt of the drums the subject of the thirty invoices, his evidence was as follows: "Q. You were referred in the record of interview that you heard recently played at page 4 of the transcript question 27, you were asked to explain further in relation to Mr. Pearce and you said words to this effect: 'To be honest with you, he hated my guts. He didn't like anybody.' and more or less said; 'I'll fix this guy by - we'll see how clever he is by not indicating everything that comes in and see if he can pick it up or not.' Can you indicate what you meant by that answer to the question? A. To me he was like a smart alec if that makes sense. And he didn't treat me fairly. He didn't treat me correctly and I was - and I did try to get back at him by doing things to the goods inward report. Q. What was it that you did in that goods inwards or material inwards report by way of retaliation to him? A. I didn't fill in the most obvious product that was coming in every week. Q. Over the period between 1993 and July 1995, did Mr. Pearce ever take you up on your recording of the goods inwards or the material inwards report? A. Never."

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50 So far as concerned the drums alleged to have been sold to Drum Distributors, Troth's evidence was as follows: "Q. I think you referred briefly to the sending off (sic) used drums to Mr. Donnelly? A. Mm hmm. Q. Did you develop a practice in about 1993 in relation to used drums that could not be reused in the factory but might have a use elsewhere? A. Could you repeat that please? Q. Did you develop a practice as far as used drums that could no longer be used in the factory? A. I did. Q. What was that? A. It was to find somebody who could buy them like a manufacturer of drums. Second hand drums. Q. Did you find such a person? A. I did, yes. Q. Who was that? A. That was the Drum Distributors. Q. Were you aware at the time that you first dealt with Drum Distributors the company had been paid (sic) to have drums sent off for scrap? A. Yes. Q. As far as the sale of drums to Drum Distributors, firstly how was payment made for those drums? A. By cheque or cheques. Q. What did you do with those cheques? A. I put them in my bank account. HIS HONOUR: Q. Who did you get the cheques from? A. Drum Distributors your Honour. Q. Who though? A. From John Donnelly or one of his daughters. McSPEDDEN: Q. Page 94 of the transcript of the record of interview questions 758 and the preceding question, you were asked whether you had permission from anybody at Cementaid to dispose of the drums and you indicated in your answer this: 'People that worked with Cementaid had told me you get rid of drums in this fashion.' Who was it that told you to get rid of the drums in that fashion? A. There were two persons. The factory operator who actually worked for them and an employ (sic) of Cementaid in Queensland. Q. You say that you banked the monies and you indicated in your record of interview that indeed that is what you did, did you come to some arrangement with the Cementaid staff in relation to doing something for them out of the exercise? A. I did. Q. What was that? A. At Christmas I would bring alcohol in for everybody that worked there. Q. And on other occasions was there anything else for the staff? A. Occasionally lunches during the working week and occasionally of a night time. Q. Did that include drinks and lunch for Mr. Pearce? A. Yes it did." 51 Insofar as concerned the matter with which he stood charged, Troth's evidence in chief was as follows: "Q. You're aware that the allegation in this trial is that you had an agreement with Mr. Donnelly to arrange for the invoicing for drums, in the receipt of drums that were not in fact delivered to the company and the payment for him of drums that were not in fact delivered, do you understand that's the allegation? A. I understand that's the allegation. Q. Was there every in 1993, 1994 or 1995 or any other time any such agreement between you and Mr. Donnelly? A. Never. Q. Was there at any time any agreement between you and Mr. Donnelly to conduct any illegal enterprise? A.. Never." 52 At the conclusion of his evidence in chief Troth said that he did not tell Donnelly that he was retaining the proceeds of sale of the drums. 53 In the course of his cross-examination by counsel for Donnelly, Troth gave the following evidence: "Q. With respect to the cheques as I understand your evidence, all payments for used drums by Drum Distributors that you received were cheques? A. All cheques. Q. Never any cash? A. Never any cash. Q. Always made out to cash? A. Always made out to cash. Q. So that there must be no understanding when we hear anything anybody here talking about cash cheques, it simply means payee cash but it's a Drum Distributor's cheque? A. Yes that's correct. Q. And may we take it you never told Mr. Donnelly one way or the other what you were going to do with those cheques? A. That is correct. Q. I understand from your evidence that you met his daughter? A. Yes, one of his daughters. Q. Was that one of the people who sometimes delivered drums either with him or without him, put it that way? A. She came with him and delivered on her own. Q. So she would either - the drums mostly came on Saturday didn't they? A. That's correct. Q. An (sic) that was to suit your convenience? A. To suit my convenience that's correct. ……… Q. As I understand what you just said Donnelly would come along or the daughter would come along, and could she really deal with these the way you said? A. Better than anybody here. Q. So she was quite competent to load and unload? A. Very much so. Q. And sometimes if the load was so big it needed more than one truck to bring them in? A. That's correct. Q. The pair would come? A. That's correct. ……… Q. Did you come to know the name of the young lady who was either bringing drums with her father, or on her own? A. I did. Q. What is her name? A. Melissa. Q. Perhaps I better step back a bit. Did you meet, at least by telephone another Donnelly young lady? A. By? Q. Telephone? A. I