Criminal law - Insider trading - Definition of 'information' in s 1042A of the Corporations Act 2001 (Cth) - Whether the definition of 'information' requires the Crown in an insider trading prosecution to prove that the 'information' in question was 'truthful' or a 'factual reality' or based on reasonable grounds

Criminal law - Conspiracy - Elements of the offence of conspiracy to commit an offence by contravening the insider trading provisions of the Corporations Act - Whether the evidence at the close of the Crown's case was incapable of establishing that the information as particularised by the Crown was 'not generally available' - Whether the evidence at the close of the Crown's case was incapable of establishing the existence of each conspiracy alleged against each of the offenders and his participation in them

Criminal law - Application by the National Crime Authority for the issue of telephone intercept and access warrants pursuant to s 45A of the Telecommunications (Interception) Act 1979 (Cth) - Warrants issued by a nominated Administrative Appeals Tribunal member - Whether the trial judge erred in holding that the warrants were valid - Whether the trial judge erred in failing to hold that the warrants were invalid and that the information obtained thereby was inadmissible

Corporations Act 1989 (Cth)

Corporations Act 2001 (Cth), s 675, s 676, s 677, s 1002A, s 1002B, s 1002G, s 1042A, s 1042C, s 1042D, s 1043A, s 1043M, s 1311

Corporations Legislation Amendment Act 1991 (Cth)

Criminal Code (Cth), s 3.1, s 4.1, s 5.1, s 5.2, s 5.3, s 5.6, s 11.5

National Crime Authority Act 1984 (Cth), s 4, s 11, s 13

Telecommunications (Interception) Act 1979 (Cth), s 4, s 5, s 5B, s 7, s 45A, s 49, s 74, s 75, s 77

Telecommunications (Interception) Regulations 1987 (Cth)

Appellant : Mr W B Zichy-Woinarski QC & Mr J R Champion

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27

Ansari v The Queen [2010] HCA 18; (2010) 241 CLR 299

Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (No 4) [2007] FCA 963; (2007) 160 FCR 35

Bateman Eichler, Hill Richards, Inc v Berner [1985] USSC 152; 105 S Ct 2622 (1985)

CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384

Commissioner for Corporate Affairs v Green [1978] VicRp 48; [1978] VR 505

Dinive Holdings Pty Ltd v Paracel Pty Ltd (1980) 4 ACLR 928

Ernst & Ernst v Hochfelder [1976] USSC 76; 96 S Ct 1375 (1976)

Flanagan v Commissioner of the Australian Federal Police (1996) 60 FCR 149

Green v Charterhouse Group of Canada Ltd [1973] 2 OR 677; (1973) 35 DLR (3d) 161

Hannes v Director of Public Prosecutions (Cth) (No 2) [2006] NSWCCA 373; (2006) 205 FLR 217

Hannes v The Queen [2008] HCA Trans 133

Hook v Rolfe (1986) 7 NSWLR 40

Hooker Investments Pty Ltd v Baring Bros Halkerston & Partners Securities Ltd (1986) 10 ACLR 462

In re Cady, Roberts & Co 40 SEC 907 (1961)

In re Motel 6 Securities Litigation 161 F Supp 2d 227 (2001)

Kelly v The Queen [2004] HCA 12; (2004) 218 CLR 216

May v O'Sullivan [1955] HCA 38; (1955) 92 CLR 654

Morrison v Kiwi Electrix Pty Ltd [1998] WASCA 203; (1998) 19 WAR 482

New South Wales Crime Commission v Vuletic [2005] NSWSC 614; (2005) 64 NSWLR 301

Newcastle City Council v GIO General Ltd [1997] HCA 53; (1997) 191 CLR 85

Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 353

R v Bilick (1984) 36 SASR 321

R v Firns [2001] NSWCCA 191; (2001) 51 NSWLR 548

R v Hannes [2000] NSWCCA 503; (2000) 158 FLR 359

R v Hillier [2007] HCA 13; (2007) 228 CLR 618

R v LK [2010] HCA 17; (2010) 241 CLR 177

R v Rivkin (Unreported, NSWSC, 70065 of 2002, 10 April 2003)

R v Rivkin [2004] NSWCCA 7; (2004) 59 NSWLR 284

R v Solomon [2005] SASC 265; (2005) 92 SASR 331

R v Staines [1997] 2 Cr App R 426

R v Tkacz [2001] WASCA 391; (2001) 25 WAR 77

Ryan v Triguboff [1976] 1 NSWLR 588

SEC v Monarch Fund [1979] USCA2 819; 608 F 2d 938 (2nd Cir 1979)

SEC v Thrasher 152 F Supp 2d 291 (SDNY 2001)

SEC v Tome 638 F Supp 596 (SDNY 1986)

Sherritt Gordon Mines Ltd v Federal Commissioner of Taxation [1977] VicRp 42; [1977] VR 342

The State of Western Australia v Mansfield [2009] WADC 56

The State of Western Australia v Montani [2007] WASCA 259; (2007) 182 A Crim R 155

Travelex Ltd v Federal Commissioner of Taxation [2010] HCA 33; (2010) 84 ALJR 683

United States v Chestman [1991] USCA2 1036; 947 F 2d 551 (2nd Cir 1991)

United States v Cusimano [1997] USCA2 476; 123 F 3d 83 (2nd Cir 1997)

United States v Mylett [1996] USCA2 918; 97 F 3d 663 (2nd Cir 1996)

United States v Teicher [1993] USCA2 255; 987 F 2d 112 (2nd Cir 1993)

Win v Minister for Immigration and Multicultural Affairs [2001] FCA 56; (2001) 105 FCR 212

1 McLURE P: I have had the advantage of reading the reasons for judgment of Buss JA. I agree with his reasons on all matters save on the question of whether the trial judge erred in concluding that the respondents had no case to answer on specified counts in the indictment. I would dismiss the appeal and the notices of contention. These are my reasons for dismissing the appeal.

2 All of the relevant background is detailed by Buss JA and not repeated here. The insider trading provisions of the Corporations Act 2001 (Cth) (the Act) are devilishly difficult to construe. It is difficult to discern an entirely coherent, internally consistent statutory framework. Thus, it is difficult to be entirely confident as to their proper construction.

3 The Crown challenges the trial judge's conclusion that it was a necessary element of the former offence in s 1002G(2)(b) of the Act and its successor, s 1043A(1)(d) of the Act, that the information acted on by the accused be 'truthful information' or 'a factual reality'. I infer the conclusions are stated in the alternative because the information the subject of the counts included statements of existing fact as well as predictions and opinions. Further, there was an evidentiary foundation for an inference that at least some of the alleged information provided to the respondents constituted fraudulent misrepresentations.

4 Implicit in the trial judge's reasons on the no case submissions is that the 'inside information' on which the Crown relied was the particularised information relating to the affairs of the bodies corporate in question, not the mere fact that a director of the bodies corporate made statements to the relevant effect. All of the Crown's particulars are in the same format. The particulars of count 1 provide a representative example:

In relation to AdultShop, the information of which the two accused were possessed was to the effect that:

(a) The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;

(b) The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million to about $111 million;

(c) The information at subparagraphs (a) and (b) above had been obtained on or about 4 January 2002 as a result of private conversation between Malcolm Day, the managing director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

5 The framing of the particulars is consistent with the way the Crown conducted its case at trial, namely, that the matters in (a) and (b) were the 'inside information' the subject of the charge. The matters in (c) were relevant to materiality and the respondents' knowledge.

6 The former s 1002G (in Pt 7.11 Div 2A) and s 1043A (in Pt 7.10 Div 3) of the Act are in materially the same terms. I will focus on s 1043A. Part 7.10 Div 3 of the Act is entitled 'The insider trading prohibitions'. Section 1043A contains a trading prohibition, a procuring prohibition and a communicating prohibition. The prohibitions relate to relevant Division 3 financial products. Such products are defined (s 1042A) to include 'securities' which in turn is defined to mean shares in a body corporate (s 92).

7 For the sake of convenience, I propose to set out s 1043A(1) which contains the trading and procuring prohibitions. It provides:

(a) a person (the insider) possesses inside information; and

(b) the insider knows, or ought reasonably to know, that the matters specified in paragraphs (a) and (b) of the definition of inside information in section 1042A are satisfied in relation to the information;

the insider must not (whether as principal or agent):

(c) apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products; or

(d) procure another person to apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products.

8 The labelling of the person in s 1043A(1)(a) as 'the insider' has the potential to mislead. Amendments made by the Corporations Legislation Amendment Act 1991 (Cth) (the 1991 Amendment Act) removed the 'insider' element from the law relating to insider trading. The prohibition in s 1043A applies to all persons regardless of whether the inside information was obtained by or from a person connected, directly or indirectly, with the body corporate whose securities were traded.

(a) matters of supposition and other matters that are insufficiently definite to warrant being made known to the public; and

(b) matters relating to the intentions, or likely intentions, of a person.

10 The word 'information' is wide enough in both its natural and ordinary meaning and extended meaning to include hearsay. It also includes matters of opinion, actual or likely intention and assumption. The clear implication is that 'information' is actually connected with a person or entity.

11 The statutory expression 'inside information' is defined in s 1042A to mean information in relation to which the following paragraphs are satisfied:

(a) the information is not generally available;

(b) if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of particular Division 3 financial products.

12 For analytical purposes I will refer to information 'not generally available' as 'confidential' information. Such information must be confidential (available) 'to' someone or, in a broad non-technical sense, 'belong to' someone. That is, there will be a person or persons entitled to possession of the confidential information and/or entitled to use or act on it. This is not a retreat to the 'misappropriation theory' which was rejected as the policy basis for the law, but a step in the process of statutory construction.

13 Inside information is widely defined to include confidential information that 'belongs to' the person who trades in the relevant securities. That is evident from the defences in s 1043H, s 1043I and s 1043J which apply when that person's intended action is itself the confidential price-sensitive information. The definition of inside information also includes confidential information 'belonging to' third parties. However, those two categories must cover the field. This case concerns confidential information in the latter category.

14 When the definitions of 'information' and 'inside information' are considered together, the evident statutory intention is that 'inside information' is confidential information in the possession of the entity (or entities) entitled to have, or act on it. That is, inside information must actually exist; it is not inside information simply because a real insider communicated it or because it was in the possession of the accused.

15 In order to establish that an accused is in possession of inside information for the purposes of s 1043A(1), there must be a proven correlation or correspondence between the inside information in the possession of the accused and the inside information in the possession of the entity entitled to it. The correspondence does not have to be coextensive. Inside information in the possession of the accused may be the product of inferences, deductions or assumptions made by the accused (or by a real insider and communicated to the accused). However, the inference, deduction or assumption in the accused's possession must be based on (caused or contributed to by) inside information, being actual events or information from within the entity entitled to possess or use it. An inference or deduction can be wrong or misleading even if based on actual inside information.

16 An accused will be in possession of inside information if it is proven that the inside information in his or her possession corresponds in whole or in material part with the actual internal affairs or internal workings of the entity entitled to possess it. What is required in order to prove the existence of that inside information will depend upon the content of the relevant inside information in the accused's possession. If he or she receives information of a rumour within a company or of what an officer is said to have reported to the board, the Crown must prove the existence of the rumour or the making of the statement, as the case may be. It does not have to prove the truth of the rumour or of the reported internal statement. If the rumour or internal statement contained a prediction, opinion or intention, it would not be necessary to prove that there were reasonable grounds for the prediction, opinion or intention.

17 However, the information in the possession of the respondents in this case was the substance of the statements made to the respondents. In relation to the particulars of count 1, the information was as to the expected profit and turnover of AdultShop. They were predictions impliedly based on actual performance to date. The Crown had to prove that there was information in the possession of AdultShop that on its face was capable of supporting the substance of the predictions. It did not. However, it was not necessary to go further and establish that the information in the possession of the companies was itself reasonably based. The Crown also failed to prove that the particularised information the subject of the other dismissed counts corresponded with actual inside information of the companies whose shares were traded.

18 In summary, it is an element of the offence of insider trading that the inside information in the possession of the accused correspond in whole or

material part with actual inside information in the possession of the entity entitled to have or use it. Thus, a fraudulent misrepresentation as to the internal affairs of an entity, even if made by an officer thereof, is incapable of being inside information.

19 This construction of the expression 'inside information' is consistent with the statutory purposes of the insider trading provisions of the Act, being to ensure market efficiency and market fairness, in the sense that all parties to a transaction have the opportunity to access the same information. It is also consistent with the 1989 Griffiths Report (Fair Shares For All, Insider Trading in Australia) on which the current statutory scheme is based. The Griffiths Report concluded:

The offence of insider trading must have its genesis in the use of information derived from within a company [4.3.5].

20 That statement reflected the law as it then stood (see Corporations Act 1989 (Cth), s 1002 which was in relevantly the same terms as the Securities Industry Acts 1980 (Cth), s 128). The removal of the 'insider' element from the law of insider trading recommended in the Griffiths Report and implemented by the 1991 Amendment Act did not take with it the additional requirement that the insider trading prohibition be on the use of actual inside information. It cannot have been the legislature's intent to prohibit the use of information that was not generally available only because the information did not actually exist in the first place.

21 The evidence adduced by the Crown against the respondents was incapable of supporting a finding that the information the subject of the dismissed counts was based on information in the possession of the bodies corporate whose shares were traded by the respondents. The appeal should be dismissed.

22 BUSS JA: The first respondent, Nigel Cunningham Swift Mansfield, and the second respondent, John Kizon, were jointly prosecuted by the Crown in right of the Commonwealth on an indictment containing 52 counts.

(a) Counts 1, 9, 12, 13, 14, 16, 17, 21 and 23, each alleged a conspiracy between Mr Mansfield and Mr Kizon pursuant to s 11.5 of the Criminal Code (Cth) (the Code) to commit an offence contrary to s 1311(1) of the Corporations Act 2001 (Cth) (the Act) by contravening the insider trading provisions of s 1002G(2)(b)

(before 11 March 2002) and s 1043A(1)(d) (on and after 11 March 2002) of the Act.

(b) Counts 1A to 1G, 9A to 9E, 13A, 14A and 14B, 16A and 16B, 21A to 21H and 23A, each alleged a substantive insider trading offence against Mr Mansfield alone. These counts were alternatives to the conspiracy counts.

(c) Counts 2, 3, 4, 5, 7, 8, 10, 11, 15, 19 and 20, each alleged a substantive insider trading offence against Mr Mansfield alone. These counts were not alternatives to the conspiracy counts.

(d) Counts 12A to 12C, 18 and 22, each alleged a substantive insider trading offence against Mr Kizon alone. Counts 12A to 12C were alternatives to the conspiracy counts. Counts 18 and 22 were not alternatives to the conspiracy counts.

(e) Count 6 alleged that Mr Mansfield alone had committed an offence contrary to s 1311(1) of the Act in that he contravened s 1002G(3) of the Act by communicating inside information to another person when he knew or ought reasonably to have known that the other person would or would be likely to purchase shares or procure a third person to purchase shares.

24 The Crown's case at trial was run on the basis that if the jury was not satisfied beyond reasonable doubt that an alleged conspiracy had been made out then the jury should consider the substantive offences pleaded as alternatives.

25 The 'inside information' related to two publicly listed companies, namely, My Casino Ltd (My Casino), which changed its name to Euraust Limited (Euraust), and AdultShop.com Ltd (AdultShop).

26 The 'inside information' comprised statements alleged to have been made by either Malcolm Day (the Managing Director of AdultShop) or Michael O'Donnell (the Chairman of My Casino).

27 The Crown particularised several separate categories of 'inside information' alleged to have been possessed by Mr Mansfield or Mr Kizon, as the case may be, during the relevant periods in relation to My Casino and AdultShop.

