R v Dowding, Grollo & Grollo [2000] VSC 274

[2000] VSC 274

Supreme Court of Victoria|2000-06-30|Before: TEAGUE, J.

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At a glance

Source facts

Court

Supreme Court of Victoria

Decision date

2000-06-30

Before

TEAGUE, J.

Catchwords

Crime - Conspiracy to defraud the Commonwealth - Application for permanent stay of proceedings - Abuse of process - Unconscionable conduct - Unfairness - Delay.

Source

Original judgment source is linked above.

Catchwords

Crime - Conspiracy to defraud the Commonwealth - Application for permanent stay of proceedings - Abuse of process - Unconscionable conduct - Unfairness - Delay.

Judgment (257 paragraphs)

[1]

Counsel for the three accused before me have applied for a permanent stay. I have said that I would not accede to the application, and that I would provide my reasons as soon as possible. I am placing a higher priority on providing these reasons quickly than on providing detail or polish.

[2]

I have provided a limited chronology in the First Table appended to these reasons. The First Table is one of five tables. The Second Table is itself a form of chronology. It is included because it sets out the page numbers of chronologies provided in other judicial reasons. The Third Table sets out (in alphabetical order governed by the last initial) the initials of various individuals (including the accused) agencies and groups, referred to in these reasons and in the First and Fifth Tables. The Fourth Table sets out the cases I have later referred to in these reasons. It is appropriate that I make a number of comments about the tables. The information in the First and Second Tables has been, with one exception, taken by me either from reasons given in the reported cases detailed in the Second Table, or from documents provided to me from one or both of two sources. One is very broadly described as the Grollo Group or individuals linked to the group ("GGI'). The other is the investigation and prosecution agencies and individuals linked to those agencies ("IPAI"). The exception was the reasons given in an unreported Federal Court decision (in proceeding 10/94p) handed down on 26 March 1997, with an addendum on 18 April 1997. The abbreviations, and notably 11/94p, and indeed other items included in the tables, are not necessarily accurate in the detail. It is also likely that I have not included other proceedings and events in the First or Second Tables because of either or both of my limited sources and the need for some selectivity. I have opted to use in the second and third columns of the First Table, shorthand links (like 10/94p) between a proceeding (p), a criminal proceeding (cp) a warrant (w) and a settlement (s). Those links are formed by reference to what appeared to be the appropriate month and year. In June 1993, I had to use a number in brackets to differentiate between two sets of proceedings initiated in that month. Unlike the first four tables, which have all been prepared by me, the Fifth Table is a version that I have condensed from a chronology provided by the Prosecution. I had reservations about adding it. Those reservations stemmed in part from it not having been prepared by me, in part from it having been provided late in the argument before me, and in part from my not having read either the affidavit or the exhibits supporting it. My concern about the last two matters was mitigated by its apparent acceptance as being reasonably accurate by counsel for the accused. The advantage that its inclusion does provide stems from its separation into columns linked to three reasonably readily comprehensible streams. I concluded that that separation helps to make the chronology of events much more readily understandable than my First Table

[14]

I have referred to aspects of the collateral purpose submissions being linked to the September 1993 terms of settlement. Those terms are referred to in the First Table as "9/93s". In what follows I shall refer to them as the 9/93 terms. The settlement that led to the signing of the 9/93 terms is to be contrasted to two other settlements that are included in the First Table. They are the 10/92 settlement and the 4/97 settlement. The 10/92 settlement was, or appears to me to have been, a settlement in principle that proved not to be susceptible to being translated into terms of settlement acceptable to all parties. The 4/97 settlement was, or appears to me to have been, effective in resolving the differences between the parties as to what would be paid to resolve all outstanding issues as to the civil liability of GGI. It is difficult, if not impossible, to understand what was being settled independently of the proceedings then current or in anticipation. As is reasonably apparent even from the limited chronology in the First Table, the three settlements were important but small chapters in a multi-chaptered story. The 9/93 terms were the subject of close review in the 10/94 proceedings, first by Olney J and later by the Full Federal Court. I have read those reasons carefully. I take them not to provide any material that is contraindicative, but rather to provide limited support, to my assessment of the 9/93 terms. Those reasons were not concerned with the limited aspects of the terms that dealt with the anticipated criminal proceedings, but were concerned with problems arising as to the regime for addressing the "Rialto issue". The "Rialto issue" was defined. Also defined was "Non-Rialto issues". The reasons reflect an acceptance that, while the Non-Rialto issues were relatively easily finalised, the Rialto issue was complex. The parties had to address certain issues as to the regime to be adopted for finalising civil liability. The way in which they did so could later be seen, with the benefit of hindsight, to have left much to be desired.