spoke to her on the phone. Q. Was her name Brook? A. Her name was Brook. Q. And she appeared, at least from your observations to be the young lady that took orders when you needed things? A. She was the one that took the orders. Q. So you would place an oral order and confirm it by a written, there would be a confirmation order from Cementaid? A. Correct. Q. And as I understand what went on, the delivery would be shortly after you placed the order, within days? A. Within two, three days correct. Q. And whoever delivered the drums would hand you documents for your signature. One of which was the delivery docket? A. Correct. Q. And at that time, may we take it, you would hand over your purchase order? A. Correct. Q. And sometimes, I would suggest, as the time went on more so, you would receive the cash cheques for the drums that had been picked up to go back to Drum Distributors the week before? A. That's correct. Q. As I understand it, I'm only giving you my client's instructions, you can agree or disagree as you see fit. As I understand it the situation at first when he, Donnelly, first delivered, he would size up the drums on the spot, pay you on the spot and off he would go? A. That's correct. Q. And then later on, for whatever reason, he would simply pick them up and get out of there more quickly and you would have to wait to the following week for the cheque? A. After he would inspect them at his yard, yes. Q. Well apparently? A. Yes. Q. I know your learned counsel asked you whether you in any way shape or form during the years 93, 94 or 95 entered into any agreement with Mr. Donnelly to cheat and defraud Cementaid. I believe you said, no most emphatically. Was there any suggestion by Mr. Donnelly of any such trickery? A. Never. Q. Was there any suggestion by you to Mr. Donnelly of any such trickery? A. No, absolutely not. Q. So I take it your evidence would be, very clearly, there was not even some sort of implicit unspoken arrangement? A. Never." 54 In the course of his cross-examination by the Crown Prosecutor, Troth gave the following (inter alia) evidence: "Q. If we take it that the $49,000 that you received came from the sale of drums, that's drums that you wouldn't use again? A. Correct. Q. Firstly over that period of time would you agree with me that's a lot of money? A. It's a lot of money all right. Q. It had added considerably to the money in your pocket over the period of time? A. Quite obviously. Q. Did it occur to you that the money ought properly have been given to Cementaid? A. Could you repeat? Q. Did it occur that money ought more properly to be given to Cementaid? A. I thought it was mine, but you know, it's a problem, it could have been theirs. Q. You say it was mine, what possible basis could you have thought …? A. Because I was… Q. …I'm sorry let me finish that, that sort of money could possibly be yours as distinct from the company that owned the goods? A. Well it never all happened at once. It was like on a weekly basis that I was getting rid of the drums and I was getting paid for the second-hand drums. HIS HONOUR: Q. Has it ever happened before October 1993? A. If that was the date. Q. That's the date of the first cheque? A. No, it never did. No. Q. You never sold any drums to anybody before that date? A. No, no. CROWN PROSECUTOR: Q. What did you do with them? A. What did I do before that? Q. Yes? A. Other drum companies would take them away they said they're not good. They wouldn't give me money. I asked a manufacture (sic) and I wasn't aware at the time. Q. When Drum Distributors came on the scene it was a financial windfall for you wasn't it? A. No, I phoned him up. I looked in the Yellow Pages for another drum supplier. Q. The $49,000 that you got from Drum Suppliers - Distributors …? A. Distributors. Q. … it was a financial windfall for you wasn't it? A. You could put it that way yes. Q. Could you think of any other way of putting it? A. Probably not, no. Q. Indeed, this was an arrangement that you kept very much to yourself, wasn't it, this arrangement that you had received money for Cementaid's property from Drum Distributors, that was something you kept very much to yourself? A. For the sale of second-hand drums? Q. Yes. A. Yes, that's correct. Q. This business of making reference if you took anyone out ever to drinks or lunch or dinner when it came from the drum man, you weren't referring to the $49,000 were you? A. Of course. Q. But never the amount? A. No, never the amount. Q. It would have been an embarrassing thing for you to disclosure (sic) wouldn't it? A. Probably at that stage I didn't know it was 49. Q. Pardon? A. I wouldn't, I wouldn't know it was $49,000. It probably wasn't that much. The only time I suppose they knew was at lunches and Christmas when I said: 'What would you like for Christmas?' And if asked here it was coming from, 'It was from the drum man'." 55 At an early stage of his evidence in chief Donnelly, referring to his attendance at Balmain Police Station on 9 March 1996 and his conversation with Det. Sgt. Power gave the following evidence: "Q. When you went, was there some sort of problem with the interview after you listened to the tape? A. Yes, I did. Q. Do you recall the conversation that you had? A. Yes, I do. ………