28 The Crown opened its case on Monday, 18 January 2010, and closed it on Friday, 12 March 2010. On 15 March 2010, counsel for Mr Mansfield and counsel for Mr Kizon made an application to the trial judge, Wisbey DCJ, pursuant to s 108 of the Criminal Procedure Act 2004 (WA) for a finding by his Honour that each of Mr Mansfield and Mr Kizon was not guilty on each count because there was no case to answer on any of the counts. Counsel for Mr Mansfield and counsel for Mr Kizon submitted to his Honour that the evidence adduced by the Crown, taken at its highest, would not enable the jury to be satisfied beyond reasonable doubt that the accused persons possessed and acted upon 'information', as defined in s 1002A (before 11 March 2002) and s 1042A (on and after 11 March 2002) of the Act. In particular, it was submitted that the evidence adduced by the Crown, taken at its highest, would not enable the jury to be satisfied beyond reasonable doubt that the 'information' in question was 'factually correct'. The prosecutor conceded that the jury could not be satisfied beyond reasonable doubt that the relevant information was 'factually correct', on any counts, except counts 2, 3, 19 and 20.

29 On 19 March 2010, the trial judge ruled that the 'information' particularised by the Crown, and allegedly possessed by each of the accused persons during the relevant periods, 'must, in general circumstances, be a factual reality' (ts 2838). He decided that a judgment of acquittal should be entered in respect of all counts, except counts 2, 3, 19 and 20. As to those counts, his Honour was satisfied that there was evidence, taken at its highest, which was capable of establishing the 'factual reality' of all or most of the particularised 'information'.

30 On 22 March 2010, the trial judge entered a judgment of acquittal in respect of all counts, except counts 2, 3, 19 and 20.

31 The Crown has appealed to this court, pursuant to s 24(2)(e)(i) of the Criminal Appeals Act 2004 (WA), against the judgments of acquittal entered by the trial judge.

The trial judge's reasons for finding there was no case to answer

32 The trial judge said in his reasons for finding there was no case to answer that trial counsel had been unable to identify any relevant authority 'where a falsehood [had] been accepted as information for the purposes of an insider trading offence' (ts 2837 - 2838). His Honour added that 'all the reported material deals with information that was factually correct' (ts 2838).

In my view, assistance can be gained by consideration of the definition of 'inside information' in s 1042A which provides that it means:

'[I]nformation in relation to which the following paragraphs are satisfied:

(a) the information is not generally available;

(b) if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of particular Division 3 financial products.'

'For the purposes of this Division, a reasonable person would be [taken to expect information to have a material effect on the price or value of particular Division 3 financial products if (and only if) the information would, or would be likely to, influence persons who commonly acquire Division 3 financial products in deciding] whether or not to acquire [or] dispose of the first-mentioned financial products' (ts 2838).

34 The trial judge then said that it was 'difficult to conceptualise how a falsehood could meet that test, or how a jury would be instructed to approach its task where the information was false' (ts 2838).

35 His Honour ruled, as I have mentioned, that the 'information' acted upon by an accused 'must, in general circumstances, be a factual reality' (ts 2838).

36 The Crown relies on three grounds of appeal, which read:

1. That in respect of Counts 1, 1A - 1G, 4, 5, 6, 7, 8, 9, 9A - 9E, 10, 11, 12, 12A - 12C, 13, 13A, 14, 14A - 14B, 15, 16, 16A - 16B, 17, 18, 21, 21A - 21H, 22, 23, and 23A the learned trial judge erred in law in ruling that it was a necessary element of an offence alleged to have been committed pursuant to s 1002G and s 1043A of the Corporations Act 2001 (Cth) that the information acted on by the accused was truthful information.
2. That in respect of Counts 1, 1A - 1G, 4, 5, 6, 7, 8, 9, 9A - 9E, 10, 11, 12, 12A - 12C, 13, 13A, 14, 14A - 14B, 15, 16, 16A - 16B, 17, 18, 21, 21A - 21H, 22, 23, and 23A the learned trial judge erred in law in ruling that it was a necessary element of an offence alleged to have been committed pursuant to s 1002G and s 1043A of the Corporations Act 2001 (Cth) that the information acted on by the accused was a factual reality.
3. That in respect of Counts 1, 1A - 1G, 4, 5, 6, 7, 8, 9, 9A - 9E, 10, 11, 12, 12A - 12C, 13, 13A, 14, 14A - 14B, 15, 16, 16A - 16B, 17, 18, 21, 21A - 21H, 22, 23, and 23A the learned trial judge erred in law in entering judgments of acquittal on the basis that each accused had no case to answer on each of the said charges.

37 On 25 June 2010, Mazza J granted leave to appeal on each of these grounds.

38 The critical issue raised by the grounds is whether it is a necessary element of the offences created by s 1002G and s 1043A, read with s 1311, of the Act that the 'information' possessed by the accused was 'truthful' or a 'factual reality'.

39 It is convenient to consider this issue by reference to the applicable statutory provisions in effect on and at relevant times after 11 March 2002. The differences in the statutory text at relevant times before 11 March 2002, on the one hand, and on and at relevant times after 11 March 2002, on the other, are not material for the purposes of this appeal.

The Crown's grounds of appeal: Mr Mansfield's and Mr Kizon's submissions

40 Counsel for Mr Mansfield and counsel for Mr Kizon submitted that the trial judge, in concluding that 'the information acted upon must, in general circumstances, be a factual reality' meant that for a statement to be 'information', for the purposes of the insider trading prohibitions in the Act, the statement must 'in general circumstances be a factual reality'. That is, a false statement of alleged fact is not a 'factual reality' and therefore is not 'information'. Counsel supported his Honour's conclusion as explained by them.

41 It was emphasised that s 1042A defines 'information' to include:

(a) matters of supposition and other matters that are insufficiently definite to warrant being made known to the public; and

(b) matters relating to the intentions, or likely intentions, of a person.

42 Counsel contended that 'matters of supposition' and 'other matters' are conjunctive, and are both qualified by the requirement that they 'are insufficiently definite to warrant being made known to the public'.

43 This qualification is important, so it was submitted, as it gives content to what is meant by 'information'. According to counsel, it is inconceivable that falsehoods or lies could ever warrant being made known to the public unless accompanied by information exposing their falsity, so as to prevent market distortion and unfairness. A false statement, by itself, will, so it was submitted, distort the market and lead to the very consequences that the market manipulation provisions of the Act are designed to negate.

44 It was therefore submitted on behalf of Mr Mansfield and Mr Kizon that the extended definition of 'information' is not inconsistent with the trial judge's construction but, rather, supports it.

45 It was also submitted that the notion of equal access to relevant information held by a corporation which issues securities cannot be thought to include false statements about the corporation or its activities. Nor can it be thought, so it was submitted, that the fiduciary duty of a corporation's officers extends to the making of false statements.

46 Before 1970, there was no Commonwealth or State legislation which specifically prohibited insider trading. As to the position at common law, see Percival v Wright [1902] 2 Ch 421; Hyatt v Allen (1914) 26 OWR 215; 17 DLR 7; Coleman v Myers [1977] 2 NZLR 225 and, on appeal, Coleman v Myers [1977] 2 NZLR 297; Dinive Holdings Pty Ltd v Paracel Pty Ltd (1980) 4 ACLR 928.

47 In 1970, the Senate of the Commonwealth Parliament established a Select Committee on Securities and Exchange (the Rae Committee) to inquire into and report on whether it was desirable and feasible to establish a Commonwealth Securities and Exchange Commission. Soon after the Rae Committee was formed, the Parliament of New South Wales enacted s 75A of the Securities Industry Act 1970 (NSW), which created the offence of insider trading where a person, through his or her association with a corporation, had 'knowledge of specific information relating to the corporation' and acted on that information for his or her own benefit or to enable another person to obtain an advantage through the use of the information in question.

48 In October 1989, the Standing Committee on Legal and Constitutional Affairs of the House of Representatives of the Commonwealth Parliament published a report (the Griffiths Report) on insider trading entitled 'Fair Shares for All: Insider Trading in Australia'. The Griffiths Report resulted in the enactment of the Corporations Legislation Amendment Act 1991 (Cth). This statute amended the provisions in the Corporations Act 1989 (Cth), the Corporations Law and the Australian Securities Commission Act 1989 (Cth) in relation to the regulation of insider trading. The Corporations Legislation Amendment Act 1991 gave effect to the recommendations embodied in the Griffiths Report.

The policy rationales for prohibiting insider trading

49 Four policy rationales have been advanced for prohibiting insider trading. The justifications are based on fiduciary duty, misappropriation of information, market fairness and market efficiency. See R v Firns [2001] NSWCCA 191; (2001) 51 NSWLR 548 [40] - [44] (Mason P, Hidden J agreeing); the Griffiths Report par 3.1; Mannolini J, 'Insider Trading - the Need for Conceptual Clarity' (1996) 14 Company and Securities Law Journal 151, 152 - 155; Jacobs A, 'Time is Money: Insider Trading from a Globalisation Perspective' (2005) 23 Company and Securities Law Journal 231, 232 - 235; Pompilio D, 'On the Reach of Insider Trading Law' (2007) 25 Company and Securities Law Journal 467, 468 - 470.

50 The fiduciary duty rationale asserts that a person who owes a fiduciary duty to a corporation (for example, a director) should not make a personal profit or avoid a personal loss by trading in the corporation's securities when he or she is in possession of confidential price-sensitive information owned by the corporation, because the use of the information for this purpose involves an abuse of trust.

51 The misappropriation rationale is, in essence, an extension of the fiduciary duty rationale. It is based on the proposition that a corporation's confidential price-sensitive information is the corporation's property and a person in a fiduciary relationship with the corporation should not misappropriate that property to trade in the corporation's securities or any other corporation's securities for the purpose of making a personal profit or avoiding a personal loss. According to this rationale, the prohibition on insider trading should extend not merely to fiduciaries, but also to people who receive confidential price-sensitive information from a fiduciary.

52 The market fairness rationale asserts that each participant in the securities market should have equal opportunity to obtain information relating to investment decisions in the securities market. There is inherent unfairness where a person in possession of confidential price-sensitive information takes advantage of that information by dealing in securities in the knowledge that the information in question is unavailable to those with whom he or she is dealing. See In re Cady, Roberts & Co 40 SEC 907 (1961), 912. See also Brudney V, 'Insiders, Outsiders, and Informational Advantages under the Federal Securities Laws' (1979) 93 Harvard Law Review, 322, where it is said:

The inability of a public investor with whom an insider transacts on inside information ever lawfully to erode the insider's informational advantage generates a sense of unfairness. The insider has acquired from the corporation relevant and material corporate information and those with whom he deals cannot acquire it from the corporation lawfully, at least [not] without the corporation's consent, which the insider has reason to know has not been given and will not be given. Allowing the insider the informational advantage in dealing with outsiders is thought to be 'unfair,' in the language of Cady, Roberts, presumably because he has a lawful monopoly on access to the information involved. The unfairness is not a function merely of possessing more information - outsiders may possess more information than other outsiders by reason of their diligence or zeal - but of the fact that it is an advantage which cannot be competed away since it depends upon a lawful privilege to which an outsider cannot acquire access (346). (emphasis added)

53 According to the market fairness rationale, a person in possession of confidential price-sensitive information should not be permitted to trade in securities of the corporation in question until the information has been publicly disclosed. This prohibition should apply irrespective of the source of the information which the person possesses and irrespective of the presence or absence of any connection or association between the person and the relevant corporation. In its Insider Trading Discussion Paper (June 2001), the Companies and Securities Advisory Committee said in relation to the notion of market fairness in the present context:

All market participants bear trading and other risks in their market dealings. These risks include that other participants have better skills to analyse the market, have access to better market research or respond more quickly to information as it comes into the public domain. Market participants with superior skill, time or commitment will therefore inevitably have a trading advantage.

Market fairness does not require the elimination of these risks or advantages. Likewise, market participants should not be discouraged from conducting research and analysis, which promote the efficiency of these markets. Indeed, skill, acumen and diligence should be encouraged. However, insider trading deals with situations where market participants who hold confidential price-sensitive information can take the premium from trading without the same risks that are run by other market participants who cannot gain access to that information by ordinary research, skill or analysis [1.20 - 1.21]. (emphasis added)

54 The market efficiency rationale is based on the proposition that the integrity of the securities market is damaged by insider trading. This rationale asserts that insider trading results in delays in the disclosure of confidential price-sensitive information, diminishes the investing public's confidence in the securities market, and reduces the incentive for Australian and international investors to buy and sell securities. These matters, in turn, adversely affect the overall liquidity and fundraising functions of the financial markets. The market efficiency rationale focuses upon the impact of insider trading on the securities and financial markets.

55 In R v Staines [1997] 2 Cr App R 426, Lord Bingham of Cornhill, in delivering the reasons of the Court of Appeal (Criminal Division), explained the unfairness of insider trading and its impact on the integrity of the securities market, as follows:

It is a familiar, if not a necessary, feature of capitalist society that there should be a market in publicly quoted securities which permits members of the public, whether corporate or individual, to buy and sell. The integrity of the market depends on equality of knowledge, since fair operation of the market is jeopardised if those who are 'in the know' (often called 'market insiders') can exploit information for their personal advantage which they have obtained in the course of their professional activities when such information is unavailable to others. It is, for example, obviously unfair if an officer of a company or a professional adviser, who obtains information that the prospects of a company are poor, is enabled to sell securities he owns in the company so as to avoid loss which other shareholders will sustain. Conversely, it is unfair if an officer of a company or a professional adviser obtains information that the market price in securities of a company is likely to rise and is so enabled to buy in order that he may personally profit from an increase in the market price. A paradigm example of the latter situation occurs where Company A proposes to make an offer for the share capital of Company B, particularly if the shareholders in Company B are expected to decline the offer. A hostile takeover bid may then be likely to ensue, with the predictable effect of driving upwards the market price of the shares in Company B. That is an obvious advantage to the shareholders in Company B and gives an opportunity to profit by buying or increasing the holding of shares in Company B. Anyone who is in a position to anticipate the upward movement of shares in Company B by buying or increasing a holding of shares in Company B before news of the impending offer becomes known to the general public, may expect to make a personal profit which may be significant. That is what is meant by insider dealing, which distorts the orderly and fair operation of the market (430).

The policy rationale for the insider trading prohibitions in the Act

56 The Griffiths Report said it was necessary, in determining the adequacy of the legislative and administrative controls over insider trading, to consider the rationale for having such controls [3.1.1]. After reviewing the various rationales for prohibiting insider trading, the committee rejected the idea that insider trading promotes market efficiency or that it is a legitimate reward for enterprise. It also rejected the suggestion that the scope of insider trading prohibitions should be limited by the fiduciary duty or misappropriation rationales. The committee decided that the rationale for legislative and administrative controls over insider trading was the necessity to guarantee investor confidence in the integrity of the securities market; that is, the market fairness and the market efficiency rationales [3.3.4] - [3.3.6]. The Griffiths Report said:

Accordingly, the Committee confirms the principles adopted in 1981 by the Committee of Inquiry into the Australian Financial System (the Campbell Committee) as a basis for the prohibition of insider trading:

'The object of restrictions on insider trading is to ensure that the securities market operates freely and fairly, with all participants having equal access to relevant information. Investor confidence, and thus the ability of the market to mobilise savings, depends importantly on the prevention of the improper use of confidential information (Australian Financial System, Final Report of the Committee of Inquiry, AGPS, Canberra, 1981, p 382)' [3.3.6].

57 These views in the Griffiths Report were echoed in the explanatory memorandum relating to the Bill which upon enactment became the Corporations Legislation Amendment Act 1991:

Some commentators have suggested that regulation of insider trading is not necessary, as insider trading enhances the efficiency of the securities market through the faster dissemination of information. The Government's policy view is, however, that it is necessary to control insider trading to protect investors and make it attractive for them to provide funds to the issuers of securities, for the greater and more efficient development of Australia's resources. The effects of insider trading on investor confidence are regarded as outweighing any efficiencies arising from the faster dissemination of information which some commentators allege would accrue if insider trading were decriminalised [307]. (emphasis added)

The provisions of the Act relevant to these appeals

58 At material times, pt 7.10 of the Act comprised s 1040A - s 1044A, and was headed 'Market misconduct and other prohibited conduct relating to financial products and financial services'.

