R v Gregory

2 On 14 July 2009 I heard an application on behalf of the accused to sever the indictment. The application was made on two grounds. First, it was submitted that the joinder of the charges was not authorised by the applicable rule, being Rule 2 of the Sixth Schedule to the Crimes Act 1958 (Vic). Secondly, it was submitted that if the charges had been properly joined in the one indictment an order should be made under s 372(3) of the Crimes Act 1958 (Vic) for separate trials of the two counts of defrauding the Commonwealth on the one hand and the conspiracy count on the other on the basis that the accused may be prejudiced or embarrassed in his defence by reason of being charged with all three counts on the one indictment and that it is desirable to direct that counts 1 and 2 be tried separately from count 3. Before considering the submissions made, it is necessary to outline the general nature of the Crown case.

3 The Crown has filed a document described as a summary of the Crown opening, which is itself 99 paragraphs long. My summary of that summary is as follows.

4 All three counts on the indictment concern allegations that the accused, together with others, used Swiss bank accounts, offshore trust structures, and entities associated with an accounting organisation in Jersey and in Switzerland known as Strachans in order to enable Mr Wheatley to conceal income from Australian taxation authorities. The prosecution alleges that the accused introduced Mr Wheatley to Strachans and in particular to a person said to be a partner in Strachans named Phillip Egglishaw.

5 The accused is a solicitor practising in Sydney. Mr Wheatley is an entertainment manager and entrepreneur. In the early 1990s Mr Wheatley was in financial difficulty. He had entered into formal arrangements with his creditors which did not conclude until 1996. In 1994 he commenced employment with an entity named International Management Group ("IMG"). He had a profit share arrangement with IMG in relation to a tour by the entertainer John Farnham called the "Talk of the Town" tour. Under this arrangement, Mr Wheatley was entitled to receive a percentage of the profits.

6 In 1994 Mr Wheatley met the accused and told him of his financial difficulties. They discussed the profit share arrangement and Mr Wheatley's general financial situation. The prosecution alleges the accused suggested that he had an idea or concept on how to deal with the profit share due to Mr Wheatley from the Talk of the Town tour. It is alleged that the accused suggested that Mr Wheatley could invest in art or take his money offshore and not have it declared in Australia. The prosecution case is that a part of the discussions Mr Wheatley had with the accused was that Mr Wheatley could send money overseas to a Swiss bank account and then bring it back into Australia in the form of a loan.

7 Mr Wheatley's profit share on the Talk of the Town tour was paid to a company named Complaw Pty Ltd. The sole directors of that company were the accused and a person named Bill Baillee. The amount paid to Complaw Pty Ltd was transferred through an intermediary to an entity or trust account referred to as the "Erbacher Trust Account 2864". It is alleged that this trust account was controlled by Strachans. The accused's co-director of Complaw Pty Ltd, Mr Baillee, is alleged to have been ignorant of these transactions.

8 The prosecution alleges that the funds were held overseas but that the money was made available to Mr Wheatley for him to draw upon and that he did so from time to time, usually after making requests for access to the funds to the accused.

9 Mr Wheatley did not declare the funds received in relation to the Talk of the Town tour in his 1993/1994 tax return or in his 1994/1995 tax return. These failures are the basis for the two counts of defrauding the Commonwealth. The accused and Mr Wheatley, Mr Egglishaw and another person alleged to be a partner in Strachans, Mr de Figueiredo, are alleged to be parties to these frauds.

10 The prosecution alleges that the accused also assisted Mr Wheatley in constructing what is described as a "bogus" loan arrangement in late 1995 enabling Mr Wheatley to access a significant sum from the funds held overseas from the Talk of the Town tour. The prosecution alleges that Mr Wheatley paid "pretend" interest on this loan until 2002. The interest payments made were "fed back" into the same Erbacher Trust account on the understanding that Mr Wheatley could access those funds again later. For reasons related to another transaction in which Mr Wheatley was involved, in 2002 it became necessary to eliminate this bogus loan from the records of a company controlled by Mr Wheatley. A purported repayment was made. It is alleged that the monies repaid were simply returned to offshore accounts of Mr Wheatley and that he and his wife were then provided with the means to access those funds. The Crown opening summary alleges that the accused was involved in the establishment of the bogus loan but does not allege involvement by the accused in its apparent repayment.