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I said: 'During the interview I was not completely truthful with you'. He said: 'What do you mean?' I said: 'When you were asking me about empty orange drums I wasn't completely truthful'. And he said: 'In what respect?' And I said: 'That I got confused. I believed that you were intimating that I had dropped a lot of drums there, unused, put them back on the truck and drove away.' And he said: 'Yes?' And I said: 'Well, I did buy drums, orange drums. A lot of orange drums but not that type of drum. So I stayed right away from orange drums from the interview because of the confusion that was, looked like being created over orange drums'. And he said: 'Well, it was a taped interview and I can't do anything about it now.'" 56 Donnelly then gave evidence as to the operations of Drum Distributors. So far as is relevant it was as follows: "Q. What did you - do - by the by, how many days a week did you work back then? A. Six to seven days a week. Q. Did you have a daughter Brooke working there? A. I certainly did. Q. How many days a week did she work? A. Six days a week. Q. Did you have a daughter Melissa working for the company? A. Yes, certainly did. Q. How many days a week did she work? A. Six days a week. Q. Briefly, what was your task within the company, what did you do? A. My task was to be out on the road, buy drums, bring them back into the factory, have them unloaded, delivery of reconditioned drums from out the other end of the factory, around buying drums again. Doing the same thing. Q. What was Melissa's job? A. Her job was virtually the same as mine. Q. Did you ever work together with her? A. Occasionally we worked together. Q. Let's deal with Brooke, she is your second daughter? A. That's correct. Q. What was her function within the company? A. To run the office, do the paperwork. Q. Did she ever help out with the loading, unloading, buying, selling any of that? A. No. 57 When, in the course of his oral evidence in chief, Donnelly came to deal with the question of the delivery of drums to Cementaid he gave the following (inter alia) evidence: "Q. Now I want to deal with the actual deliveries. And this is only with respect to Cementaid. Was there any particular day or time that you would usually make deliveries to Cementaid? A. Saturday morning, early. Q. Why was that? A. Request of Mr. Troth because it was more convenient. Q. Were you happy to do that? A. Yes, I had no problems to be there at 7 o'clock in the morning. ……… Q. Now lets (sic) us take the Saturday, you come to work, the sun then comes up, I presume. Q. Yes, that's correct. Q. Who would be there? A. There would be my foreman and probably one other to help load the truck. I would, if there was (sic) two trucks Melissa would be there as well. Q. What about Brooke, would she be there? A. She would be there." 58 When he came to deal with the drums the subject of Invoice No. 3974 dated 17 June 1995 Donnelly said that, on that day, the number of the drums involved was such that two trucks were required to deliver them, one truck, which was capable of carrying 180 drums, being driven by himself and the other, capable of carrying 135, drums being driven by his daughter Melissa. Although, so he said, they set off driving in tandem, before they reached Cementaid's premises the truck which he was driving broke down. Accordingly, he stayed with that truck for the time being while Melissa drove on to Cementaid's premises for the purpose of delivering her load and, when she returned, she drove him to a place where he could obtain a replacement spare part when he then installed, following which he, in his turn, drove to Cementaid's premises and delivered the load which the truck he was driving was carrying. 59 When he came to deal with the drums which were removed for disposal or which, so he said, he purchased for the purpose of being refurbished Donnelly gave the following (inter alia) evidence: "Q. Now with respect to purchasing of drums I think you said you had cash cheques, is that correct? A. That's correct. Q. And when would those be given over to Mr. Troth? A. At the beginning on the day that I picked the drums up because I would sort them and grade them there and then on the spot. Q. This is in 1993, is it? A. That's correct, when we first started. Q. So you eyeball the drums, assess them and pay? A. That's correct. Q. Did that change? A. It did change. Q. Why? A. Because it was just too time consuming for the amount of drums on a Saturday to do that sort of thing; we just had too many other things on. Q. Did you have anyone else at your factory who was capable of doing this assessing or appraising of drums? A. Yes, my foreman. Q. So what was the system after you ceased to inspect them yourself, grade them and pay for them? A. We would take the trucks back or I would take the truck back, depending - park it … Q. With something on it? A. Yes, loaded. Q. Yes. A. Park the truck in the yard, leave it there, hop in another truck and go do whatever else I had to do. On the Monday the foreman would, with a couple of his yardmen, unload the truck, grade his drums into different sections of how many here and how many there, put them in different sections. We would then go to the office and say to Brooke: 'I have so many first grade, so many second grade, so many third grade.' If there was rubbish for removal there was so many removed. Q. Let's talk about the rubbish for removal. What would happen after that number of known? Would Brooke do …? A. She would then charge for the removal of (sic). Q. Would she do that each time? A. How do you mean? Q. The garbage - I'm not going to say garage (sic) - garbage drums came in. Would she send an invoice out right away or was that something else? A. No, that went on with the same invoices that we created on the delivery docket. She would add that to that. Like there would be - Mr. Troth would say there would be so many - there will be drums for removal, Brooke would then - that would be on the docket. ……… Q. … Now once the others - I think you've categorised them as grade one. grade two, grade three - these are ones you can refurbish? A. That's correct. Q. And were there different values put on those? A. Certainly was. Q. What were the values? Were they fluctuating or were they constant? A. They fluctuated to a certain extent on supply and demand. ……… Q. With respect to your payment of these cash cheques after these drums were graded I think you are suggesting on a Monday or something like that, is that correct? A. That's correct. Q. What would happen? So many of that I take it? A. That's correct. Q. What would then happen with those facts and figures? A. Those figures were given by my foreman to Brooke. Q. And what was her job description? What would she do with those? A. She would work out the total amount of money and the price