59 The insider trading prohibitions were contained in div 3 of pt 7.10. Division 2 dealt with various kinds of prohibited conduct, other than insider trading. In general, div 2 was concerned with false, fictitious, misleading, deceptive or fraudulent conduct in relation to securities, including market manipulation, market rigging or the making of false or misleading statements in relation to securities.

60 At material times, div 3 comprised s 1042A - s 1043O.

61 Section 1042A provided, relevantly, that in div 3:

'Division 3 financial products' means:

(a) securities; or

(b) derivatives; or

(c) managed investment products; or

(d) superannuation products, other than those prescribed by regulations made for the purposes of this paragraph; or

(e) any other financial products that are able to be traded on a financial market.

'generally available', in relation to information, has the meaning given by section 1042C.

'information' includes:

(a) matters of supposition and other matters that are insufficiently definite to warrant being made known to the public; and

(b) matters relating to the intentions, or likely intentions, of a person.

'inside information' means information in relation to which the following paragraphs are satisfied:

(a) the information is not generally available;

(b) if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of particular Division 3 financial products.

'material effect', in relation to a reasonable person's expectations of the effect of information on the price or value of Division 3 financial products, has the meaning given by section 1042D.

...

'relevant Division 3 financial products', in relation to particular inside information, means the Division 3 financial products referred to in paragraph (b) of the definition of 'inside information'.

62 Section 1042C was concerned with when information was 'generally available'. It read:

(1) For the purposes of this Division, information is 'generally available' if:

(a) it consists of readily observable matter; or

(b) both of the following subparagraphs apply:

(i) it has been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in Division 3 financial products of a kind whose price might be affected by the information; and

(ii) since it was made known, a reasonable period for it to be disseminated among such persons has elapsed; or

(c) it consists of deductions, conclusions or inferences made or drawn from either or both of the following:

(i) information referred to in paragraph (a);

(ii) information made known as mentioned in subparagraph (b)(i).

(2) None of the paragraphs of subsection (1) limits the generality of any of the other paragraphs of that subsection.

63 Section 1042D specified when a reasonable person would take information to have a 'material effect' on the price or value of div 3 financial products. It stated that, for the purposes of div 3, 'a reasonable person would be taken to expect information to have a "material effect" on the price or value of particular Division 3 financial products if (and only if) the information would, or would be likely to, influence persons who commonly acquire Division 3 financial products in deciding whether or not to acquire or dispose of the first-mentioned financial products'.

64 Section 1043A prohibited certain specified conduct by a person who was in possession of inside information. It provided:

(a) a person ('the insider') possesses inside information; and

(b) the insider knows, or ought reasonably to know, that the matters specified in paragraphs (a) and (b) of the definition of 'inside information' in section 1042A are satisfied in relation to the information;

the insider must not (whether as principal or agent):

(c) apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products; or

(d) procure another person to apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products.

...

(2) Subject to this Subdivision, if:

(a) a person ('the insider') possesses inside information; and

(b) the insider knows, or ought reasonably to know, that the matters specified in paragraphs (a) and (b) of the definition of 'inside information' in section 1042A are satisfied in relation to the information; and

(c) relevant Division 3 financial products are able to be traded on a financial market operated in this jurisdiction;

the insider must not, directly or indirectly, communicate the information, or cause the information to be communicated, to another person if the insider knows, or ought reasonably to know, that the other person would or would be likely to:

(d) apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products; or

(e) procure another person to apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products.

...

(3) For the purposes of the application of the Criminal Code in relation to an offence based on subsection (1) or (2):

(a) paragraph (1)(a) is a physical element, the fault element for which is as specified in paragraph (1)(b); and

(b) paragraph (2)(a) is a physical element, the fault element for which is as specified in paragraph (2)(b).

65 Section 1043M specified, amongst other things, various defences to a prosecution for an offence. It is unnecessary to set out the defences.

The elements of the substantive offence of insider trading contrary to s 1043A(1)

66 The substantive offence created by s 1043A(1), read with s 1311(1), comprises, relevantly to these appeals, the following elements.

67 First, a person (the insider) possesses 'information'. Secondly, the 'information' is not 'generally available'. Thirdly, if the 'information' in question were 'generally available', a reasonable person would expect the 'information' to have a material effect on the price or value of the securities in question. Fourthly, the insider applies for, acquires, or disposes of, securities, or procures another person to apply for, acquire, or dispose of securities. Fifthly, the insider knows, or ought reasonably to know, that the 'information' is not 'generally available' and that, if it were 'generally available', a reasonable person would expect it to have a material effect on the price or value of the relevant securities.

68 The prosecution must prove each of the elements of the offence beyond reasonable doubt.

The legislative history relating to the definition of 'information' in s 1042A

69 The legislative history relating to the definition of 'information' in s 1042A was examined by Jacobson J in Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (No 4) [2007] FCA 963; (2007) 160 FCR 35 [526] - [544].

70 As I have mentioned, the offence of insider trading created by s 75A of the Securities Industry Act 1970 (NSW) was concerned with whether a person, through his or her association with a corporation, had 'knowledge of specific information relating to the corporation'.

71 In Ryan v Triguboff [1976] 1 NSWLR 588, Lee J held that the term 'specific information', for the purposes of s 75A, connoted not merely that the information was 'precisely definable', but that 'its entire content [could] be precisely and unequivocally expressed and discerned' (596). See also Green v Charterhouse Group of Canada Ltd [1973] 2 OR 677; (1973) 35 DLR (3d) 161, where Grant J decided that information which was preliminary and uncertain was not 'specific confidential information' within s 113 of the Securities Act 1966 (Ontario) [142].

72 In Commissioner for Corporate Affairs v Green [1978] VicRp 48; [1978] VR 505, McInerney J considered the meaning to be ascribed to the word 'information' in s 124(2) of the Companies Act 1961 (Vic), which provided, relevantly, that 'an officer of a corporation shall not make improper use of information acquired by virtue of his position as such an officer'. His Honour held that 'information', for the purposes of s 124(2), was not restricted only to 'specific information' or factual knowledge of a concrete kind, but may include information garnered from a hint or a veiled suggestion. After referring to Ryan and Green v Charterhouse and distinguishing those decisions on the basis of the different statutory text, his Honour said:

I am reluctant to import into s 124(2) a word which is not there. Our section does not require that the information be 'specific'. In many cases a hint may suggest information or may enable an inference to be drawn as to information. Information about impending stock movements or share movements may often be veiled. Discussion concerning such a movement may often take the form of 'mooting' but not deciding a matter (511).

73 In Hooker Investments Pty Ltd v Baring Bros Halkerston & Partners Securities Ltd (1986) 10 ACLR 462, Young J considered the meaning of 'information' in s 128(1) of the Securities Industry Act 1980 (NSW). Section 128(1) read:

A person who is, or at any time in the preceding 6 months has been, connected with a body corporate shall not deal in any securities of that body corporate if by reason of his so being, or having been, connected with that body corporate he is in possession of information that is not generally available but, if it were, would be likely materially to affect the price of those securities.

74 Young J made these observations about what was meant by 'information' in s 128(1) in the course of deciding to strike out the plaintiff's statement of claim and grant it leave to file a further statement of claim within 14 days:

The next question is what is meant by 'information'? In the Ryan case that I referred to earlier and in the Canadian cases to which I made reference, information was held to be material which itself affected the price, not information which a person could use to make calculations. In Victoria in [Commissioner for Corporate Affairs v Green [1978] VicRp 48; [1978] VR 505] this line of reasoning was not followed and it seems to me that in view of the amendments made in 1980 that the definition given to information by McInerney J in that case comes close to what should be adopted here; that is, the factual knowledge either of a concrete kind or that obtained by means of a hint or veiled suggestion from which one can impute other knowledge. I wonder a bit, however, whether it is safe to equate information and knowledge. Information is often defined as knowledge acquired, derived or inculcated by observation, reading or study or by what one is told; but in some cases information implies lack of knowledge such as, for instance, where one says he is informed of a thing but he does not know whether or not his information is true: see State v Simpson 118 SW 1187 at 1188.

To my mind information in sub-s (1) goes further than knowledge and includes the situation where someone has been informed of something which he does not know to be true nor does he care whether it is true or not. In other words, information may include a rumour that something has happened with respect to a company which a person neither believes nor disbelieves (467 - 468). (emphasis added)

75 The Corporations Legislation Amendment Act 1991 introduced a new definition of 'information' which did not require that information be 'specific'. The new definition in s 1002A(1) and, later, in s 1042A provided that 'information' includes matters of supposition and other matters that are insufficiently definite to warrant being made known to the public (par (a)) and matters relating to the intentions, or likely intentions, of a person (par (b)).

76 The explanatory memorandum to the Bill which upon enactment became the Corporations Legislation Amendment Act 1991 made these comments in relation to the new definition of 'information':

Doubt was also expressed as to whether the term 'information' would be interpreted as encompassing supposition, intentions and other matter not sufficiently certain to require its release to the public, notwithstanding the broad interpretation given to the term in Commissioner for Corporate Affairs v Green [1978] VicRp 48; [1978] VR 505 at 511.

Proposed amendment

Proposed section 1002A(1) provides definitions of 'information' and 'securities', in relation to a body corporate, to apply for the purposes of the insider trading provisions. The definition of information is an inclusive one, with information being taken to include supposition and other matters insufficiently definite to warrant being made known to the public and matters relating to the intentions, or likely intentions, of a person [319] - [320].

77 In R v Rivkin (Unreported, NSWSC, 70065 of 2002, 10 April 2003), the accused had been charged with an offence of insider trading under s 1002G of the Act. Whealy J heard an application made on behalf of the accused in which it was argued, relevantly, that the indictment, together with the particulars, disclosed no breach of the insider trading prohibitions because the particularised information was in fact not 'information' within the meaning of the definition in s 1002A [43]. His Honour ruled against this argument and, in his reasons, expressed the 'tentative view' that a statement of a falsehood may nevertheless come within the concept of information [50]. His Honour's full reasons on this point were as follows:

While it is not necessary for me to express a concluded opinion, nor indeed is it desirable to do so for the purposes of the present application, I must say that I incline to the tentative view that a statement as to the existence of a state of affairs, even though it may not be precisely accurate - even though it might not be accurate at all - may nevertheless be comprehended within the concept of information for the purposes of the insider trading legislation. That is, information which is confidential, price sensitive and which may not be used in the prohibited manner may nevertheless extend to inaccurate or even baseless information [50]. (emphasis added)

78 In Hannes v Director of Public Prosecutions (Cth) (No 2) [2006] NSWCCA 373; (2006) 205 FLR 217, Barr and Hall JJ made the following comments about 'information' for the purposes of the insider trading prohibitions.

79 First, the definition of 'information' in s 1002A(1) (now in s 1042A) is inclusive rather than comprehensive, but expressly includes 'matters relating to the intentions, or the likely intentions, of a person'. The intention of a natural person or a corporation may be held with 'varying degrees of certainty' [411]. Further:

The existence of such an intention is information. If it is passed on to others, it is information in the hands of the recipients. However, the intention may be inferred by others from the conduct of the directors. The inference may be drawn with varying degrees of certainty as to its accuracy. Nevertheless, such an inference remains information. Indeed, there is no clear distinction between information conveyed orally and by conduct. In the case where the director tells a third party of his or her intentions, the information is in fact inferred not merely from receiving the communication, but from forming a belief as to its veracity [411].

80 Secondly, as noted by McInerney J in Commissioner for Corporate Affairs v Green, the kind of information which may affect a securities market may be 'quite imprecise' [415]. However:

[T]he source of the rumour may be of very considerable importance, despite the vagueness of the known details. If the information in question is so imprecise that it is not likely to affect the market, the charge will not be made out. But if it is sufficient to satisfy that element of the offence, there is no reason to import into the statutory definition an additional requirement of specificity or precision [415]. (emphasis added)

81 An application by the unsuccessful appellant in Hannes (No 2) for special leave to appeal to the High Court was dismissed. See Hannes v The Queen [2008] HCA Trans 133.

82 In Citigroup (No 4), Jacobson J expressed these views about the definition of 'information' in s 1042A:

(a) information can be non-specific, and what is drawn from it, by way of inference, is also 'information', as defined [537];

(b) information, whether in the form of a hint or a rumour, must be communicated orally or by conduct, for example, 'by observation of the words or conduct of others' [537];

(c) an inference may be a supposition or a matter of supposition and, therefore, 'information', as defined; the supposition would be that which the person concerned drew from the hint or other non-specific information received from another [538];

(d) although a hint or other non-specific information must be communicated by words or conduct, the inference or supposition drawn from it is 'information', as defined [542];

(e) the kind of information which may affect a securities market may be quite imprecise, but if the information in question is so imprecise that it is unlikely to affect the market, a charge of insider trading in relation to the information will not be made out [543].

The nature of 'information' for the purposes of the continuous disclosure requirements of the Act compared to the nature of 'information' for the purposes of the insider trading prohibitions

83 As Mason P noted in Firns, Australian corporations law and practice seek to attack insider trading through the continuous disclosure provisions of the Act and the ASX listing rules [63].

84 At the material time, the continuous disclosure provisions in s 675, s 676 and s 677 of the Act, as well as the insider trading prohibitions, applied to 'information' that was not generally available and that a reasonable person would expect, if it were generally available, to have a material effect on the price or value of the securities in question.

85 As I have mentioned, 'information' was defined, for the purposes of the insider trading prohibitions, to include matters of supposition and matters relating to intentions.

86 By contrast, this definition of 'information' did not apply for the purposes of the continuous disclosure provisions. The definition of 'information' in s 9 of the Act (which merely provided that 'information' included complaint) applied for the purposes of s 675, s 676 and s 677. Further, the ASX listing rules contained exemptions in relation to the continuous disclosure provisions which did not apply to the insider trading prohibitions.

United States decisions on the meaning of 'information' in the context of the United States insider trading prohibitions

87 The Securities Exchange Act 1934, 48 Stat 881, 15 USC chap 2B (the 1934 Act) was intended primarily to protect investors against manipulation of stock prices by regulating securities transactions and imposing regular reporting requirements on companies listed on national securities exchanges. See Ernst & Ernst v Hochfelder [1976] USSC 76; 96 S Ct 1375 (1976), 1382.

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange -

...

(b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, or any securities-based swap agreement, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

...

Rules promulgated under subsection (b) that prohibit fraud, manipulation, or insider trading (but not rules imposing or specifying reporting or recordkeeping requirements, procedures, or standards as prophylactic measures against fraud, manipulation, or insider trading), and judicial precedents decided under subsection (b) and rules promulgated thereunder that prohibit fraud, manipulation, or insider trading, shall apply to security-based swap agreements to the same extent as they apply to securities. Judicial precedents decided under section 17(a) of the Securities Act of 1933 and sections 9, 15, 16, 20, and 21A of this title, and judicial precedents decided under applicable rules promulgated under such sections, shall apply to security-based swap agreements to the same extent as they apply to securities.

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

(a) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,

in connection with the purchase or sale of any security.

Rule 10b-5 was promulgated under the grant of authority given by Congress to the Securities and Exchange Commission in s 10(b) of the 1934 Act.

90 To establish that a defendant has breached s 10(b) and r 10b-5, the Securities and Exchange Commission must prove:

(1) a misrepresentation, or an omission (where there is a duty to speak), or other fraudulent device; (2) in connection with the purchase or sale of any security; (3) scienter by the defendant in making that misrepresentation or omission; and (4) materiality of that misrepresentation or omission.

See SEC v Tome 638 F Supp 596 (SDNY 1986), 620 (internal citations omitted).

91 The United States laws on insider trading have developed through judicial interpretation of the general anti-fraud provisions embodied in r 10b - 5, which does not expressly refer to insider trading.