11 The prosecution alleges that at around the same time as the bogus loan was being apparently repaid, Mr Wheatley began involvement in the promotion of a boxing fight between Kostya Tszyu and Jesse James Leija. In due course a company associated with Mr Wheatley became entitled to an amount of $581,112.84 in relation to the promotion of this fight. The prosecution alleges that the accused together with Mr Wheatley, Mr Egglishaw and Mr de Figueiredo, conspired to transfer a sum of $400,000 to overseas bank accounts purportedly in payment for management services. It is alleged that the payment was a "pretended" one and that in accordance with an agreement between the participants a deliberately false paper trail was created. It is alleged that pursuant to the agreement between the participants the income figure disclosed to the Australian taxation authorities was $400,000 less than the true figure. The prosecution alleges that Mr Wheatley and his wife were again provided with the means to access these funds which were held for them overseas in accounts controlled by Strachans.

Joinder of the charges in one indictment: legal principles

12 The rule relevant to joinder is Rule 2 of the Sixth Schedule of the Crimes Act 1958 (Vic). That rule provides:

"Charges for any offences may be joined in the same presentment if those charges are founded on the same facts or form or are part of a series of offences of the same or a similar character."

13 The applicable legal principles were not the subject of significant controversy before me. They are as follows:

(1) The rule is to be given a liberal interpretation consistent with the policy underlying it, namely, to enable the joinder of charges which may be properly and conveniently dealt with together: R v Reid;[1] Ludlow v Metropolitan Police Commissioner.[2]

(2) Both the law and the facts should be taken into account in deciding whether offences are similar or dissimilar: Ludlow;[3] R v Smart;[4] Reid.[5]

(3) In order for there to be a series of offences of a similar character there has to be some nexus between the offences: Ludlow;[6] Smart;[7] Reid;[8] R v McLean.[9]

(4) It is not necessary that the offences exhibit close similarities. Not infrequently in cases of commercial fraud, it is enough that offences or groups of offences have a common genesis or are otherwise linked and associated by commonality of parties or transactions: R v Heinze.[10]

(5) Two offences can constitute a "series": Ludlow.[11]

(6) A difference in time between offences might mean that what could otherwise be considered a series has become fragmented over time so as not to deserve that description: McLean.[12]

14 Counsel for the accused correctly submitted that the issue as to whether joinder properly fell within Rule 2 was an issue of power and not convenience or fairness. He submitted that the joinder of count 3 with counts 1 and 2 was not permissible under Rule 2.

15 Counsel for the accused particularly relied upon what he submitted was the temporal separation between counts 1 and 2 on the one hand and count 3 on the other. He submitted that depending upon how one worked it out the separation was at least eight years and on one view in excess of nine years. He referred to the concerns expressed by Tadgell JA in McLean where the temporal separation was only two and a half years.

16 He also submitted that it was clear that the various counts were not founded on the same facts so that the issue was whether they were part of a series of offences of the same or a similar character. He submitted that they were not and that the dissimilarities between count 3 on the one hand and counts 1 and 2 on the other were marked. He referred to the fact that counts 1 and 2 were substantive whereas count 3 was a conspiracy. He referred to the fact that the offences arose under different statutes. He submitted that one count required proof of an agreement whereas the others did not. He submitted two counts required proof of fraud in the common law sense whereas the other did not.

17 On behalf of the Crown it was submitted that the three counts were sufficiently related so as to constitute a series of offences of the same or similar character given the following circumstances:

(a) The victim in relation to each offence was the Commissioner of Taxation.