for the - at the - on the day for each different section of numbers of the grades. Q. Yes. A. And make out a cash cheque. Q. And what would happen to the cash cheque? A. It would be taken on the following Saturday and handed to Mr. Troth. Q. And was there any other paperwork apart from whatever Brooke and the foreman did and the cheque? A. No. Q. No other paperwork? A. No." 60 At the outset of his cross-examination of Donnelly the Crown Prosecutor turned to the question of the drums said to have been removed from Cementaid's premises each Saturday. "Q. The empty drums, that's the Cementaid's orange drums that you collected, on each occasion that you made the deliveries to Cementaid are you able to say whether they were empty drums or drums that contained sludge and slurry or rubbish? A. The ones I purchased were empty. Q. And may we take it that the ones that contained sludge, slurry or rubbish were the ones that you invoiced the company to take away? A. With heavy sludge and slurry, yes. Q. Have you any indication or can you give us any indication as to the percentage of empty drums as against sludge and slurry and rubbish drums that you took away? A. There was a lot more empty ones than sludge and slurry ones. Q. Now there are just a couple of areas I wanted to ask you some questions about, Mr. Donnelly, and they are these. You know we have in Court the comparison of cheque butts and cheques that you wrote or that your daughter wrote, may I take it at your behest or your direction, would that be right? A. Yes. Q. Would you agree that there's not one cheque butt that written out correctly in what my be called in the normal course of business practice? A. I do. Q. There's not one butt which records either 'Cementaid' or 'John Troth' as being the supplier of drums? A. That's correct. Q. Now you agreed I think that so far as you were concerned I think the drums were owned by Cementaid, I think you said as much in the interview with the police? A. That's correct. Q. And as far as you were concerned you were making a genuine honest bona fide purchase? Why didn't you include either Cementaid or John Troth as … ? A. Sorry? Q. … on the cheque butts? A. Because I was informed it was for Cementaid's social club and requested to have a cash cheque. Q. The cash cheque is fine. What I'm talking about is the particulars on the butt. A. That's correct, sorry. Q. If the transaction was a genuine one and that you agreed that the drums were, in fact, owned by Cementaid, why is there no mention at all on the cheque butts as to the payee? A. Because under our system or in our industry you give a cash cheque to a social club or to somebody - something like that you just put a bodgy name in it because of taxation purposes for the other - for the receipt - for the person receiving it more than anything else. Q. When you said 'put a bodgy name' in there it's a deliberate untruth in the document, isn't it? A. No, it is not a deliberate untruth. Q. Why is it not? A. It is a bodgy cover, taxation to cover the person receiving the cheque. Q. Well, as its a bodgy cover for taxation or its a bodgy cover for anything it's still not true, is it? A. I suppose so. Q. Well, is it 'suppose so' or you know so? A. Well, I never looked at it. I've never looked at it in the way you are putting it to me. Q. You see, the cheque butts didn't tell the truth about the payee, the correct payee of the cheque, did they? A. That's correct. Q. To that extent the cheque butts were false documents, weren't they; they did not reflect the truth of the situation? A. No. Q. Why was the truth not good enough in relation to the compilation of your company documents? A. I'm sorry? Q. Why was the truth not good enough in relation to the compilation of your company documents? A. What document are you referring to. Q. I'm referring to the cheque butts? A. Because that is the system that our industry runs. Q. You can speak for yourself but when you say 'our industry' you have an intimate working knowledge of the financial practices of all drum reconditioners in Sydney? A. Well, I've been in the industry for thirty-two years, it is very competitive and that is the way the industry operates. HIS HONOUR: Q. Does that apply to all the drums that you buy for recondition (sic)? A. 90 percent (sic) of them, your Honour, unless they are a company account and we don't run very many company accounts. Q. So 90 percent (sic) you pay by cash cheque? A. Cash cheque, sir. Q. And you have no record as to who you bought it from? A. No, sir. Q. What you paid for it per drum? A. No, sir. Q. Or how many drums? A. No, sir." 61 At the conclusion of his cross-examination of Donnelly, the Crown Prosecutor came to the meeting between the Messrs. Aldred and Donnelly: "When Mr. Aldred and senior (sic) came or when you spoke to Aldred subsequently, did you ever mention to Mr. Aldred that you paid Mr. Troth $49,433.00? A. No, I just said I bought the drums and gave the cheques to Troth to pass on. As far as I was concerned they were being passed on. It - I didn't even know the amount of money. HIS HONOUR: Q. Pass onto who? A. To the Cementaid's social club. Q. Who mentioned the social club as being the recipient of these monies (sic)? A. That was the - what I assumed from what Mr. Troth had told me. The money was going to the boys, which is the boys' social club. That's what they called it. The boys or social club. It's all the same. Within the Cementaid end … CROWN PROSECUTOR: Q. What did Troth say was going to be done about the money? A. All he said is the money was going to the boys. You know, their social club or drinks and do whatever they do. I don't know, their social club. 'To the boys', he said. Q. When did you realise that you paid out $49,000.00 to Mr. Troth? A. When did I realise. Q. Yes? A. When all these cheques were all added up. I had not sat down and worked out how much money I'd paid Mr. Troth. Q. Indeed you couldn't, could you, because you didn't have a record of a purchase anywhere and nothing written on any of the cheque butts? A. That's correct."