92 These insider trading laws are based on the fiduciary duty and misappropriation rationales. In United States v Cusimano [1997] USCA2 476; 123 F 3d 83 (2nd Cir 1997), the United States Court of Appeals, Second Circuit, said in relation to an appeal by the defendant-appellant Flanagan, who had been convicted of insider trading charges:

Flanagan's conviction for insider trading, both as a violation of s 10(b) and Rule 10b-5 and as an object of the conspiracy charge, was based on the so-called 'misappropriation theory' of insider trading. In contrast to the traditional theory of insider trading, under which a corporate insider trades in the securities of his own corporation on the basis of material, non-public information, under the misappropriation theory s 10(b) and Rule 10b-5 are violated whenever a person trades while in knowing possession of material, non-public information that has been gained in violation of a fiduciary duty to its source. Despite our Circuit's long-standing acceptance of the misappropriation theory of insider trading liability, Flanagan argues that we should reconsider its wisdom, citing two cases from other Circuits that held that the misappropriation theory does not support liability under s 10(b) and Rule 10b-5. We can quickly dispose of Flanagan's argument. Subsequent to briefing and oral argument in this case, the Supreme Court reversed the Eighth Circuit's judgment in O'Hagan and endorsed the misappropriation theory of insider trading liability. Accordingly, we decline Flanagan's request that we revisit the issue (87 - 88). (internal citations omitted)

93 A person, referred to in the United States cases as the primary insider, will violate s 10(b) and r 10b-5 where he or she misappropriates material non-public information in breach of a fiduciary duty or similar relationship of trust and confidence and uses that information in a securities transaction (United States v Teicher [1993] USCA2 255; 987 F 2d 112 (2nd Cir 1993), 119 (quoting United States v Chestman [1991] USCA2 1036; 947 F 2d 551 (2nd Cir 1991), 556)).

94 A person who engages in a securities transaction while in knowing possession of material non-public information which has been obtained by another in breach of a fiduciary duty or similar relationship of trust and confidence (and passed directly or indirectly to the first-mentioned person) is referred to in the United States cases as a 'tippee' or secondary insider.

95 In Bateman Eichler, Hill Richards, Inc v Berner [1985] USSC 152; 105 S Ct 2622 (1985), the question at issue was whether the in pari delicto defence at common law barred a private action for damages under the United Stated federal securities laws against corporate insiders and broker-dealers who allegedly fraudulently induced investors to purchase securities by misrepresenting that they were conveying material non-public information about the issuer. The Supreme Court of the United States held that there was no basis summarily for applying the in pari delicto defence. Brennan J, who delivered the opinion of the Supreme Court, explained the circumstances in which a tippee will infringe s 10(b) and r 10b-5, and compared the relative culpability of a tippee on the one hand and a primary insider on the other:

The Court has made clear in recent Terms that a tippee's use of material nonpublic information does not violate s 10(b) and Rule 10b-5 unless the tippee owes a corresponding duty to disclose the information. That duty typically is 'derivative from ... the insider's duty.' In other words, '[t]he tippee's obligation has been viewed as arising from his role as a participant after the fact in the insider's breach of a fiduciary duty' towards corporate shareholders. In the context of insider trading, we do not believe that a person whose liability is solely derivative can be said to be as culpable as one whose breach of duty gave rise to that liability in the first place.

Moreover, insiders and broker-dealers who selectively disclose material nonpublic information commit a potentially broader range of violations than do tippees who trade on the basis of that information. A tippee trading on inside information will in many circumstances be guilty of fraud against individual shareholders, a violation for which the tipper shares responsibility. But the insider, in disclosing such information, also frequently breaches fiduciary duties toward the issuer itself. And in cases where the tipper intentionally conveys false or materially incomplete information to the tippee, the tipper commits an additional violation: fraud against the tippee (2630). (internal citations omitted)

96 The nature of non-public 'information', for the purposes of the United States laws on insider trading, has been considered in several cases.

97 In SEC v Monarch Fund [1979] USCA2 819; 608 F 2d 938 (2nd Cir 1979) it was held that, to constitute non-public information, information must be specific and more private than general rumour (942 - 943).

98 In Bateman Eichler, Brennan J said that the material before the court strongly suggested that much of the information conveyed to the respondent investors was true, but that it was deceptive by virtue of exaggeration and the failure to include additional information (2629, fn 21). His Honour continued:

If this was the case, and if the respondents otherwise acquired a derivative duty within the meaning of Dirks, there is no question that their trading on the basis of this information violated the securities laws. If the information was entirely false, the SEC and Bateman Eichler contend that the respondents, by trading on what they believed was material nonpublic information, are nevertheless guilty of at least an attempted violation of the securities laws if they otherwise believed that Neadeau had breached his fiduciary duties. This view has drawn substantial support among the lower courts. See, eg, Tarasi v Pittsburgh National Bank 555 F 2d at 1159-1160; Kuehnert v Texstar Corp 412 F 2d at 704; Grumet v Shearson/Amercian Express Inc 564 F Supp at 340. The respondents, on the other hand, contend that they could not have inherited any duty to disclose false information, and that the case is properly viewed as governed by the doctrine of legal impossibility, which would bar any liability, rather than factual impossibility, which would permit liability on an attempt theory. See also Note, The Availability of the In Pari Delicto Defence in Tippee-Tipper Rule 10b-5 Actions after Dirks v SEC, 62 Wash U LQ 519, 540-542 (1984). Because this issue has not been fully briefed and was not considered by the courts below, we express no views on it and simply proceed on the assumption that the respondents' activities rendered them in delicto (2629 - 2630, fn 21). (original emphasis)

99 In United States v Mylett [1996] USCA2 918; 97 F 3d 663 (2nd Cir 1996), the United States Court of Appeals, Second Circuit, made these observations about the nature of non-public information:

We do not today hold that any predictions made by an insider can constitute the basis for insider trading simply because a tippee relies upon them and their source, and they subsequently come true. It may well be that insider trading has not occurred, for example, in situations in which an insider has made categorical statements that are completely without foundation and these are used successfully by a trader. We need go nowhere near such an extreme holding, for here the statement made by the insider was qualified, supported, and credible (667). (emphasis added)

See also SEC v Thrasher 152 F Supp 2d 291 (SDNY 2001) [7] - [8]; In re Motel 6 Securities Litigation 161 F Supp 2d 227 (2001) [11].

The merits of the Crown's grounds of appeal

100 The definition of 'information' in s 1002A(1), which applied at material times before 11 March 2002, and the definition of 'information' in s 1042A, which applied on and at material times after 11 March 2002, are identical. The proper construction of the definition is critical to the resolution of the Crown's grounds of appeal.

101 As McHugh J noted in Kelly v The Queen [2004] HCA 12; (2004) 218 CLR 216, the function of a definition is not to enact substantive law, but to provide aid in construing the statute [103]. His Honour added:

Nothing is more likely to defeat the intention of the legislature than to give a definition a narrow, literal meaning and then use that meaning to negate the evident policy or purpose of a substantive enactment. There is, of course, always a question whether the definition is expressly or impliedly excluded. But once it is clear that the definition applies, the better - I think the only proper - course is to read the words of the definition into the substantive enactment and then construe the substantive enactment - in its extended or confined sense - in its context and bearing in mind its purpose and the mischief that it was designed to overcome. To construe the definition before its text has been inserted into the fabric of the substantive enactment invites error as to the meaning of the substantive enactment [103].

102 The modern approach to statutory construction is purposive. The statutory text is the surest guide to the Parliament's intention. A decision as to the meaning of the text must begin by considering the context, in its widest sense. This will include the general purpose and policy of the provision. See Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 353 [69] (McHugh, Gummow, Kirby & Hayne JJ); Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 [47] (Hayne, Heydon, Crennan & Kiefel JJ); Travelex Ltd v Federal Commissioner of Taxation [2010] HCA 33; (2010) 84 ALJR 683 [82] (Crennan & Bell JJ).

103 At common law (that is, apart from any reliance on s 15AB of the Acts Interpretation Act 1901 (Cth)), a court is permitted, in construing a statutory provision, to have regard to the words used by the Parliament in their legal and historical context and, if appropriate, to give them a meaning that will give effect to any purpose of the legislation that can be deduced from that context. See CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384, 408 (Brennan CJ, Dawson, Toohey and Gummow JJ); Newcastle City Council v GIO General Ltd [1997] HCA 53; (1997) 191 CLR 85, 112 - 113 (McHugh J).

104 Section 1042A provides that, in div 3 of pt 7.10, 'information' includes:

(a) matters of supposition and other matters that are insufficiently definite to warrant being made known to the public; and

(b) matters relating to the intentions, or likely intentions, of a person.

105 The word 'information', in its ordinary meaning, has a broad connotation. It includes:

(a) according to The Macquarie Dictionary (3rd ed, 1997), '1. knowledge communicated or received concerning some fact or circumstance; news. 2. knowledge on various subjects, however acquired'; and

(b) according to The Oxford English Dictionary (2nd ed, 1989), '3.a. Knowledge communicated concerning some particular fact, subject or event; that of which one is apprised or told'.

106 In Win v Minister for Immigration and Multicultural Affairs [2001] FCA 56; (2001) 105 FCR 212, a Full Court of the Federal Court (Whitlam, Tamberlin & Sackville JJ) referred to these definitions and said, correctly in my respectful opinion, that 'information' is capable of different shades of meaning, depending on the context [18].

107 Paragraph (a) of the definition of 'information' in s 1042A includes within that concept matters of 'supposition' and other matters that are 'insufficiently definite to warrant being made known to the public'.

108 The word 'supposition' includes an assumption, a hypothesis and a matter which is accepted or received as true, without positive knowledge and perhaps erroneously. See the definitions of 'supposition' in The Macquarie Dictionary (3rd ed, 1997) and The Shorter Oxford English Dictionary (5th ed, 2002). Invariably (if not always), an assumption, a hypothesis or a matter which is accepted or received as true, without positive knowledge and perhaps erroneously, relating to a corporation or its affairs would be insufficiently definite to warrant being made known to the public.

109 Paragraph (b) of the definition of 'information' in s 1042A includes within that concept matters relating to the 'intentions' of a person and, also, matters relating to the 'likely intentions' of a person. A person's intentions or likely intentions relating to a corporation or its affairs would include the person's aim, purpose or design or probable aim, purpose or design as to the corporation or its affairs.

110 The word 'include' primarily has an expansive function. Usually, a definition which states that a word includes specified matters reveals a Parliamentary intention to add the meanings given in the definition to the ordinary meaning of the word. Often, the added meaning is not otherwise within the ordinary meaning. The ordinary meaning is amplified to the extent specified. See Sherritt Gordon Mines Ltd v Federal Commissioner of Taxation [1977] VicRp 42; [1977] VR 342, 353 (McInerney J).

111 Sometimes, however, 'includes' has been taken to have an exhaustive function where it appears from the context that the Parliamentary intention was to confine the ordinary meaning of the word to the meaning conveyed by the matters specified in the definition.

112 In Hook v Rolfe (1986) 7 NSWLR 40, 49 - 50, Samuels JA said:

'Includes' is a word of extension and not of restrictive definition. In R v Hermann (1879) 4 QBD 284 at 288, Lord Coleridge CJ observed:

' ... The words "shall include" are not identical with, or put for "shall mean". The definition does not purport to be complete or exhaustive. By no means does it exclude any interpretation which the sections of the Act would otherwise have, it merely provides that certain specified cases shall be included.'

Hence 'includes' denotes a legislative intention to enlarge the ordinary meaning of the word defined, unless, perhaps, the items included in the definition would fall within it. In that case the definition, though introduced by the word 'includes', might be regarded as exhaustive; YZ Finance Co Pty Ltd v Cummings [1964] HCA 12; (1964) 109 CLR 395 and R v McN [1963] SR (NSW) 186; 80 WN 608 are cases in which different results followed the application of Lord Watson's latitudinarian test in Dilworth v Commissioner of Stamps [1899] AC 99 at 105 - 106. Dr D C Pearce in his Statutory Interpretation in Australia, 2nd ed (1981) at 115 - 118, favours the view that 'includes' should not generally be regarded as introducing an exhaustive definition, and quotes from Lord Selborne LC in Robinson v Barton-Eccles Local Board (1883) 8 App Cas 798 at 801:

' ... An interpretation clause of this kind [ie one which uses the word "includes"] is not meant to prevent the word from receiving its ordinary, popular, and natural sense whenever that would be properly applicable; but to enable the word as used in the Act, when there is nothing in the context or the subject matter to the contrary, to be applied to some things to which it would not ordinarily be applicable.'

See also R v Tkacz [2001] WASCA 391; (2001) 25 WAR 77 [45] - [58] (Malcolm CJ).

113 In the present case, the Parliament, by using 'includes' in the definition of 'information' in s 1042A, intended to enlarge the ordinary meaning of 'information', rather than to provide an exhaustive definition. It is inconceivable that the Parliament intended to confine the insider trading prohibitions to the matters specified in pars (a) and (b) of the definition and exclude more definite matters such as statements of existing objective fact. This is confirmed by the explanatory memorandum to the Bill which upon enactment became the Corporations Legislation Amendment Act 1991. See [76] above. Paragraphs (a) and (b) were included to ensure that the matters specified in those provisions were within the concept of 'information' in div 3 of pt 7.10. The word 'information' as defined in s 1042A necessarily included, for example, statements of alleged fact, opinions, predictions, forecasts, statements of intention or likely intention, hypotheses, assumptions, hints, suggestions and conjecture.

(a) a statement may be 'information', as defined, irrespective of whether or not the matters stated are reliable or have a sound factual foundation;

(b) an opinion, a prediction and a forecast may each be 'information', as defined, irrespective of whether or not there are reasonable grounds for the opinion, prediction or forecast; and

(c) a statement, opinion, prediction and forecast may each be 'information', as defined, even if the person who makes or repeats the statement, opinion, prediction or forecast knows or believes that:

(i) it is unreliable or has an unsound factual basis; or

115 My reasons for the opinion I have expressed are as follows.

116 First, neither the definition of 'information' in s 1042A nor any other provision in div 3 of pt 7.10 contains an express stipulation to the effect that the 'information' must be 'truthful', a 'factual reality' or based on reasonable grounds.

117 Secondly, div 3 of pt 7.10 does not expressly include as an element of the offence created by s 1043A, read with s 1311(1), that the 'information' possessed by the accused was 'truthful', a 'factual reality' or based on reasonable grounds. Similarly, div 3 of pt 7.10 does not confer a defence on the accused where the 'information' possessed by him or her was not 'truthful', not a 'factual reality' or not based on reasonable grounds.

118 Thirdly, information in the form of opinions, predictions, forecasts, statements of likely intention, hypotheses, assumptions, hints, suggestions and conjecture is inherently uncertain, imprecise or speculative, at least to some degree. For example, information that involves an expression of opinion or a prediction, including an opinion or a prediction that is not based on reasonable grounds, may or may not prove to be wholly or partly correct.

119 Fourthly, although 'matters of supposition' (see par (a) of the definition of 'information') will invariably (if not always) be 'insufficiently definite to warrant being made known to the public' (see par (a) of the definition), it does not follow by implication from this part of the definition (in the context of div 3 of pt 7.10 and the continuous disclosure provisions) that 'matters of supposition and other matters that are insufficiently definite to warrant being made known to the public' (see par (a) of the definition) will not be 'information' if the matters of supposition or other matters will never warrant being made known to the public because, for example, the matters are not 'truthful' or not a 'factual reality' or not based on reasonable grounds. Matters of supposition will be 'information', as defined, notwithstanding, or despite the fact that, those matters are insufficiently definite, for whatever reason, to warrant being made known to the public. The words 'insufficiently definite to warrant being made known to the public' expand the matters which fall within the description 'matters of supposition'. The ordinary meaning of those words is not to be constrained in the manner contended for on behalf of Mr Mansfield and Mr Kizon.

120 Fifthly, div 3 of pt 7.10 does not confine 'information' to matters which have been generated by or on behalf of the corporation whose securities are traded. Although the identity of the person who has generated the matters in question (and the nature and extent of, or the absence of, any connection between the person and the corporation in question) will bear upon whether a reasonable person would be taken to expect those matters to have a 'material effect' on the price or value of the securities within s 1042D, the identity of the person does not affect the status of the matters as 'information' as defined.