[29]

25 O'Donovan was concerned with a complicated scheme that was devised to avoid the payment of income tax by a company with current year profits ("CYP company"). Shares in the CYP company were sold to another company that donated a large sum to an art gallery that bought a work of art from that other company at an inflated price. If efficacious/effective, the scheme would have, inter alia, given the original shareholders a capital receipt, reduced the taxable income of the CYP company to nil, and returned the promoters' money. The promoters, and the barrister whose advice they had sought, were prosecuted for conspiracy to defraud. At the committal hearing, the magistrate gave reasons for ruling that there was a case to answer. He ruled that he would not enter upon what was seen to be a key question. That key question was framed more and less widely on occasions but was essentially: "Was the scheme effective to reduce the taxable income of a CYP company to nil?" An application was made to Jackson J sitting alone to review the ruling of the magistrate. Jackson J expressed a reluctance to intervene, but did so because he considered that the magistrate was in error in not addressing the key question. He directed that the magistrate should determine the question. On appeal, all three of Fox, Northrop and Pincus JJ considered that Jackson J was wrong to give that direction. Fox J said that he agreed in substance with Northrop J. He added comments that are of particular significance because they were picked up by Pincus J. Those comments of Fox J were part of what I take to be advice to the magistrate as to how to proceed. Pincus J said that he could not accept that the degree of probability of success of the scheme was irrelevant, and that he agreed with Fox J that the magistrate could consider whether there was a clear risk that the CYP companies would be assessed. Those comments of Pincus and Fox JJ are significant in the context of some broad statements made by Northrop J. It is upon those statements that Mr Judd, before me, seeks to rely heavily.

[32]

There are at least seven factors which influence me in concluding that I should not treat what Northrop J has said in O'Donovan as being strongly persuasive towards the conclusion that the Tax Act regime precludes consideration in another court of a matter the subject of a TARD on the basis that a TARD is made finally and for all purposes. The first is that a blanket preclusionary effect does not accord with my perception of what, taken over a broad spectrum of potential applications, would generally be likely be likely to seen to be appropriate, in the absence of an express statutory provision, and given the existence of other common law safeguards. The second is that the introduction of "finally" by Northrop J seems to me to be strained, in the way that I have noted briefly above. The third is that, in my opinion, both Fox and Pincus JJ distanced themselves from the blanket preclusionary tags of irrelevant, speculative and immaterial used by Northrop J. The fourth is that, as Northrop J himself said at 112, and as was noted by the other judges, the unsatisfactory nature of how the proceeding came before the court can be seen to have create a degree of artificiality in the presentation of the issues. What was being sought and given was in the nature of judicial advice to the magistrate who had to act on what he was directed to do relative to the proceeding then before him. The fifth is that what the three judges were reacting to was a direction given by Jackson J that the magistrate was obliged to do that which he was trying to avoid doing, namely make a decision relative to a question with tax consequences. The sixth is that the focus of Northrop J was on a future possible TARD. He was not concerned about a past TARD. An analysis of what a future determination might be necessarily would involve speculation about the future. That is a very different thing from reviewing what has been determined upon material placed before the court or other decision-maker. The seventh is linked to the sixth and explains why I find Pearson, despite the differences in the tax/tariff regimes, of more persuasive value to me than O'Donovan. With a past determination, one can analyse the issues actually raised, the evidentiary standards, the evidentiary framework, the evidence actually led, the submissions made, the submissions accepted, the reasons and the ultimate outcome in a way that is conducive to taking account of what is relevant, rather than ignoring it, or being compelled to accept it.

[35]

Despite the qualifications stemming from matters I have referred to above, I am strongly disposed to take a lead from what was said in Pearson. It is appropriate that I spell out further the resonance that Pearson has, by casting, in terminology and expressions closely borrowed from that case, some propositions that I would be disposed to apply in the case before me. As in Pearson, I note that the trial scheduled before me is not, as was the position in Rogers, concerned with initial and subsequent criminal proceedings, where the subsequent proceedings are to be determined against the same evidentiary background. As in Pearson, I note that the decisions in the AAT and Federal Court were not made against the same evidentiary background. The AAT was not bound by the rules of evidence. I note that, before me, the Prosecution case does not question that the AAT or court findings were incontrovertibly correct in the context they were made. There is a different burden of proof. This court should accept that the Federal Court decision has finally decided the amount of income tax payable by the taxpayers then before the Court. It is not a conclusive decision against the world of the assessable income, taxable income or otherwise. It is a conclusive decision determining the income tax payable for the purpose of the civil proceedings for the recovery of the tax payable. The findings in the AAT and the Federal Court are not of preclusive effect. They are not unimportant. They are evidence and can properly be taken into account. A criminal court judge sitting alone should appreciate that, given the different evidentiary environment, the judge can, but is not required to follow the decisions. It would be natural to pay the decisions and the reasoning supporting them a great deal of respect. The relative importance of the earlier decisions would depend on the issues before the court. If the issues were explicitly limited, some comments could be no more than obiter dicta. What the decision-maker makes of the evidence is a matter for the decision-maker.