(b) Each offence is alleged to have been committed with the same co-offenders, being Mr Wheatley, Mr Egglishaw and Mr de Figueiredo.

(c) The means by which the accused and the co-offenders are alleged to have defrauded or dishonestly caused a risk of loss to the Commonwealth is essentially the same in all three counts, namely the concealment of income so as to further Mr Wheatley's financial interests by the use of overseas bank accounts, and entities associated with Strachans.

(d) The role of the accused and of the alleged co-offenders in relation to each offence is essentially the same and in particular in relation to each offence the accused acted as Mr Wheatley's solicitor and adviser.

(e) The genesis of all three offences was the financial problems experienced by Mr Wheatley.

(f) The origin of all three offences was a plan to assist Mr Wheatley in his financial difficulty by concealing future income which was discussed between the accused and Mr Wheatley in 1994.

(g) Mr Wheatley is a key witness in respect of all three counts.

(h) The income in relation to counts 1 and 2 was derived in relation to the same tour.

(i) The period of repatriation of the income concealed in respect of counts 1 and 2 has "temporal proximity" with acts relevant to count 3.

18 Counsel for the accused particularly took issue with the last factor relied upon, submitting that the "repatriation" by reason of what was alleged to be the repayment of the bogus loan occurred in 2002 and, according to the Crown summary of its opening, the Crown did not contend that Mr Gregory had any involvement in that bogus loan after the end of 1995.

Joinder under Rule 2

1"> 19 Taking into account both the law and the facts, and based upon the Crown case as I have outlined it to be, my conclusion is that there is a nexus between all three counts, that all three counts do have a common genesis, and that all three counts are linked and associated by commonality of parties and commonality in their commercial objective. In particular, accepting for these purposes the Crown allegations:

(1) The commercial objective of all of the offences was minimisation of Mr Wheatley's tax by fraudulent means.

(2) The active participants in each of the offences were the same, and their roles were essentially the same.

(3) The victim of each of the offences was the Commonwealth.

(4) The character of the fraudulent or dishonest activity in each case was similar, involving the concealment of income using overseas entities associated with Strachans.

20 Leaving to one side the issue of temporal proximity, it seems to me that the nexus between these offences is considerably stronger than that which existed in authorities where joinder was held to be appropriate; such as, Ludlow, McLean, and R v Clayton-Wright[13] (which was discussed and approved by Tadgell JA in McLean[14]).

21 I am mindful of Tadgell JA's observations in McLean about a temporal separation in that case of two and a half years.

22 As I understand it, the prosecution case is that there was a continuing corrupt relationship between the parties which encompassed all three counts. This relationship relevantly began when the transactions the subject of counts 1 and 2 were undertaken. Its continued existence after those transactions was manifested by the accessing of funds, the movement of funds by the payment of pretend interest, and the arrangements made in relation to the bogus loan. The prosecution case is that the transactions which are the subject of count 3 occurred in the context of that continuing relationship.

23 Given the nature of the prosecution case, I do not consider that the temporal separation is sufficient to mean that these three offences, which otherwise are a series, have become fragmented over time so as not to deserve that description.

24 I reject the accused's submission that the three counts are not properly joined under Rule 2 of the Sixth Schedule.

25 I have been provided with folders of material, which include the hand up brief, a transcript of the committal, copies of exhibits at the committal, and notices of additional evidence. I have not been taken through that material by the parties. I have myself gone through some of the material by reference to the cross-referenced footnotes in the summary of Crown opening.

26 The Full Court in Smart[15] observed that in considering the issue of severance in a case that involves commercial complexities it is of the utmost importance that the trial judge be in a position to understand the material which will be led at trial so as to form an independent judgment on severability. I do not consider that I have such an understanding at the present time, notwithstanding the helpful submissions that were made.

27 One issue which may be of significance is the question of whether evidence admissible on counts 1 and 2 is also admissible on count 3, and vice versa. The prosecution position is that it is and the position of the accused is that it is not. I have not heard submissions which would enable me to determine that matter.