121 Sixthly, the fact that 'information', as defined, has been obtained from a particular source is itself 'information'. For example, where a person makes a statement, the 'information', as defined, is not confined to the underlying statement, but extends to the fact that the statement was made or allegedly made and the identity of the person who made or allegedly made it. As Whealy J noted in Rivkin (Unreported), the source of 'information' is capable of having a significant impact on the price of securities [46].

122 Seventhly, div 3 of pt 7.10 does not require the Crown to prove that the accused used or relied on the 'inside information' in question when he or she traded in the relevant securities. Similarly, div 3 of pt 7.10 does not confer a defence on the accused where the 'inside information' in question was not used or relied on by him or her when he or she traded in the relevant securities or where the accused traded in the relevant securities contrary to the 'inside information' in question.

123 Eighthly, 'information' that is not 'truthful' or not a 'factual reality' or not based on reasonable grounds may, nevertheless, influence persons who commonly acquire div 3 financial products in deciding whether or not to acquire or dispose of the financial products in question:

(a) if the untruthfulness or absence of factual reality or absence of reasonable grounds is unknown to them; or

(b) if the untruthfulness or absence of factual reality or absence of reasonable grounds is known to them, and they use this knowledge in deciding whether or not to acquire or dispose of the relevant financial products.

124 Ninthly, if the 'information' relied on by the Crown in an insider trading prosecution was not 'truthful' or not a 'factual reality' or not based on reasonable grounds, that characteristic of the 'information' may, depending on the circumstances, be relevant to the inquiry mandated by s 1042D, namely, whether the 'information' would, or would be likely to, influence persons who commonly acquire div 3 financial products in deciding whether or not to acquire or dispose of the financial products in question. For example, a statement which appears, on its face, to be completely without foundation, would be unlikely to influence persons who commonly acquire the relevant financial products in deciding whether or not to acquire or dispose of those products.

125 Tenthly, the inclusion within 'information', as defined, of information that is not 'truthful' or not a 'factual reality' or not based on reasonable grounds is consistent with the market fairness policy rationale, and significant aspects of the market efficiency policy rationale, on which the insider trading prohibitions are based. It is consistent with the market fairness rationale in that a person who trades in securities while in possession of inside information (whether or not the information is 'truthful' or a 'factual reality' or based on reasonable grounds) will have information that is not available to the persons with whom he or she is dealing. It is consistent with significant aspects of the market efficiency rationale in that a person who trades in securities while in possession of inside information (whether or not the information is 'truthful' or a 'factual reality' or based on reasonable grounds) is engaging in conduct of a kind which is likely to diminish the investing public's confidence in the securities market.

126 Eleventhly, if a 'primary insider' reveals 'inside information' to a 'secondary insider' or 'tippee' with the intention that the 'secondary insider' or 'tippee' should use or rely on it to trade in securities in violation of the insider trading prohibitions, and the 'primary insider' knows or believes that the 'information' is not 'truthful' or not a 'factual reality' or not based on reasonable grounds, the 'primary insider' would be likely to incur criminal liability under div 2 of pt 7.10, in addition to liability under s 1043A(2), read with s 1311(1).

127 Twelfthly, the United States cases on the nature and characteristics of 'information' for the purposes of United States law are not of assistance in construing div 3 of pt 7.10. There is no analogy between the text of the Australian legislation and the text of the United States legislation. As I have mentioned, the United States laws on insider trading have developed through judicial interpretation of the general anti-fraud provisions embodied in r 10b-5. Also, the United States laws are based on different policy rationales, namely, fiduciary duty and misappropriation of information.

128 Thirteenthly, contrary to the view expressed by the trial judge, there is no difficulty in conceptualising how 'information' that is not 'truthful' or not a 'factual reality' could satisfy the test of 'materiality' for the purposes of 'inside information', as defined, and s 1042D, or how a jury should be instructed to approach its task where 'information' is false.

129 'Inside information' was defined to mean, in essence, information that was not generally available and that, if it were generally available, a reasonable person would expect it to have a material effect on the price or value of particular div 3 financial products. Section 1042D provided that, for the purposes of div 3 of pt 7.10, a reasonable person would be taken to expect information to have a 'material effect' on the price or value of particular div 3 financial products if (and only if) the information would, or would be likely to, influence persons who commonly acquire div 3 financial products in deciding whether or not to acquire or dispose of the first-mentioned financial products.

130 Where 'information' is not 'truthful' or not a 'factual reality', the statements of alleged fact, opinions, predictions, forecasts, statements of intention or likely intention, hypotheses, assumptions, hints, suggestions or conjecture etc, as the case may be, are to be evaluated in relation to 'materiality' from the perspective of the reasonable person referred to in the definition of 'inside information' and s 1042D. This evaluation will be based on:

(a) what is reasonably embodied in or conveyed by the relevant statements of alleged fact, opinions, predictions, forecasts, statements of intention or likely intention, hypotheses, assumptions, hints, suggestions or conjecture etc, as the case may be; and

(b) the identity of the person who generated or allegedly generated the matters,

in the context of any other information which is (in contrast with the alleged inside information) generally available and which is relevant to the price or value of the div 3 financial products in question.

131 Grounds 1 and 2 of the Crown's appeal have been made out.

132 A conclusion in relation to the merits of ground 3 of the Crown's appeal must be deferred until the issues raised by Mr Mansfield and Mr Kizon in their notices of contention have been examined.

Mr Mansfield's and Mr Kizon's notices of contention

133 Each of Mr Mansfield and Mr Kizon filed a notice of contention. The notices are identical. They raise three grounds.

134 Ground 1 asserts that the evidence at the close of the Crown's case was incapable of establishing an essential element of each count alleged against Mr Mansfield or Mr Kizon, namely, that the information as particularised by the Crown was 'not generally available'.

135 Ground 2 alleges that the evidence at the close of the Crown's case was incapable of establishing the existence of each conspiracy alleged against Mr Mansfield and Mr Kizon and his participation in them.

136 Ground 3 alleges that, in respect of telephone intercept and access warrants B01179/00 and B01179/01, the trial judge erred:

(b) in failing to hold that the warrants were invalid and that the information obtained thereby was inadmissible.

Ground 1 of the notices of contention: Mr Mansfield's and Mr Kizon's submissions

137 At the trial, it was submitted on behalf of each of Mr Mansfield and Mr Kizon, as part of his application that he had no case to answer, that the evidence at the close of the Crown's case was incapable of proving that the alleged inside information particularised by the Crown was 'not generally available' for the purposes of s 1002G (before 11 March 2002) and s 1043A (on and after 11 March 2002) of the Act.

138 It was not essential for the trial judge to rule on this submission because he had determined that there was no case to answer based on the issue of 'falsity' and 'information'. His Honour did, however, rule on this submission in relation to Mr Mansfield and counts 2, 3, 19 and 20. His Honour said he was 'not persuaded that there are such defects in the evidence that taken at its highest it would not sustain a verdict of guilty and the submission of no case is declined in respect of those counts' (ts 2867). Counts 2 and 3 related to shares in My Casino, and counts 19 and 20 to shares in My Casino when it was called Euraust.

139 Counsel for Mr Mansfield and counsel for Mr Kizon placed particular emphasis on the failure of the Crown:

(a) to call Mr Day and Mr O'Donnell to give evidence or to call evidence as to information disseminated at company briefings or presentations to 'persons who commonly invest' such as brokers and analysts;

(b) to produce announcements from German stock exchanges for either company, search results of European websites for either company, search results for electronic and print media outside Australia, internet searches for either company, or searches of internet chat sites such as 'Hot Copper'.

140 It was submitted that the evidence at the close of the Crown's case did not permit an inference to be drawn that the alleged information was 'not generally available' and, in consequence, neither Mr Mansfield nor Mr Kizon could lawfully be convicted on the counts alleged against him.

The merits of ground 1 of the notices of contention

141 The alleged inside information relied on by the Crown was set out in particulars to the counts in the indictment. I have reproduced the particulars in the Schedule to these reasons.

142 The test in s 1042C for determining whether information is 'generally available' or not has three aspects.

143 First, information is 'generally available' if it consists of 'readily observable matter' (s 1042C(1)(a)).

144 Secondly and alternatively, information is 'generally available' if:

(i) it has been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in div 3 financial products of a kind whose price might be affected by the information; and

(ii) since it was made known, a reasonable period for it to be disseminated among such persons has elapsed (s 1042C(1)(b)).

145 Thirdly and alternatively, information is 'generally available' if the information consists of deductions, conclusions or inferences made or drawn from either or both of the following:

(i) information that consists of 'readily observable matter';

(ii) information that has been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in div 3 financial products of a kind whose price might be affected by the information.

146 In a prosecution for an insider trading offence, the Crown must prove beyond reasonable doubt that, at the material time, the inside information was not 'generally available'.

147 It is a question of fact whether a matter is 'readily observable' or not. The test for determining this question is objective and hypothetical. Proof that a matter is 'readily observable' does not depend on proof that persons have actually perceived the matter. Rather, it turns on whether the particular matter could have been widely observed. See Firns, where Mason P said:

I have endeavoured to show why, in my opinion, a decision that a particular item of information is 'readily observable matter' is a complex and nuanced one that takes into account the international ambit of Division 2A and the capacity for types of information to be relayed across the world instantaneously through modern means of telecommunications.

As indicated already, the issue is par excellence a jury question, especially bearing in mind the presence of 'readily' in the statutory 'definition'. This said, there are some categories of information which by their nature and the circumstances of their revelation are inherently observable and readily so. Observability does not depend upon proof that a person or group of persons actually perceived the information. That is not to say that the depositing of information in an obscure portion of a public library would establish ready observability. The issue is a factual or jury one. But the point of present relevance is that the objective and hypothetical circumstances are to be looked at, not merely the actualities in the particular case. Ready observability cannot be located a priori in the Australian capital cities where the ASX has a physical presence.

In some cases the matter may be so clear that a court could determine that there was no evidence capable of grounding a conviction based upon proving the negative proposition that the information used by the insider was not 'readily observable matter'. In other situations, there would be evidence fit to go to the jury but the Crown case would be so weak that any conviction would be unreasonable in the sense expounded in Jones v The Queen (1997) 191 CLR 439. Thirdly, an appellate court considering whether to direct a new trial would have regard to the sufficiency of the evidence to bring about a verdict that would not be unreasonable [87] - [89]. (original emphasis)

148 A judicial gloss of the words 'readily observable matter' would in many contexts be inappropriate and potentially dangerous. See R v Hannes [2000] NSWCCA 503; (2000) 158 FLR 359 [272] - [273] (Spigelman CJ); Firns [83].

149 The provisions of s 1042C (and its precursor, s 1002B) deviate from the recommendations in the Griffiths Report. This departure in the legislation, and the evident object of s 1002B, were mentioned in some detail in the explanatory memorandum relating to the Bill which upon enactment became the Corporations Legislation Amendment Act 1991:

Section 1002B - Information generally available

Background

The Committee recommended that information be defined as 'generally available' where it is disclosed in a manner which would be likely to bring it to the attention of a 'reasonable investor', and where a reasonable period of time for the dissemination of the information has elapsed.

Concern was expressed that in consequence of the adoption of this definition in the exposure draft, information directly observable in the public arena would not be regarded as generally available, as it has not been 'made known'. It was considered that a person could be liable for insider trading where he/she traded in securities on the basis of, for example, an observation that the body corporate had excess stocks in a yard. This was not the intention of the provisions.

Further, although it was not intended that the provisions would regard as inside information such things as deductions and conclusions which investors, brokers or other market participants may make based on independent research of generally available information, a number of submissions considered that this intention was not reflected in the provisions.

Proposed amendment

Proposed section 1002B is a reflection of the Committee's recommendation in relation to generally available information. For information to be generally available, subsection 1002B(2) requires either that it:

• consist of readily observable matter, ie facts directly observable in the public arena (subparagraph (a)); or
• be made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in securities of bodies corporate of a kind whose price or value might be affected by the information. This provision is intended to define the term 'generally available' in terms appropriate to closely held and unlisted companies as well as listed companies with dispersed shareholdings. It would not be sufficient for information to be released to a small sector of the investors who commonly invest in the securities. The information must be made known to a cross section of the investors who commonly invest in the securities; and
• a reasonable period of time has elapsed for the information to be disseminated. This provision is designed to prevent an insider, who is aware of information prior to its release, getting an unfair head start on other market participants, not to require an embargo on trading of such duration that it constitutes an impediment to the efficient operation of the market (subparagraph (b)).

Proposed subsection 1002B(3) makes it clear that information is also generally available if it consists of deductions, conclusions or inferences based on, separately or in combination, readily observable matter and information that has been made known within subparagraph (2)(b)(i) [325] - [329].

150 The test to be applied by a trial judge in determining a submission of no case to answer at the close of the prosecution case has been considered and discussed in numerous authorities. See, for example, May v O'Sullivan [1955] HCA 38; (1955) 92 CLR 654; R v Bilick (1984) 36 SASR 321; Morrison v Kiwi Electrix Pty Ltd [1998] WASCA 203; (1998) 19 WAR 482; The State of Western Australia v Montani [2007] WASCA 259; (2007) 182 A Crim R 155. The question is not whether, on the evidence as it stands, the accused ought to be convicted, but whether, on the evidence as it stands, he or she could lawfully be convicted.

151 In Bilick, the Full Court of the Supreme Court of South Australia considered the application of the test in a case which depends on circumstantial evidence. King CJ (Mohr J agreeing) said:

The same test is to be applied to deciding a submission of no case to answer in a case depending upon circumstantial evidence as in a case depending upon direct evidence, although the manner of its application will be different. The question to be answered by the trial judge is whether there is evidence with respect to every element of the offence charged which, if accepted, could prove that element beyond reasonable doubt. Where there is direct evidence of the actus reus and that evidence is capable of supporting an inference of mens rea, there is a case to answer except in the extreme case, as perhaps of testimony which is manifestly self-contradictory or the product of a disorderly mind, envisaged by the Privy Council [in Haw Tua Tau v Public Prosecutor [1981] 3 WLR 395] in which the direct 'evidence' is so incredible as to amount to no evidence. Where the case is a circumstantial or partly circumstantial case and therefore depends on inferences, the question may be expanded so that it becomes: On the assumption that all the evidence of primary fact considered at its strongest from the point of view of the case for the prosecution, is accurate, and on the further assumption that all inferences most favourable to the prosecution which are reasonably open, are drawn, is the evidence capable of producing in the mind of a reasonable person satisfaction, beyond reasonable doubt, of the guilt of the accused? That, as it seems to me, was the question which the learned trial Judge was required to answer in deciding on the submission of no case to answer (337).

See also Morrison at 489 - 491; Montani [39] - [40].

152 The counts against Mr Mansfield and Mr Kizon alleged that they had engaged in insider trading in AdultShop and My Casino during the first seven months of 2002 (the relevant period).

153 The evidence at the close of the Crown's case established that during the relevant period:

(a) AdultShop and My Casino were listed on multiple stock exchanges in Germany, in addition to being listed on the ASX;

(b) both companies had a large number of European investors;

(c) some of these investors were members of the boards of both companies;

(e) both companies were 'small capitalisation companies' and not every announcement was reported in the media; and

(f) information about the companies was discussed on internet chat sites including 'Hot Copper'.

154 The Crown called three witnesses as to what information was 'generally available', namely:

(a) Judith Young, a retired information manager from the Sydney office of the Australian Crime Commission;

(b) Sean Sampson, a former employee of Media Monitors; and

(c) Catherine Whittingham, a former manager of Rehame Australia Monitoring Services Pty Ltd (Rehame).

Each of these witnesses gave evidence of searches they had conducted. They produced to the court material obtained as a result of the searches (the information material).

155 Ms Young gave evidence that in 2003 she conducted a search through a 'gateway' into the electronic database of the State Library of New South Wales using the words 'AdultShop' and 'My Casino' for the relevant period. She produced from this search a list of matches for 136 articles but, as a result of budget constraints, printed only nine of the first 10 articles.