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62 Melissa Donnelly gave evidence that, over the period from November 1993 to June 1995, she, at times in company with Donnelly, and at times alone, delivered drums to and picked up drums from Cementaid. Although she was unable to say that it was she who delivered the drums the subject of the thirty impugned invoices, she nonetheless asserted that the drums were in fact delivered. 63 Melissa Donnelly gave no evidence to corroborate the evidence given by Donnelly himself as to what was alleged to have occurred on 17 June 1995 (see para. 58 (above)), the day when, so he said, the truck which he had been driving to Cementaid broke down. 64 In the course of her evidence in chief at trial, Brooke Donnelly gave the following evidence: "Q. With respect to Cementaid, are you able to recall who the driver or drivers were over the 20 odd months that you dealt with them? A. Either Melissa my sister or my father. Q. Would they travel together? A. Occasionally, yes. Q. With respect to the two of them, when you handed whoever it was driving the docket? A. Yes. Q. Did you ever give them … ? A. I give (sic) them an envelope contains (sic) cheques. The cheques were for the drums that were purchased from Cementaid the previous week. Q. Let's just deal with that for a moment if we might: did you create the cheques? A. Yes I did. Q. We've seen a battery of cheques here, perhaps we could just look at a few of them, BC, just have a look and see if you can identify those documents (shown)? A. Yep. They (sic) my cheques. Q. You say mine? A. They're the cheques that I wrote. Q. Do you see any other signatures than your own on those just take your time and go through? A. Yes, my father's. Q. Is your father's signature on the earlier cheques, would you check that for us? A. Yes, they are. Q. Did that sort of get taken over by your signing of the cheques? A. I did. HIS HONOUR: Q. Did you draw those at someone's direction or what happened? A. No. The actual - I was in charge of pricing the drums. We have a foreman. When the drums came back he would tell me what grade drums they were and I determine the price and draw up the cheques accordingly. WETMORE: Q. I was going to ask you about that procedure and I will do so now. In order to create these cheques, did you fill in the amount yourself? A. Yes, I did. Q. How did you decide what amounts to put in? A. We have a foreman and when the trucks would return from Cementaid with the drums on them he would unload the drums, grade the drums and come to me and say, we have X amount of drums and they come out of this grade drum. I would then value that put a price on that particular grade and have a total amount.

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Q. Now if you could just slow down a little bit. You say trucks would come back in with drums? A. Yes. Q. And what sort of drums would you actually see coming back in on the trucks? A. The bulk of the drums were the orange drums and there were some other various coloured drums as well. Q. Now, typically was there any day out of the seven the trucks would go out with the orange drums, do you recall? A. What date? Q. What days, not the date? A. What day did they leave. Q. Yes? A. Typically a Saturday. And typically when you saw drums returned, was there any particular day? A. The same day, the Saturday. Q. We have this right, the truck would go out with nice shiny drums and come back with a different load of drums? A. That's right. Q. Now I'm not going to ask you to answer this unless you can, but are you able, the operative word is able, are you able to compare in any averaging or typical way the number of drums that would go out, compared with the number of drums that would come back? A. Yes. Q. And can you put that into percentages? A. Yes. Q. Could you give us the percent of drums coming back compared with the drums going out? A. I would say it would be about seventy percent (sic).. Q. And was that typical, over the entire period? A. Yes. Q. And are you able to say whether over the time the truck went out and the new refurbished drums they would come back with some apparently used drums? A. Yes, they always came back with used drums. Q. You mentioned that the used drums would be graded? A. Yes. HIS HONOUR: Q. Is it you are saying that of the drums that went out to Cementaid, were sold to Cementaid, you say about 70 percent would come back? A. The truck that returned from Cementaid would hold about 70 percent of the quantity of drums that left. WETMORE: Q. Are you able, this is the critical question, are you able now recalling back, to say whether or not the drums that came back were drums that had already been reconditioned but never used? A. No, they were used drums. Q. How do you know they were used drums? A. You can tell because a second hand drum is, well obviously it's marked up. It has product residue in it, all of those kinds of things. A reconditioned drum looks like a brand new shiny drum. It is very obvious the difference. Q. Now, when they got back as I understand it, the foreman or whoever would grade the drums? A. Yes. Q. What were the grades? A. You have a first grade drum, a second grade drum, a third grade drum and a scrap drum. Q. Let's deal firstly with scrap drums, what would you do, accounting wise or whatever, with those drums that were scrap grade? A. On the invoices they are charged as disposal drums because we charge a fee to remove a scrap drum because we have to pay to dispose of it. We can't use it to recondition it. Q. What would you do with account or docket with respect to those? A. I would charge the customer. Q. How much? A. I believe it was five dollars a drum. Q. Now with respected (sic) to grades 1, 2 and 3? A. Yes. Q. Would the price that you were prepared to pay as a purchaser, would that vary on the grades? A. Yes. Q. And can you please indicate whether or not, just a grade 1 for example, would the price on that that you were prepared to pay remain constant or would it fluctuate? A. It fluctuates. Q. Why did it fluctuate? A. It is very much a supply and demand system where we may