28 I have accordingly determined to defer consideration of the application under s 372(3) and to hear further submissions on the issue of cross-admissibility. At an earlier directions hearing I had suggested that it would be desirable for the prosecution to take me through the proposed evidence in some detail, particularly any charts or summaries which are proposed to be relied upon, in advance of empanelment. My consideration of the summary of Crown opening and my limited review of the hand up brief has fortified me in the view that that process is necessary. It seems to me that the appropriate time to hear submissions on the issue of cross-admissibility and to then rule on the severance application would be immediately after that exercise has been undertaken.

29 I will hear the parties on the appropriate directions to be made.

I certify that this and the 8 preceding pages are a true copy of the reasons for Ruling of Whelan J of the Supreme Court of Victoria delivered on 25 August 2009.

The DIRECTOR OF PUBLIC PROSECUTIONS, who prosecutes in this behalf for Her Majesty the Queen, INFORMS THE COURT AND CHARGES that between January 1994 and 6 October 1995 at Melbourne in the State of Victoria and elsewhere PAUL JOHN GREGORY did with Glenn Dawson Wheatley, Philip Egglishaw and Philip de Figueriedo, contrary to section 29D of the Crimes Act 1914, defraud the Commonwealth, in relation to the failure to declare income totalling $74,494.00 to the Commissioner of Taxation from the John Farnham "Talk of the Town" Tour for the financial year ending 30 June 1994.

And the said DIRECTOR OF PUBLIC PROSECUTIONS further INFORMS THE COURT AND CHARGES that between 1 July 1994 and 23 January 1996 at Melbourne in the State of Victoria and elsewhere PAUL JOHN GREGORY did with Glenn Dawson Wheatley, Philip Egglishaw and Philip de Figueriedo contrary to section 29D of the Crimes Act 1914, defraud the Commonwealth, in relation to the failure to declare income totalling $181,916 to the Commissioner of Taxation from the John Farnham "Talk of the Town" Tour for the financial year ending 30 June 1995.

And the said DIRECTOR OF PUBLIC PROSECUTIONS further INFROMS THE COURT AND CHARGES that between approximately 28 March 2003 and 26 May 2004 at Melbourne in the State of Victoria and elsewhere PAUL JOHN GREGORY did conspire with Glenn Dawson Wheatley, Philip Egglishaw, Philip de Figueriedo and Strachans SA, contrary to subsection 135.4(5) of the Criminal Code, to dishonestly cause a risk of loss to a Commonwealth entity, namely the Commonwealth, knowing or believing that there was a substantial risk of the loss occurring, by agreeing an amount of $400,000 would be paid to Overseas Promotions Inc. as that entity's pretended share of the proceeds of the world wide promotion of the Kostya Tszyu v Jesse James Leija fight held at the Telstra Dome in Melbourne on 19 January 2003.

[1] [1999] VSCA 98; [1999] 2 VR 605, 621 ("Reid").

[2] [1971] AC 29, 40 ("Ludlow").

[3] [1971] AC 29, 39.

[4] [1983] VicRp 22; [1983] VR 265, 282 ("Smart").

[5] [1999] VSCA 98; [1999] 2 VR 605, 621.

[6] [1971] AC 29, 39.

[7] [1983] VicRp 22; [1983] VR 265, 282.

[8] [1999] VSCA 98; [1999] 2 VR 605, 621.

[9] [2000] VSCA 217; (2000) 2 VR 118, 128-9 ("McLean").

[10] [2005] VSCA 124; (2005) 153 A Crim R 380, 392.

[11] [1971] AC 29, 38.

[12] [2000] VSCA 217; (2000) 2 VR 118, 133.

[13] [1948] 2 All ER 763

[14] [2000] VSCA 217; (2000) 2 VR 118, 131-3.

[15] [1983] VicRp 22; [1983] VR 265, 282.