(a) Ms Young was unable to give evidence of the content of the remaining 127 articles;

(b) she could not give evidence as to what publications were maintained on the database in 2003 nor what was maintained on the database in 2002; and

(c) although she recalled conducting a Google internet search, she could not recall the precise nature of the search or its result.

157 Mr Sampson gave evidence that in 2005 he conducted a search of the international database of a company called 'Factiva' using the words 'AdultShop', 'My Casino' and 'Euraust'. He narrowed the search to only Australian publications and printed a list of articles containing the key words. He sent the list to an Australian Crime Commission investigator, Christopher Cubbage, who selected the articles he wanted printed.

(b) he was unable to say what publications were maintained on the Factiva database either in 2005 or, importantly, in 2002;

(d) he was unable to say what was contained in the articles that were not printed.

159 Ms Whittingham gave evidence that Rehame was a media monitoring service for news and current affairs in Australia. In September 2003, Mr Cubbage asked her to conduct a search of the Rehame database for television and radio coverage during the relevant period using the names 'AdultShop' and 'My Casino'. She said in evidence that when she searched the database, Rehame no longer possessed transcripts of the relevant television or radio coverage, but only summaries that had been prepared by employees. She produced these summaries.

(a) Ms Whittingham gave evidence that the summaries were only designed to give a general overview of the subject matter; and

(b) she said that Rehame only monitored mainstream news and current affairs programmes. She believed that it did not monitor 'specialty programmes', such as those concerned with the stock market and securities.

161 At the trial, counsel for Mr Mansfield tendered, as exhibits 8.1, 8.2 and 8.3 (ts 487), various ASX announcements relating to AdultShop and My Casino. Exhibit 8.1 comprised the ASX announcements made during 2000, exhibit 8.2 the ASX announcements made during 2001 and exhibit 8.3 the ASX announcements made during 2002.

162 I have read the tendered ASX announcements. None of the alleged inside information was disclosed or referred to in the announcements. Further, no deduction, conclusion or inference as to the existence of any of the alleged inside information is reasonably open on the basis of the material in the announcements.

163 At the trial, exhibit 1, which was tendered by the Crown (ts 392), comprised a compact disc (together with two volumes of transcripts) of covertly recorded telephone and other conversations between Mr Mansfield and Mr Kizon or between one or other or both of them and another person or other people. These conversations formed a significant part of the Crown's case.

164 In particular, the Crown relied upon covertly recorded telephone conversations to prove that the alleged inside information was not generally available, as follows:

(a) Counts 1, 1A to 1G (inclusive), 4, 5, 6, 7 and 8:

(i) Mansfield/Kizon: AB 2519 - 2528; 2633; 2815; 2825 - 2826; 2887 - 2888; 2923

(iii) Mansfield/Boyatzis: AB 2501; 2529; 2673 - 2674; 2709 - 2710; 2765 - 2766; 2817 - 2818; 2843 - 2844; 2866 - 2867; 2917 - 2919

(iv) Mansfield/Puzey: AB 2745 - 2752; 2823; 2839; 2847 - 2849; 2852

(v) Mansfield/Gould: AB 2791; 2799; 2827; 2833; 2837; 2911 - 2913; 2934; 2944

(vii) Mansfield/Ride: AB 2653 - 2657; 2915; 3001 - 3003

(i) Mansfield/O'Donnell: AB 3123; 3126 - 3127; 3167 - 3168

(ii) Mansfield/Stapleton: AB 3129 - 3130; 3133 - 3135

(i) Mansfield/Kizon: AB 3365 - 3367; 3379 - 3381; 3390 - 3392

(k) Counts 21, 21A to 21H (inclusive), 22, 23 and 23A:

(i) Mansfield/Kizon: AB 3726; 3728 - 3729; 3765 - 3766; 3796 - 3798

165 In its particulars to some of the counts the Crown relied upon the same information, including its source, as in an earlier count or counts. So:

(a) the references in the appeal book relating to count 1 are relevant to count 9, and the references relating to counts 1 and 9 are relevant to count 14;

(b) the references in the appeal book relating to count 12 are relevant to counts 12A - 12C;

(c) the references in the appeal book relating to count 16 are relevant to count 17; and

(d) the references in the appeal book relating to count 21 are relevant to count 23.

166 I have read these passages. The conversations reveal the belief of the parties to them that particular information referable to the specified counts in the indictment was not generally available. In numerous of the conversations there is discussion about when particular information will be announced to the market. The conversations contain evidence that is consistent with particular information referable to the specified counts not being 'readily observable', and not having been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in securities of a kind whose price might be affected by the information.

167 Also, the Crown relied in particular upon other conversations on 13, 14 and 15 March 2002 recorded by listening devices installed at the office of Emmanuel Stamatiou. These conversations were relevant to counts 16 and 17. Mr Mansfield, Mr Kizon and Mr Stamatiou were parties to the conversations.

168 The Crown's case in proof of the element that the alleged inside information in relation to each count was not generally available depended on inferences to be drawn from circumstantial evidence.

169 Circumstantial evidence must not be considered on a piecemeal basis. It must be evaluated in its entirety. See R v Hillier [2007] HCA 13; (2007) 228 CLR 618 [46] (Gummow, Hayne & Crennan JJ).

170 In R v Rivkin [2004] NSWCCA 7; (2004) 59 NSWLR 284, Mason P, Wood CJ at CL and Sully J said:

The Crown had to establish that the information was not generally available, and, in the course of doing so, it had to exclude the existence of deductions, conclusions or inferences of the kind referred to, and of any facts from which they might have been made or drawn.

This required circumstantial proof, and the Crown was able to do so, in our view, by pointing to the absence of any information in relation to 'the deal' in press reports, media releases and analysts' reports of the kind that might have been expected, had the information been generally available ... [178] - [179].

171 In the present case, the critical issue on the no case submission was this: on the assumption that all of the evidence relied on by the Crown was accepted as reliable, and on the further assumption that all inferences most favourable to the Crown which were reasonably open, were drawn, was the evidence capable of satisfying a reasonable person beyond reasonable doubt that the alleged inside information in relation to each count was not generally available?

172 The alleged inside information the subject of counts 1, 1A to 1G, 4, 5, 6, 7, 8, 9, 9A - 9E, 14, 14A, 14B, and part of the alleged inside information the subject of counts 21, 21A - 21H, 22, 23 and 23A, comprises, in essence, statements allegedly made by Mr Day in relation to substantial increases in the expected profit or turnover of AdultShop for the 2002 financial year and, in the case of some of those counts, more general statements allegedly made by Mr Day to the effect that AdultShop's financial performance was outstanding.

173 In my opinion, it was reasonably open to infer that if this alleged inside information the subject of counts 1, 1A - 1G, 4, 5, 6, 7, 8, 9, 9A - 9E, 14, 14A, 14B, and partly the subject of counts 21, 21A - 21H, 22, 23 and 23A, had been:

(a) readily observable matter, within s 1042C(1)(a); or

(b) made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in div 3 financial products of a kind whose price might be affected by the information, within s 1042C(1)(b)(i),

it would have been disclosed or referred to in the tendered ASX announcements (which it was not), or alternatively it would have been otherwise disclosed publicly by AdultShop in Australia (which, on the evidence, it was reasonably open to infer it was not).

174 It was reasonably open to dismiss, as far-fetched and fanciful, any submission on behalf of Mr Mansfield or Mr Kizon to the effect that the alleged inside information, the subject of the counts to which I have referred, may have been disclosed or referred to in Germany but not in Australia. It was reasonably open to infer that if the alleged inside information had been disclosed or referred to, it would have been disclosed or referred to on the home exchange in Australia (which, on the evidence, it was not).

175 Part of the alleged inside information the subject of counts 21, 21A - 21H, 22, 23 and 23A comprises, in essence, statements allegedly made by Mr Day to the effect that 'Packer' had bought 4.9% of AdultShop.

176 It was reasonably open to infer that the reference to 'Packer' was to interests associated with the late Kerry Packer and his expansive business empire. It was common knowledge at the material time that Mr Packer was the richest and one of the most influential and successful businessmen in Australia. It was reasonably open to infer that it would have been highly desirable, from the viewpoint of the shareholders of AdultShop and the prospects of the company, for a man of Mr Packer's wealth, influence and success to acquire a stake in the company. It was reasonably open to infer that public knowledge or awareness of Mr Packer's alleged interest in AdultShop would have been likely to have enhanced the standing of the company as a desirable investment.

177 In my opinion, it was reasonably open, in these circumstances, to infer that if this part of the alleged inside information the subject of counts 21, 21A - 21H, 22, 23 and 23A had been:

(a) readily observable matter, within s 1042C(1)(a); or

(b) made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in div 3 financial products of a kind whose price might be affected by the information, within s 1042C(1)(b)(i),

it would have been disclosed or referred to in the tendered ASX announcements (which it was not), or alternatively it would have been otherwise disclosed publicly by AdultShop in Australia (which, on the evidence, it was reasonably open to infer it was not), even though the alleged 4.9% shareholding was less than a 'substantial holding', as defined in s 9 of the Act.

178 The alleged inside information the subject of the remaining counts, namely, counts 2, 3, 10, 11, 12, 12A - 12C, 13, 13A, 15, 16, 16A - 16B, 17, 18, 19 and 20 comprises, in essence, statements allegedly made by Mr O'Donnell:

(a) as to complaints he was about to make to the Australian Securities and Investments Commission concerning alleged fraudulent share transactions by some of My Casino's directors or associates;

(b) to the effect that business transactions or investments were available to My Casino which would yield very significant financial benefits for the company;

(c) that negotiations were occurring in relation to a proposed business deal, and information about the deal would be revealed to the market within days;

(d) to the effect that various business transactions were under consideration by My Casino, and each of these transactions would make money for the company and result in an increase in its share price.

179 In my opinion, it was reasonably open to infer that if this alleged inside information the subject of these counts had been:

(a) readily observable matter, within s 1042C(1)(a); or

(b) made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in div 3 financial securities of a kind whose price might be affected by the information,

it would have been disclosed or referred to in the tendered ASX announcements (which it was not), or alternatively, it would have been otherwise disclosed publicly by My Casino in Australia (which, on the evidence, it was reasonably open to infer it was not).

180 I am satisfied that on the assumption that all of the evidence relied on by the Crown was accepted as reliable, and on the further assumption that all inferences most favourable to the Crown which were reasonably open, were drawn, the evidence was capable of satisfying a reasonable person beyond reasonable doubt that the alleged inside information in relation to each count was not generally available. In particular, it was reasonably open to infer that:

(a) the alleged inside information did not consist of readily observable matter;

(b) the alleged inside information had not been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in div 3 financial products of a kind whose price might be affected by the information; and

(c) the alleged inside information did not consist of deductions, conclusions or inferences made or drawn from either or both of the following:

(i) information that consisted of readily observable matter;

(ii) information that had been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in div 3 financial products of a kind whose price might be affected by the information.

Ground 2 of the notices of contention: Mr Mansfield's and Mr Kizon's submissions

182 At the trial, it was also submitted on behalf of each of Mr Mansfield and Mr Kizon, as part of his application that he had no case to answer, that there was no case on the conspiracy counts (that is, counts 1, 9, 12, 13, 14, 16, 17, 21 and 23) or on counts 12A - 12C (which were substantive counts relating only to Mr Kizon). The trial judge, having upheld the defence submission on 'falsity' and 'information', did not rule on this point.

183 According to counsel for Mr Mansfield and counsel for Mr Kizon, the Crown's case against each accused was that they possessed 'specific knowledge' (being the state of affairs set out in the particulars of each count) including the source of that knowledge (being a company insider). The Crown asserted that Mr Mansfield and Mr Kizon agreed to procure another person to purchase or acquire shares in either AdultShop or My Casino.

184 It was submitted on behalf of Mr Mansfield and Mr Kizon that the 'known and proven source of the information' was essential to proof of the conspiracy counts. It was said that the known and proven source of the information:

(a) went directly to the objective test as to whether the information was price-sensitive; and

(b) was also critical to the state of mind of each accused as to general availability of the information, the quality of the information (that is, whether it was price-sensitive) and whether this state of mind was shared.

185 Counsel for Mr Mansfield and counsel for Mr Kizon submitted that the evidence at the close of the Crown's case in relation to each count of conspiracy was incapable of establishing that both accused had the requisite knowledge, as particularised by the Crown.

186 Count 1 alleged a conspiracy between 6 January 2002 and 31 January 2002 to procure shares in AdultShop. The particulars alleged that Mr Mansfield and Mr Kizon possessed inside information to the effect that:

(a) the expected profit of AdultShop for the 2002 financial year had risen from $3 million to $11 million;

(b) the expected turnover of AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

(c) the information in pars (a) and (b) above had been obtained on or about 4 January 2002 as a result of a private conversation between Mr Day (the Managing Director of AdultShop) and a person or persons whom Mr Day apparently treated as a confidant.

187 It was the Crown's case that Mr Mansfield communicated the information in pars (a), (b) and (c) to Mr Kizon during a telephone call on 6 January 2002 at 7.50 pm and that the confidant in par (c) was Mr Mansfield.

188 It was submitted that, in the trial of Mr Kizon, the information in pars (a), (b) and (c) was hearsay. It was inadmissible against him as to the truth of the statements allegedly made. There was therefore no evidence that Mr Kizon had knowledge that the information provided by Mr Mansfield came from Mr Day, or that it was obtained as a result of a private conversation in which Mr Day regarded Mr Mansfield as a confidant. At most, so it was submitted, the information was admissible to show that Mr Kizon believed the information came from Mr Day. According to counsel for Mr Mansfield and counsel for Mr Kizon, this was insufficient to establish that both Mr Mansfield and Mr Kizon jointly possessed the requisite knowledge, as asserted by the Crown, and, with that shared knowledge, conspired to procure shares in AdultShop.

189 Count 9 alleged a conspiracy between 8 February 2002 and 12 March 2002 to procure shares in AdultShop. In its particulars, the Crown relied upon the same information, including its source, as in count 1, set out at [186] above. In addition, the Crown relied upon the following:

(d) Mr Day was of the opinion that the 'figures' for AdultShop were still a 'good story';

(f) it was expected that the market would be informed of the figures in March or April 2002;

(g) the information in pars (d) and (f) had been obtained on or about 7 February 2002 as a result of a private conversation between Mr Day and a person or persons whom Mr Day apparently treated as a confidant;

(h) the information in par (e) had been obtained as a result of a private conversation between Mr Day and a person or persons whom Mr Day apparently treated as a confidant.

190 It was the Crown's case that Mr Mansfield communicated the information in pars (d), (f) and (g) to Mr Kizon and that the confidant in par (g) was Mr Mansfield, and that Mr Kizon communicated the information in pars (e) and (h) to Mr Mansfield and that the confidant in par (h) was Mr Kizon.

191 It was submitted that, in the trial of Mr Kizon, the information set out in pars (d), (f) and (g) was hearsay. It was inadmissible against him as to the truth of the statements allegedly made. Counsel repeated in relation to count 9 the submission which I have recorded at [188] above in relation to count 1.

192 Further, it was submitted in relation to count 9 that there was no evidence that Mr Mansfield had communicated the information in pars (d), (f) and (g) to Mr Kizon or that Mr Kizon had knowledge of it. This, so it was submitted, was fatal to the conspiracy in which shared knowledge of the particularised information defined its parameters and distinguished it from the conspiracy alleged in count 1.

193 Count 12 alleged a conspiracy between 27 February 2002 and 5 March 2002 to procure shares in My Casino. The particulars alleged that Mr Mansfield and Mr Kizon possessed inside information to the effect that:

(a) negotiations were taking place concerning a deal involving a business known as Europcar;

(b) Mr O'Donnell (the Chairman of My Casino) was going to release information concerning this deal to the market within days;

(c) the information in pars (a) and (b) above had been obtained on or about 27 February 2002 as a result of a private conversation between Mr O'Donnell and a person or persons whom Mr O'Donnell apparently treated as a confidant.