require a thousand first grade drums this week, next week we are own(sic) require fifty, so obviously you don't pay the same price when you don't require that. Supply and demand theory really. Q. Would the same answer to the same question applying with respect to a grade 2 and grade 3? A. Exactly. Q. I'm just trying to, and I appreciate it was seven or so years ago, to test your memory in this sense, are you able to say what the average prices were? And I appreciate they fluctuate for a grade 1, grade 2 and grade 3 drums? Let's just look at 1994 in the middle of it all? A. Across the board an average price probably averaged out between six7 and eight dollars. Q. And that is adding grade one … ? A. All three together. HIS HONOUR: Q. So you said between six and eight, you mean seven averaging it out? A. Yeah, seven I suppose, yeah. WETMORE: Q. Now, once you had the number and grade of the drums that had been used and that you were going to strike a cheque for, would you do some calculations? A. Yeah, I just totalled the amount of drums against the price for that particular grade and add them all together. Q. And you then make out a cheque? A. Yes, I would either make out a cheque then and there or quite often I would wait until the next load was going out. I just scribbled these things on a notepad I have. Q. And I take it you I (sic) kept that pad for some time? A. Yeah, yeah it was a big notepad. Q. And after a while did those notepad entries get entered into a formal documentation? A. No, no. Q. Was it the case that your cheque stub was all you had for a record? A. That is it, yeah. Q. And the cheque would then go out, I think you said with the driver who got the docket book and cheque just before leaving? A. Go altogether." 65 Although the submissions of counsel to the jury appear not to have been recorded, it would seem that, despite the suggestion which had been put to Mr. Bargwanna in the course of his cross-examination by counsel for Troth to the effect that one of the terms of Troth's employment was that, if he were able to find someone willing to purchase the 200 litres drums which could not be reused without first being refurbished, he was entitled to sell them and to keep the proceeds of sale to himself (see para. 21 (above)) and despite the evidence given in chief by Troth to a similar effect (see para. 50 (above)), during the course of her submissions to the jury, counsel for Troth did not press the jury to accept that suggestion but, rather, conceded that Troth had been guilty of a failure to account to Cementaid in respect of any money which had been paid by Donnelly for drums which had been sold to Drum Distributors for the purpose of being refurbished. That this was so is made clear by the following passages in the summing-up by Shillington DCJ: "Ms. McSpedden on behalf of her client emphasised the onus of proof. She frankly concedes that there was a failure to account on behalf of her client for the $49,000.00, but emphasises that is not the charge which is before you and that that does not establish that there was any conspiracy. ……… She says well you would also accept the evidence of Brooke and Melissa Donnelly in support of the evidence of Mr. Donnelly himself as to the supply of the items, and the taking away of the items from the premises of Cementaid, that although her client was guilty of criminal activity by failing to account for the $49,000.00, she says well that is not the subject of the charge, the subject of the charge is one of conspiracy, and she submits to you you would not be satisfied that there was first of all any failure to deliver the goods the subject of the 30 invoices and for that reason her clients should be also found not guilty." 66 Since none of the grounds of appeal taken on behalf of either Donnelly or Troth is directed towards the summing-up, it is unnecessary to record in any detail any of the directions given by Shillington DCJ. However, in the light of one aspect of the matter which occurred after the jury had retired, it is as well that I set out part of his Honour's charge to the jury. It was as follows: "Members of the jury, the case presented by the Crown is a circumstantial one. I will come back to the reasons why that is the situation later in my summing-up. But I must tell you members of the jury that in the case of a circumstantial case, that is a case in which the Crown submits that the various circumstances are such that they would lead you to a verdict of guilty, before you can convict an accused on such a case you must be satisfied beyond all reasonable doubt that the facts as found by you are inconsistent with any other rational conclusion than that the accused is guilty. As I say, I will come back to the way in which the Crown puts it case in a circumstantial way in this particular trial. ……… What is essentially put here is that Cementaid was induced to pay for thirty invoice supplied items by Drum Distributors for goods never supplied. It is essential members of the jury that you would be satisfied before you would go any step further, that in fact those goods were not supplied. The allegation here is that you conclude that there was such agreement between Troth and Donnelly, that Troth used his knowledge of the sole use of the materials inwards report as being the only information which went into the computer assessed stocktakes for the month, and he, knowing that that was the only item used, concealed the failure of deliveries by not putting that information onto the stock material inwards reports, and that he agreed with Donnelly to take advantage of this situation and to allow Donnelly to obtain payments for drums which were never delivered, that is in the sum of $116,990.00. It is the Crown's case that for his contribution towards that situation that Troth did receive $49,433.00. For that to be the situation of course, you would have to reject the evidence of both the accused, that in fact there were genuine sales by Donnelly, illegal of course, but nevertheless sales by Troth to Donnelly of the 205 litre drums which it is said went out and went back to Drum Distributors."