[37]

I am also not satisfied that there is any unconscionability or unfairness in the Prosecution advancing a case which raises issues other than those identified in the Terms of Settlement of 22 September 1993. From my review of those terms of settlement, it seems to me appropriate to draw a number of conclusions. One is that, understandably, the main focus of the documents was on addressing what were then relatively immediate problems that needed to be addressed. Those problems were the "proceedings" as defined in the terms. It was the clearly stated intention of the terms to settle the various matters then the subject of those proceedings. There was also a focus, but only a limited focus on addressing future potential problems. Although the DPP was a party, there is a specific focus on the role of the different Commonwealth agencies. The major part of the document sets out the agreed procedures to be followed by the Commissioner of Taxation and the taxpayers to facilitate and finalise the assessment of the amount of income tax to be paid. The accused now contend that part of the scheme of the terms of settlement was "to confine the scope of the issues between the parties, including the DPP, to those expressed in the assessments." I accept that it was part of the scheme to confine the income tax issues between the Commissioner and the taxpayers in this manner. However, on my construction of the terms, there is a discrete separation of clauses applying to the Commissioner and to the DPP and there is a discrete separation of clauses going to potential civil and criminal liability. The accused now seek to take the commitments as to the tax assessment process made by the Commissioner and to have those commitments attach to the DPP in the exercise of his powers as to criminal proceedings. I do not accept that that is appropriate. It seems to me that the fact that the DPP is a party to this settlement as a result of a challenge to the exercise of his civil remedies powers does not support such an extension. Clause 28 is the only clause in which the powers of the DPP as to criminal prosecutions is linked in any way to the assessment process. It is a provision as to a time-frame for any future criminal proceedings. There is no indication or further elaboration in the document of why that agreement has been reached. There is no clearly stated commitment by the DPP to restrict future criminal proceedings in any other way. There is no clause such as: "The DPP agrees that he will not bring or cause to be brought a criminal proceeding in relation to offences in respect of the Rialto issue which does not confine itself to offences in respect of amounts found to be assessable income in the assessment process." The position as to preclusion might have been quite different if the future had been addressed in some such manner. However, it was not, and the document as it stands does not support the extent of preclusion that the accused now contend for.

[61]

I turn back to the submissions of Mr Heliotis referable to the ill-health of Mrs Dina Grollo. I have reviewed what was said in the three cases brought to my attention by Mr Heliotis. The decision is Hakim is reported, but those in Murphy and Warming are not. I accept the point of Mr Heliotis that it may be difficult to find authority from higher courts. In Hakim and Murphy, the trial judge was prepared to grant a permanent stay, where the ill health of the accused had been demonstrated along with other factors. In Warming, the trial judge said that he would have ordered a stay but for his course having to be governed by statutory provisions. He did not note details of the seriousness of the health problems of the accused before him. In Hakim, Lee J noted the accused's long history of heart disease, to which was added a by-pass operation with complications, and deterioration of memory, resulting in what Lee J described as a deplorable medical condition with continuing deterioration. Lee J concluded that it would be out of accord with common humanity to proceed, but noted that the case just fell within the class of case that could be regarded as an abuse of process. In declining to disturb the conclusion of Lee J, Kirby P noted that it would be only in a rare case that intervening illness or the physical or mental condition of the accused would bring a court to order a stay. No specific reference was made to the concern of the courts to maintain community confidence in the administration of justice. That confidence is likely to be reduced where, as has been seen on occasions to occur in relation to a handful of high profile accused, severe medical problems or prognoses relative to the accused have been identified, but have not subsequently been manifest. I believe that the Mr Murphy of the case cited to me, to whom was accorded a 70% probability of death within two years in 1992, is still alive. I take the stated need for the presence of high hurdles for accused persons by Lee J and Kirby P to be referable to considerations of that kind. Of course, I am not faced with an application referable to the state of health of an accused, but with the state of health of the wife of an accused. An accused must be in court. The position of the wife of an accused is that she can choose to attend or not to attend, depending upon her present disposition. I accept that, as much if not more than any person other than a participant in the trial, she has the right to be in court, so long as the jury is not distracted. Moreover, the memory of an accused and the effect of ill health upon that memory could be very important in a way not closely comparable in the case of his wife. Similar considerations apply to the giving of instructions to legal representatives. The factor of mutual interdependence is, in my view, far from enough to cover the gap. Perhaps in an extreme and different kind of case, illness of a wife might justify a stay, but I cannot envisage it. Like other judges, I sometimes have to make decisions that appear to reflect an unsympathetic attitude. However, I am concerned as to the position of Mrs Grollo, and I have no difficulty about taking steps to try to limit the potential for adverse consequences. I have asked my tipstaff to ensure that a place in the court is always available for Mrs Grollo. I will see to it that mid-morning and mid-afternoon breaks are taken so that no session will last for more than about an hour and a quarter.

R v Dowding, Grollo & Grollo [2000] VSC 274

At a glance

Court

Decision date

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Catchwords

Source

Catchwords

Judgment (257 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (21)