194 It was the Crown's case that Mr Mansfield communicated the information in pars (a), (b) and (c) to Mr Kizon during a telephone call on 27 February 2002 at 4.58 pm and that the confidant in par (c) was Mr Mansfield.

195 It was submitted that, in the trial of Mr Kizon, the information set out in pars (a), (b) and (c) was hearsay. It was inadmissible against him as to the truth of the statements allegedly made. There was therefore no evidence that Mr Kizon had knowledge that the information provided by Mr Mansfield came from Mr O'Donnell, or that it was obtained as a result of a private conversation in which Mr O'Donnell regarded Mr Mansfield as a confidant. At most, so it was submitted, the information was admissible to show that Mr Kizon believed the information came from Mr O'Donnell. According to counsel for Mr Mansfield and counsel for Mr Kizon, this was insufficient to establish that both Mr Mansfield and Mr Kizon jointly possessed the requisite knowledge, as asserted by the Crown, and, with that shared knowledge, conspired to procure shares in My Casino.

196 Further, it was submitted that the evidence revealed that, during the period of the alleged conspiracy the subject of count 12, Mr Kizon was acquiring shares in My Casino through his company, All Mediation Services Pty Ltd, while Mr Mansfield was selling shares in My Casino through his company, Glentown Nominees Pty Ltd. This, so it was submitted, was the antithesis of the conspiracy alleged against the accused.

197 Count 12A alleged that between 27 February 2002 and 28 February 2002 Mr Kizon, being possessed of inside information in relation to My Casino, procured All Mediation Services Pty Ltd to purchase 200,000 shares in My Casino. Counts 12B and 12C made similar allegations against Mr Kizon in relation to different periods. The particulars in relation to counts 12A, 12B and 12C were identical to the particulars relied on by the Crown in relation to count 12. It was submitted that, in the trial of Mr Kizon, the information in question was hearsay.

198 Count 13 alleged a conspiracy on or about 7 March 2002 to procure shares in My Casino. The particulars alleged that Mr Mansfield and Mr Kizon possessed inside information to the effect that:

(a) negotiations were taking place concerning a deal involving a business known as Europcar;

(b) there were about five such deals under consideration;

(c) Mr O'Donnell was of the opinion that each deal was serious, each deal would see the share price increase, and there was no doubt that money would be made;

(d) the information in pars (a), (b) and (c) above had been obtained on or about 7 March 2002 as a result of a private conversation between Mr O'Donnell and a person or persons whom Mr O'Donnell apparently treated as a confidant.

199 It was the Crown's case that Mr Mansfield communicated the information in pars (a), (b), (c) and (d) to Mr Kizon and that the confidant in par (d) was Mr Mansfield.

200 It was submitted that although Mr Mansfield had knowledge of the information in pars (a), (b), (c) and (d), there was no evidence that Mr Kizon had knowledge of the information set out in pars (b), (c) and (d). Also, it was submitted that there were no recorded conversations between Mr Mansfield and Mr Kizon where these matters were discussed. This, so it was submitted, was fatal to the conspiracy alleged in count 13.

201 Further, it was submitted that, in the trial of Mr Kizon, the information in par (a) was hearsay. It was inadmissible against him as to the truth of the statement allegedly made. Counsel repeated in relation to count 13 the submissions which I have recorded at [195] above in relation to count 12.

202 Count 14 alleged a conspiracy between 12 March 2002 and 20 March 2002 to procure shares in AdultShop. In its particulars, the Crown relied upon the same information, including its source, as in count 9, set out at [189] above. In addition, the Crown alleged that Mr Mansfield and Mr Kizon possessed inside information to the effect that:

(i) AdultShop was intending to release to the market on Monday 18 March 2002 its profit figures for the previous six months;

(j) the profit figures for the previous six months were going to be all right but would not break any records;

(k) AdultShop would announce the high or big quarterly figures to the market at the end of April 2002;

(l) the release at the end of April 2002 would show two quarters of good figures;

(m) the information in pars (i), (j), (k) and (l) above had been obtained on or about 12 March 2002 as a result of a private conversation between Mr Day and a person or persons whom Mr Day apparently treated as a confidant.

203 It was the Crown's case that Mr Kizon communicated the information in pars (i), (j), (k), (l) and (m) to Mr Mansfield and that the confidant in par (m) was Mr Kizon.

(a) in the trial of Mr Kizon, the information in pars (a), (b) and (c) (set out at [186] above) and (d), (f) and (g) (set out at [189] above) was hearsay; and

(b) in the trial of Mr Mansfield, the information in pars (i), (j), (k), (l) and (m) was hearsay.

205 Accordingly, it was submitted that in the trial of each accused there was no admissible evidence of a shared knowledge of the particularised information, which defined the conspiracy alleged in count 14, and this was fatal to the count.

206 Count 16 alleged a conspiracy between 13 March 2002 and 19 March 2002 to procure shares in My Casino. The particulars alleged that Mr Mansfield and Mr Kizon possessed inside information to the effect that:

(a) negotiations were taking place concerning a $28 million deal involving an internet sports betting business;

(c) Hans-Rudolph Moser, a Director of My Casino, had endorsed spending between $20,000 and $50,000 on preliminary due diligence in relation to the deal;

(d) the information in par (a) above had been obtained on or about 12 March 2002 as a result of a private conversation between Mr O'Donnell and a person or persons whom Mr O'Donnell apparently treated as a confidant;

(e) the information in pars (b) and (c) above had been obtained on or about 12 March 2002 as a result of a private conversation between Mr Day (who apparently had some involvement in My Casino) and a person or persons whom Mr Day apparently treated as a confidant.

207 It was the Crown's case that Mr Mansfield communicated the information in pars (a), (b), (c), (d) and (e) to Mr Kizon and that the confidant in pars (d) and (e) was Mr Mansfield.

208 It was submitted that, in the trial of Mr Kizon, the information in pars (a), (b), (c), (d) and (e) was hearsay. It was inadmissible against him as to the truth of the statements allegedly made. There was therefore no evidence that Mr Kizon had knowledge that the information provided by Mr Mansfield came from Mr O'Donnell or Mr Day or that it was obtained as a result of private conversations in which Mr O'Donnell and Mr Day regarded Mr Mansfield as a confidant. At most, so it was submitted, the information was admissible to show that Mr Kizon believed the information came from Mr O'Donnell or Mr Day. According to counsel for Mr Mansfield and counsel for Mr Kizon, this was insufficient to establish that both Mr Mansfield and Mr Kizon jointly possessed the requisite knowledge, as asserted by the Crown, and, with that shared knowledge, conspired to procure shares in My Casino.

209 Further, it was submitted that there was no evidence that Mr Mansfield had communicated the information in par (c) to Mr Kizon or that Mr Kizon had knowledge of it. This, so it was submitted, was fatal to count 16 where the inside information particularised was alleged to be the shared knowledge pursuant to which the accused agreed to procure shares.

210 Count 17 alleged a conspiracy between 14 March 2002 and 1 May 2002 to procure shares in My Casino. The particulars of count 17 were identical to the particulars of count 16.

211 Counsel repeated in relation to count 17 the submissions which I have recorded at [208] - [209] above in relation to count 16.

212 Count 21 alleged a conspiracy between 9 June 2002 and 5 July 2002 to procure shares in AdultShop. The particulars alleged that Mr Mansfield and Mr Kizon possessed inside information to the effect that:

(b) the projected revenue for AdultShop for the following month would significantly exceed what had previously been forecast;

(c) the information in pars (a) and (b) above had been obtained on or about 6 June 2002 as a result of a private conversation between Mr Day and a person or persons whom Mr Day apparently treated as a confidant.

213 It was the Crown's case that Mr Kizon communicated the information in pars (a), (b) and (c) to Mr Mansfield during a telephone call on 9 June 2002 at 7.27 pm and that the confidant in par (c) was Mr Kizon.

(a) in the trial of Mr Mansfield, the information in pars (a), (b) and (c) was hearsay and was not admissible as evidence of knowledge by Mr Mansfield of the facts and matters relied upon by the Crown to establish the alleged conspiracy; and

(b) in the trial of Mr Kizon, the information in pars (a), (b) and (c) was not evidence of knowledge by Mr Mansfield capable of establishing the existence of the conspiracy alleged.

215 Count 23 alleged a conspiracy between 9 July 2002 and 12 July 2002 to procure shares in AdultShop. The particulars of count 23 were identical to the particulars of count 21. Counsel repeated in relation to count 23 the submissions which I have recorded at [214] above in relation to count 21.

The merits of ground 2 of the notices of contention

(1) A person who conspires with another person to commit an offence punishable by imprisonment for more than 12 months, or by a fine of 200 penalty units or more, is guilty of the offence of conspiracy to commit that offence and is punishable as if the offence to which the conspiracy relates had been committed.

Note: Penalty units are defined in section 4AA of the Crimes Act 1914.

(a) the person must have entered into an agreement with one or more other persons; and

(b) the person and at least one other party to the agreement must have intended that an offence would be committed pursuant to the agreement; and

(c) the person or at least one other party to the agreement must have committed an overt act pursuant to the agreement.

(2A) Subsection (2) has effect subject to subsection (7A).

...

(7) Any defences, procedures, limitations or qualifying provisions that apply to an offence apply also to the offence of conspiracy to commit that offence.

(7A) Any special liability provisions that apply to an offence apply also to the offence of conspiracy to commit that offence.

217 The term 'special liability provision', referred to in s 11.5(7A), is defined in the Dictionary at the end of the Code to mean:

(a) a provision that provides that absolute liability applies to one or more (but not all) of the physical elements of an offence; or

(b) a provision that provides that, in a prosecution for an offence, it is not necessary to prove that the defendant knew a particular thing; or

(c) a provision that provides that, in a prosecution for an offence, it is not necessary to prove that the defendant knew or believed a particular thing.

218 Section 3.1 of the Code provides:

(1) An offence consists of physical elements and fault elements.

(2) However, the law that creates the offence may provide that there is no fault element for one or more physical elements.

(3) The law that creates the offence may provide different fault elements for different physical elements.

219 By s 4.1(1) of the Code:

A physical element of an offence may be:

(a) conduct; or

(b) a result of conduct; or

(c) a circumstance in which conduct, or a result of conduct, occurs.

220 Section 5.1(1) of the Code provides:

A fault element for a particular physical element may be intention, knowledge, recklessness or negligence.

221 By s 5.2 of the Code:

(1) A person has intention with respect to conduct if he or she means to engage in that conduct.

(2) A person has intention with respect to a circumstance if he or she believes that it exists or will exist.

(3) A person has intention with respect to a result if he or she means to bring it about or is aware that it will occur in the ordinary course of events.

222 Section 5.3 of the Code provides:

A person has knowledge of a circumstance or a result if he or she is aware that it exists or will exist in the ordinary course of events.

223 By s 5.6 of the Code:

(1) If the law creating the offence does not specify a fault element for a physical element that consists only of conduct, intention is the fault element for that physical element.

(2) If the law creating the offence does not specify a fault element for a physical element that consists of a circumstance or a result, recklessness is the fault element for that physical element.

Note: Under subsection 5.4(4), recklessness can be established by proving intention, knowledge or recklessness.

224 In R v LK [2010] HCA 17; (2010) 241 CLR 177, the High Court gave detailed consideration to s 11.5 of the Code. See also Ansari v The Queen [2010] HCA 18; (2010) 241 CLR 299.

225 A number of propositions in relation to s 11.5 may be discerned from the reasons in LK and Ansari, including:

(a) Section 11.5(1) creates an offence of conspiring with another person to commit an offence. The words 'conspires' and 'conspiracy', where appearing in s 11.5, are to be understood by reference to the common law, subject to express modification under s 11.5. One such modification is that the offence under s 11.5(1) is confined to agreements to commit an offence (being a non-trivial offence). By contrast, liability for conspiracy under the common law covers a wider field. See LK [96] - [107]; Ansari [58].

(b) The elements of the offence of conspiracy are contained in s 11.5(1). See LK [141].

(c) The offence has a single physical element of conduct, namely, conspiring with another person to commit an offence punishable by imprisonment for more than 12 months, or by a fine of 200 penalty units or more. See LK [141].

(d) The fault element of the offence is intention. See LK [117], [141]; Ansari [33].

(e) In LK, the plurality (Gummow, Hayne, Crennan, Kiefel & Bell JJ) explained what is required to prove an intention to commit an offence in the context of s 11.5(1):

The offence of conspiracy under the Code is confined to agreements that an offence be committed. A person who conspires with another to commit an offence is guilty of conspiring to commit that offence. It was incumbent on the prosecution to prove that LK and RK intentionally entered an agreement to commit the offence that it averred was the subject of the conspiracy. This required proof that each meant to enter into an agreement to commit that offence. (Code, s 5.2(1).) As a matter of ordinary English it may be thought that a person does not agree to commit an offence without knowledge of, or belief in, the existence of the facts that make the conduct that is the subject of the agreement an offence (as distinct from having knowledge of, or belief in, the legal characterisation of the conduct). This is consistent with authority with respect to liability for the offence of conspiracy under the common law. Subject to one reservation, it is how the fault element of the offence created in s 11.5(1) operates. The reservation concerns the application of s 11.5(2)(b). As these reasons will show, this provision informs the meaning of 'conspires' in sub-s (1) by making clear that at least one other party to the agreement must have intended that an offence be committed pursuant to the agreement. It also speaks to proof of the accused's intention. The reservation arises because s 11.5(2)(b) is subject to s 11.5(7A), which applies any special liability provisions of the substantive offence to the offence of conspiring to commit that offence. (Sub-sections (2A) and (7A) were introduced into the Code by the Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 (Cth).) A special liability provision includes a provision that absolute liability applies to one or more (but not all) of the physical elements of an offence. (The Dictionary to the Code provides that a 'special liability provision' is a provision that absolute liability applies to one or more (but not all) of the physical elements of an offence or that in a prosecution for an offence it is not necessary to prove that the defendant knew a particular thing or that the defendant knew or believed a particular thing.) Proof of the intention to commit an offence does not require proof of knowledge of, or belief in, a matter that is the subject of a special liability provision [117].

(f) In Ansari, the plurality (Gummow, Hayne, Heydon, Crennan, Kiefel & Bell JJ) rejected the contention that:

[Section] 11.5 is to be interpreted as requiring proof that an accused conspirator intended that a specified fault element (being a fault element of lesser culpability than the fault element of intention) accompany a particular physical element of an offence as distinct from proof that the accused intended that an act or acts be performed which, if carried out in accordance with the agreement, would amount to the commission of an offence [60].

(g) In Ansari, the plurality also rejected the contention that 'under s 11.5 a person does not intend that an offence will be committed unless he or she intends that any fault element specified for that offence will exist at the time the physical element for the fault element comes into existence' [61].

(h) The offence created by s 11.5(1) is confined to agreements that an offence be committed. A person who conspires with another to commit an offence is guilty of conspiring to commit that offence. The Crown must establish that the accused persons intentionally entered into an agreement to commit the offence particularised in the indictment as the subject of the conspiracy. This requires proof that each accused person meant to enter into an agreement to commit that offence. See LK [117], [141], [145].

(i) Section 11.5(2)(a) and (b) are epexegetical of what it is to 'conspire' with another person to commit an offence within s 11.5(1). Section 11.5(2)(b) requires that for a person to 'conspire' under s 11.5(1), he or she and at least one other party to the agreement 'must have intended', when the agreement was entered, that an offence be committed pursuant to it. Neither s 11.5(2)(a) nor s 11.5(2)(b) specifies an element of the offence. See LK [133].

(j) It is necessary for a trial judge, in charging a jury as to the meaning of 'conspiring' with another person, to direct that the prosecution must establish that the accused entered into an agreement with one or more other persons, and that he or she and at least one other party to the agreement intended that the offence particularised as the object of the conspiracy be committed pursuant to the agreement. Also, the prosecution must prove to the criminal standard that a party to the agreement committed an overt act pursuant to the agreement: s 11.5(2)(c). See LK [141].