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Having then identified the various overt acts relied upon by the Crown to establish the conspiracy charged, continued: "Members of the jury, those are the alleged acts of the two accused, which you are entitled to look at and if you are satisfied first of all that there were no delivery by Drum Distributors of the various drums the subject of those thirty invoices to Cementaid, and if those events occurred that there was no transfer of drums, although illegal, by Troth back to Donnelly's company. If those were the actual conclusions that you would arrive at then it would be open to you to look at those various circumstances and conclude beyond reasonable doubt that there was an agreement between those two persons, the two accused, to obtain money fraudulently from Cementaid by Donnelly's company and subsequent repayment by him to Troth as his share in the illegal activities." 67 Some hours after they had retired, the jury sent a note to Shillington DCJ. The transcript records the following: "HIS HONOUR: A note from the jury, I will just read it out - 'In finding a conspiracy how closely should it match the details put by the Crown. What should we find if for example we thought the drums could have been physically delivered but returned without being genuinely used or by some other means not available to Cementaid?' The Crown's case is that they were not delivered Mr. Crown, I think shortly that is it? CROWN PROSECUTOR: Yes, that's right. McSPEDDEN: And if they find they could have physically delivered (sic) they must acquit your Honour. WETMORE: That's right. CROWN PROSECUTOR: Unless taken away by Mr. - HIS HONOUR: I think that follows doesn't it Mr. Crown - its depends what they mean by physically delivered. If they came out and were never taken there for example but simply left at the premises and didn't ever get there. They don't really have to go into that, they just simply have to find they didn't arrive for the use of Cementaid. WETMORE: Yes that's right, it is the ultimate end use. HIS HONOUR: Your case is that they were delivered and went into the stock of Cementaid Mr. Crown? CROWN PROSECUTOR: My case is that weren't … (sic) WETMORE: They did not. HIS HONOUR: They did not. CROWN PROSECUTOR: Did not, exactly. HIS HONOUR: I'm sorry I think I said they did, but did not arrive and go into the stock of Cementaid in the ordinary way. CROWN PROSECUTOR: That's right, in the ordinary way, yes of course. HIS HONOUR: If they weren't able to find they would have to return verdicts of not guilty. CROWN PROSECUTOR: Yes." 68 The transcript then records that, after the jury had returned and Shillington DCJ had read out their note, the following then occurred: "Well as I made clear in the summing-up members of the jury, it is essential that the Crown must prove that the drums were not delivered. Now by delivered really means were the drums delivered and did they go into the stock of Cementaid in the ordinary way. That is what the Crown's case is in effect. Now you do not have to make any positive finding or any finding really as to what may have happened to them, if you were satisfied beyond reasonable doubt that they had not gone into the stock of Cementaid in the ordinary way. That is the essential thing. Did they arrive, did they come into the stock and were they dealt with in the ordinary way and confirmed as having gone through that process by Mr. Troth. WETMORE: Your Honour, if I might, I did put it as part of my case that once Mr. Donnelly or Melissa or both of them dropped off the drums, if they went after that, if my client left the yard and went somewhere else then that is not evidence against him in the sense … HIS HONOUR: If they've come into the yard … WETMORE: Once he's dropped them off, got the delivery chit signed, he's out. HIS HONOUR: Signed by Mr. … WETMORE: By Mr. Troth. If they went from there somewhere else of course that is not against my client. HIS HONOUR: No, well that's why I made it plain that they have to go into the stock. WETMORE: No that isn't so, if they went somewhere else from there that's none of my client's business. It is none of my client's business and it wouldn't be a conspiracy. For example if they got dropped of (sic) and somebody else who shouldn't have put them away, it doesn't matter that they never went into stock. HIS HONOUR: When I say the stock, I mean into the premises. WETMORE: As long as what your Honour is saying is they got to the premises, my client leaves … HIS HONOUR: That's what I mean by interstock (sic). They've got to come into the premises and be at the premises (sic) by your client. WETMORE: Yes, and my client leaves with his empty drums, then there's nothing against … HIS HONOUR: The empty drums are something - on your case - quite different. WETMORE: Of course. But as long as he leaves thinking I've delivered, that's the end of the matter. HIS HONOUR: That interchange is certainly not - it probably amplifies and illuminates what I have been trying to say to the jury. The essential thing is that they arrive at the Cementaid premises, they're put down there and what might happen after that is another matter. FOREPERSON: If for example there were a conspiracy and they were in agreement to defraud but if it were carried out by means of, just example, drums being delivered, left the premises (sic), picked up the next week and used, so there was still a conspiracy but not being executed in precisely the way the Crown has described it. Should we find that we see beyond reasonable doubt a conspiracy has been proved or do we have to find in relation to the specific way in which the Crown has said … (not transcribable) … that there were in fact no drums. HIS HONOUR: Yes, well you would have to find that the specific way in which it has been presented to you, in other words that they never really got there, it never got to the premises for the use of Cementaid to the knowledge of both of the accused. Does that cover the situation. FOREPERSON: Yes I think so, thank you." Neither counsel sought a further direction from Shillington DCJ in respect of that matter. 69 Ultimately - but not until the late morning of the following hearing day - the jury, as I have earlier recorded, found each of Donnelly and Troth guilty as charged. 70 The grounds of appeal which were filed on behalf of Donnelly were as follows:

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76 Insofar as concerned Ground 6, those submissions were as follows: "The Appellant seeks leave on the basis that the learned Judge failed to apply the provisions of s. 44 of the Crimes (Sentencing Procedure) Act 1999 in that there existed special circumstances being the health of the Appellant, that of his wife, the needs of his employees and his previous excellent character, the lasting effect of war related trauma, the time spent between being charged and the trial and the options contained in the Pre-Sentence Report (p2) and respectfully submits that the sentence was excessive in these circumstances. 77 Except to the extent noted below, the Written Submission filed on behalf of Troth adopted the submissions which had been filed on behalf of Donnelly. 78 Insofar as concerned Ground 2 taken in the Written Submissions filed on behalf of Troth - which ground, as I have earlier noted, was not, on the hearing of the appeal advanced on behalf of Donnelly - those submissions were as follows: "The jury ought to have had a reasonable doubt as to the guilt of the accused by reason of the fact that the evidence relied upon by the Crown to prove a conspiracy was entirely circumstantial and raised an equally competing inference inconsistent with a conspiracy as evidenced by the jury's question to his Honour in terms: 'In finding a conspiracy, how closely should it match the details put by the Crown. What should we find if, for example, we thought the drums could have been physically delivered but returned without being genuinely used or by some other means not being made available to Cementaid.'" 79 Insofar as concerns Ground 3 taken in those submissions, the submissions were as follows: "There is a real risk that the jury, came to the view that the drums could have been physically delivered but returned without being genuinely used or by some other means not being made available to Cementaid, presumably at the instigation of the Appellant Troth alone. In that circumstance there was no alternate count on the indictment against the Appellant Troth alone, in spite of his frank admission that he had retained moneys due to his employer from the sale of used drums. There is a real risk that the guilty verdicts returned in respect of a conspiracy was (sic) by way of a compromise to ensure that the Appellant Troth was convicted at least because of his admitted dishonesty, in the circumstances where the jury could not be satisfied beyond reasonable doubt as to the existence of a conspiracy."

[52]

except for such comfort as could be drawn from the evidence given by Donnelly, Melissa Donnelly and Brooke Donnelly, there was no evidence which was tendered which would corroborate Troth's evidence. 83 The test to be applied by a court when asked to set aside the verdict of a jury on the ground that it is unreasonable, or cannot be supported, having regard to the evidence, is to be found in the joint Judgment of Mason CJ, Deane, Dawson and Toohey JJ in M v. The Queen (1994) 181 CLR 487, 493-494) where their Honours say: "Where, notwithstanding that as a matter of law there is evidence to sustain a verdict, a court of criminal appeal is asked to conclude that the verdict is unsafe or unsatisfactory, the question which the court must ask itself is whether it thinks that upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty. But in answering that question the court must not disregard or discount either the consideration that the jury is the body entrusted with the primary responsibility of determining guilt or innocence, or the consideration that the jury has had the benefit of having seen and heard the witnesses. On the contrary the court must pay full regard to those considerations. It was with those considerations in mind that some members of this Court have thought it necessary to qualify the statement by Barwick CJ in Ratten v. The Queen that: 'It is the reasonable doubt in the mind of the court which is the operative factor.' Barwick CJ went on to say: 'It is of no practical consequence whether this is expressed as a doubt entertained by the court itself or as a doubt which the court decides that any reasonable jury ought to entertain. If the court has a doubt, a reasonable jury should be of a like mind. But I see no need for any circumlocution; as I have said it is the doubt in the court's mind upon its review and assessment of the evidence which is the operative consideration.' The qualification was that no circumlocution was involved in speaking of a doubt which a reasonable jury ought to have entertained because account must be taken of the advantage which a jury has in seeing and hearing the witnesses. To ask only whether the court has a doubt may place insufficient emphasis upon the fact that the jury, having seen and heard the evidence given, was in a position to evaluate that evidence in a manner in which a court of appeal cannot. But it is, we think, possible to make too much both of the view expressed by Barwick CJ and of the qualification suggested. In most cases a doubt experienced by an appellate court will be a doubt which a jury ought also to have experienced. It is only where a jury's advantage in seeing and hearing the evidence is capable of resolving a doubt experienced by a court of criminal appeal that the court may conclude that no miscarriage of justice occurred. That is to say, where the evidence lacks credibility for reasons which are not explained by the manner in which it was given, a reasonable doubt experienced by the court is a doubt which a reasonable jury ought to have experienced. If the evidence, upon the record itself, contains discrepancies, displays inadequacies, is tainted or otherwise lacks probative force in such a way as to lead the court of criminal appeal to conclude that, even making full allowance for the advantages enjoyed by the jury, there is a significant possibility that an innocent person has been convicted, then the court is bound to act and to set aside a verdict based upon that evidence." 84 I am far from being persuaded that there is a significant possibility that, in this case, innocent men have been convicted. On the contrary, it seems to me that, in this case, the case which was advanced by the Crown was compelling. That being so I would dismiss Grounds 1, 2, 4. 85 Nor am I persuaded that the jury's verdict represented a compromise to ensure that Troth was convicted because of his admitted dishonesty in circumstances where the jury could not be satisfied beyond reasonable doubt as to the existence of the conspiracy charged. As will be clear from that part of Shillington DCJ's summing-up where his Honour set out what was the essential Crown case (see para. 66 (above)), his Honour made it abundantly clear that, in order to convict, the jury must be satisfied that the drums the subject of the thirty invoices were never supplied to Cementaid, a point which his Honour reinforced when he came to deal with the note which had been forwarded to him by the jury. I would reject Ground 3. 86 I turn then to Ground 5, which ground, being based upon the note sent by the jury to Shillington DCJ, was, in the Written Submissions, put as showing a "substantial possibility that the jury may have been mistaken". Although put in that way in the Written Submissions, on the hearing of the appeal it appeared to be put that the direction given by Shillington DCJ was such as to confuse the jury as to what facts would need to be found if they were properly to find that there had been a conspiracy of the type charged. Put in the latter way, the submission requires the leave of the Court since no objection was taken at trial. Quite apart from the fact that the passage from the transcript which I have earlier set out (see para. 68 (above)), in my view, makes it clear that, in order that they might find there had been a conspiracy as charged, the jury had to find that the subject drums never reached the premises of Cementaid, I would not be disposed to grant the leave required to enable the submission to be put. I would dismiss Ground 5. 87 I turn finally to the question of penalty. 88 Although Donnelly and Troth were charged with, and convicted of, a common law misdemeanour, for which the available sentence is at large, in assessing the appropriate maximum penalty consideration is generally given to the sentence applicable to any relevant substantive offence or offences. In the present case each of Donnelly and Troth could have been charged with multiple counts under ss. 178BA or 178BB of the Crimes Act 1900, the former of which provides: "178BA(1) Whosoever by any deception dishonestly obtains for himself or herself or another person any money or valuation thing or any financial advantage of any kind whatsoever shall be liable to imprisonment for 5 years"

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