226 In the present case, the evidence obtained from the telephone intercepts in relation to the alleged possession by each of the accused of the alleged inside information is to be found in the appeal book, as follows:

AB 2483 - 2484; 2501 - 2502; 2503 - 2504; 2519 - 2521; 2591 - 2593; 2619 - 2620; 2623 - 2624; 2627; 2629 - 2630; 2632 - 2633; 2661; 2663; 2731 - 2735; 2738; 2743; 2745 - 2753; 2825; 2827; 2829; 2831; 2833; 2837; 2839; 2843 - 2844; 2847 - 2849; 2852; 2857; 2861; 2863 - 2864; 2866 - 2867; 2869 - 2871; 2873 - 2874; 2887 - 2888; 2908; 2911 - 2913; 2915; 2917 - 2918; 2923; 2925 - 2929; 2934; 2944; 2951 - 2953; 2961; 2963; 2965; 2967 - 2968; 2973 - 2976; 2989 - 2990; 3003; 3007 - 3009; 3011 - 3012; 3027; 3036 - 3037

AB 2483 - 2484; 2519 - 2521; 2591 - 2593; 2629 - 2630; 2632 - 2633; 2731 - 2735; 2738; 2825; 2887 - 2888; 2923; 2973 - 2976; 3007 - 3009; 3011 - 3012

AB 3042; 3051 - 3053; 3067 - 3074; 3075 - 3079; 3081 - 3082; 3101 - 3104; 3109; 3147 - 3150; 3151 - 3153

AB 3163 - 3166; 3177 - 3182; 3185 - 3186; 3188 - 3189; 3191 - 3193; 3209; 3212 - 3213; 3233 - 3234; 3241; 3243

AB 3163 - 3166; 3177 - 3182; 3185 - 3186; 3188 - 3189; 3191 - 3193; 3241 - 3243

AB 3257 - 3259; 3263- 3265; 3267 - 3268; 3271; 3275 - 3281; 3283 - 3284; 3287; 3291; 3293; 3295 - 3297

AB 3257 - 3259; 3267 - 3268; 3271; 3273 - 3274; 3287; 3291; 3293; 3295 - 3297

AB 3344 - 3345; 3348; 3352; 3358; 3360 - 3361; 3364 - 3367; 3372 - 3374; 3378 - 3381; 3390 - 3392

AB 3344 - 3345; 3348; 3360 - 3361; 3364 - 3367; 3378 - 3381; 3390 - 3392

AB 3626 - 3627; 3726; 3728 - 3729; 3733 - 3735; 3737; 3740; 3742 - 3745; 3764 - 3766; 3809; 3818 - 3821; 3837; 3850

AB 3626 - 3627; 3726; 3728 - 3729; 3733 - 3735; 3737; 3740; 3764 - 3766; 3809

227 As I have mentioned, in its particulars to some of the counts the Crown relied upon the same information, including its source, as in an earlier count or counts. So:

(a) the references in the appeal book relating to count 1 are relevant to count 9, and the references relating to counts 1 and 9 are relevant to count 14;

(b) the references in the appeal book relating to count 12 are relevant to counts 12A - 12C;

(c) the references in the appeal book relating to count 16 are relevant to count 17; and

(d) the references in the appeal book relating to count 21 are relevant to count 23.

228 Also, in the present case, evidence in relation to the alleged possession by each of the accused of the alleged inside information relating to counts 16 and 17 is to be found in transcripts of conversations between Mr Mansfield, Mr Kizon and Mr Stamatiou at Mr Stamatiou's office on 13, 14 and 15 March 2002.

229 The Crown filed and served, as part of its supplementary written submissions, a schedule headed 'Document 2' setting out references in the appeal book to evidence relevant to the elements of each alleged conspiracy, including the participation of each accused in it. The references included evidence as to the belief in and the possession of the alleged inside information by each of Mr Mansfield and Mr Kizon; evidence of the belief of each of Mr Mansfield and Mr Kizon that the alleged inside information was not generally available; evidence of the belief of each of Mr Mansfield and Mr Kizon that the alleged inside information was material in that, if it were generally available, a reasonable person would expect it to have a material effect on the price or value of the relevant securities; and evidence of the participation of each of Mr Mansfield and Mr Kizon in each alleged conspiracy. It is unnecessary to reproduce 'Document 2' in these reasons.

230 I have read the relevant passages in the appeal book and the transcripts which are relied on by the Crown. I am satisfied that there was a case fit to be left to the jury that each of Mr Mansfield and Mr Kizon possessed the alleged inside information.

231 As to the submission by counsel for Mr Mansfield and counsel for Mr Kizon that there was no evidence in relation to count 9 that Mr Mansfield had communicated to Mr Kizon the information in pars (d), (f) and (g) set out at [189] above, or that Mr Kizon had knowledge of it:

(a) there was evidence in the form of a telephone intercept that on 7 February 2002 Mr Day told Mr Mansfield that AdultShop was 'still a good story' and that the market would be informed of the 'figures' in March or April 2002: AB 3042; and

(b) it was reasonably open to infer from the overall course of dealings and the relationship between Mr Mansfield and Mr Kizon, as revealed by the material obtained from the telephone intercepts and the listening devices, that those items of information were, at some material time, conveyed by Mr Mansfield to Mr Kizon: the intercepts indicate numerous proposed meetings between them: see, for example, AB 2825 - 2826; 2923; 2931; 3009; 3161 - 3162; 3166; 3170; 3190; 3192 - 3193; 3336 - 3338; 3369; 3465; 3800; 3810.

232 As to the submission by counsel for Mr Mansfield and counsel for Mr Kizon that there was no evidence in relation to count 13 that Mr Kizon had knowledge of the information in pars (b), (c) and (d) set out at [198] above:

(a) there was evidence in the form of a telephone intercept that on 7 March 2002 Mr O'Donnell told Mr Mansfield that there were about five deals under consideration involving a business known as Europcar; each deal was serious, each deal would see the share price of My Casino increase, and there was no doubt that money could be made: AB 3283 - 3284; and

(b) it was reasonably open to infer from the overall course of dealings and the relationship between Mr Mansfield and Mr Kizon, as revealed by the material obtained from the telephone intercepts and the listening devices, that those items of information were, at some material time, conveyed by Mr Mansfield to Mr Kizon: as I have mentioned, the intercepts indicate numerous proposed meetings between them.

233 As to the submission by counsel for Mr Mansfield and counsel for Mr Kizon that there was no evidence in relation to counts 16 and 17 that Mr Mansfield had communicated to Mr Kizon the information in par (c) set out at [206] above:

(a) there was evidence in the form of a telephone intercept that on 12 March 2002 Mr Day told Mr Mansfield that Hans-Rudolf Moser, a director of My Casino, had endorsed spending between $20,000 and $50,000 on preliminary due diligence in relation to a $28 million deal involving an internet sports betting business: AB 3354; and

(b) it was reasonably open to infer from the overall course of dealings and the relationship between Mr Mansfield and Mr Kizon, as revealed by the material obtained from the telephone intercepts and the listening devices, that those items of information were, at some material time, conveyed by Mr Mansfield to Mr Kizon: as I have mentioned, the intercepts indicate numerous proposed meetings between them.

234 The evidence relied on by the Crown to prove that at the material time each of Mr Mansfield and Mr Kizon intended to trade in the securities in question is as follows:

AB 2483 - 2484; 2489; 2501; 2503 - 2504; 2519 - 2524; 2526 - 2528; 2529; 2531 - 2534; 2537 - 2540; 2541 - 2542; 2547 - 2549; 2551 - 2553; 2554 - 2555; 2557 - 2558; 2559; 2561; 2564; 2578 - 2580; 2587; 2591 - 2593; 2595 - 2596; 2601; 2603 - 2604; 2617; 2619 - 2620; 2629 - 2630; 2632 - 2633; 2635 - 2638; 2639; 2646; 2649 - 2651; 2654; 2657; 2673 - 2675; 2701 - 2702; 2708 - 2710; 2714; 2717; 2721 - 2722; 2737; 2741; 2743; 2751 - 2752; 2759; 2765; 2767 - 2768; 2781 - 2785; 2791; 2799; 2815; 2817 - 2820; 2828 - 2829; 2837; 2843 - 2844; 2857; 2861; 2863 - 2864; 2866 - 2867; 2870; 2887 - 2888; 2889; 2891; 2908 - 2909; 2912 - 2913; 2918 - 2919; 2923; 2951 - 2953; 2961; 2963; 2965; 2973 - 2976; 3008 - 3009; 3020 - 3021; 3036 - 3037

AB 2483 - 2484; 2489; 2519 - 2524; 2526 - 2528; 2557 - 2558; 2591 - 2593; 2629 - 2630; 2632 - 2633; 2721 - 2722; 2737; 2815; 2887 - 2888; 2923; 2973 - 2976; 3008 - 3009

AB 3071 - 3074; 3076 - 3079; 3082; 3085; 3093; 3101 - 3104; 3109; 3121; 3148 - 3149

AB 3071 - 3074; 3082; 3085; 3093; 3109; 3121; 3148 - 3149

AB 3161; 3164 - 3166; 3167; 3169 - 3170; 3177 - 3182; 3186 - 3187; 3191 - 3193; 3195; 3197 - 3199; 3204 - 3205; 3217; 3233 - 3234; 3241; 3243 - 3244; 3245 - 3248; 3249; 3251 - 3252

AB 3161; 3164 - 3166; 3169 - 3170; 3177 - 3182; 3186 - 3187; 3191 - 3193; 3197 - 3199; 3241; 3243 - 3244; 3249; 3251 - 3252

AB 3257 - 3258; 3263 - 3264; 3284; 3295 - 3297; 3301

AB 3364 - 3367; 3379; 3386 - 3387; 3390 - 3392; 3396 - 3397

AB 3597 - 3599; 3626 - 3627; 3726 - 3727; 3729 - 3740; 3742 - 3745; 3748; 3764 - 3769; 3796 - 3798; 3809; 3824 - 3825; 3826 - 3827; 3828; 3870 - 3871

AB 3597 - 3599; 3626 - 3627; 3726 - 3727; 3729 - 3740; 3748; 3764 - 3769; 3796 - 3798; 3809; 3828; 3870 - 3871

235 As I have mentioned, in its particulars to some of the counts the Crown relied upon the same information, including its source, as in an earlier count or counts. So:

(a) the references in the appeal book relating to count 1 are relevant to count 9, and the references relating to counts 1 and 9 are relevant to count 14;

(b) the references in the appeal book relating to count 12 are relevant to counts 12A - 12C;

(c) the references in the appeal book relating to count 16 are relevant to count 17; and

(d) the references in the appeal book relating to count 21 are relevant to count 23.

236 I have read the relevant passages relied on by the Crown. I am satisfied that there was a case fit to be left to the jury that at the material time each of Mr Mansfield and Mr Kizon intended to trade in the securities in question while in possession of the alleged inside information. It was reasonably open to infer the requisite intention from the following. First, the combination of statements made by and admissible against the particular accused as set out in the schedule headed 'Document 2'. See [229] above. Secondly, the fact that at the material time each of the accused in fact engaged in trading in the securities in question.

237 The conversations which counsel for Mr Mansfield and counsel for Mr Kizon submitted were hearsay communications by one accused to the other of the alleged inside information allegedly obtained from either Mr Day or Mr O'Donnell were admissible on the following basis.

238 First, the statements of each accused to the other were admissible against both of them as evidence from which the agreement alleged by the Crown to constitute each conspiracy could be inferred. Secondly, the statements by the particular accused who had allegedly obtained some alleged inside information from either Mr Day or Mr O'Donnell were admissible against that accused as admissions by him of knowledge of, or belief in, and possession of that alleged inside information, and belief that the alleged inside information was not generally available and that, if it were generally available, a reasonable person would expect it to have a material effect on the price or value of the relevant securities. Thirdly, the conversations between both accused were evidence of the dissemination of the alleged inside information in question by one accused to the other and were also evidence of belief in and possession of that information by the accused to whom the information was communicated, and belief that the alleged inside information was not generally available and that, if it were generally available, a reasonable person would expect it to have a material effect on the price or value of the relevant securities.

239 The submissions on behalf of Mr Mansfield and Mr Kizon that the 'known and proven source of the information' was essential to proof of the conspiracy counts does not accurately reflect the state of mind required of each accused. The Crown was only required to prove, relevantly, that each accused had knowledge of, or belief in, and possession of the particulars provided in relation to each conspiracy count, and that each conspirator believed that the alleged inside information was not generally available and that, if it were generally available, a reasonable person would expect it to have a material effect on the price or value of the relevant securities. See LK [117]; Ansari [59].

240 Further, the submission as to the alleged hearsay character of the communications by one accused to the other is inconsistent with my decision, in the context of the Crown's grounds of appeal, that:

(a) the definition of 'information' in s 1042A does not require that the 'information' be 'truthful' or a 'factual reality' or based on reasonable grounds; and

(b) div 3 of pt 7.10 does not include as an element of the offence created by s 1043A, read with s 1311(1), that the 'information' possessed by the accused was 'truthful' or a 'factual reality' or based on reasonable grounds.

241 In my opinion, the totality of the evidence relied on by the Crown established a case fit to be left to the jury that there was a concluded agreement between Mr Mansfield and Mr Kizon to procure shares in AdultShop and My Casino, as alleged in the conspiracy counts and the supporting particulars.

242 The existence of evidence that, during the period of the alleged conspiracy the subject of count 12, Mr Kizon was acquiring shares in My Casino through his company while Mr Mansfield was selling shares in My Casino through his company is not, of itself, fatal to the Crown's case on that or any other count.

243 The evidence at the close of the Crown's case was capable of establishing the elements of each conspiracy alleged against Mr Mansfield and Mr Kizon, including the participation of each of them in it.

Ground 3 of the notices of contention: general

245 Evidence comprising recorded telephone calls intercepted pursuant to warrants B01179/00 and B01179/01 was essential to the Crown's case.

246 During pre-trial argument, Mr Mansfield and Mr Kizon challenged the validity of the warrants. They asserted that the warrants were invalid and, in consequence, evidence as to the intercepted telephone calls was inadmissible.

247 The trial judge ruled that the warrants were valid. See The State of Western Australia v Mansfield [2009] WADC 56.

Ground 3 of the notices of contention: the relevant statutory framework

248 The National Crime Authority (the Authority) was established under s 7 of the National Crime Authority Act 1984 (Cth) (later re-named the Australian Crime Commission Act 2002) (the NCA Act). The provisions of the NCA Act relevant for present purposes are those in force as at 23 October 2001 - 15 April 2002.

249 The general functions of the Authority, as set out in s 11(1) of the NCA Act, include, relevantly:

(a) to collect and analyse criminal information and intelligence relating to relevant criminal activities and disseminate that information and intelligence to:

(i) law enforcement agencies; and

(ii) any person authorized by the Governor-General, the Governor of a State, a Minister of State of the Commonwealth or a Minister of the Crown of a State to hold an inquiry to which the information or intelligence is relevant;

(b) to investigate, otherwise than pursuant to a reference made under section 13 or a law of a State or in accordance with section 14, matters relating to relevant criminal activities.

250 The special functions of the Authority, as set out in s 11(2) of the NCA Act, are:

(a) where a reference to the Authority made under section 13 is in force in respect of a matter relating to a federally relevant criminal activity - to investigate the matter; and

(b) where a reference to the Authority made in accordance with section 14 by a Minister of the Crown of a State is in force in respect of a matter relating to a federally relevant criminal activity - subject to subsection 14(1), to investigate the matter in so far as the relevant offence is, or the relevant offences are or include, an offence or offences against a law of the State.

251 By s 13(1) of the NCA Act, the Minister may, after consulting the Inter-Governmental Committee, by notice in writing to the Authority, refer a matter relating to a 'federally relevant criminal activity' to the Authority for investigation.

252 In s 4(1) of the NCA Act, the term 'relevant criminal activity' is defined to mean 'any circumstances implying, or any allegations, that a relevant offence may have been, may be being, or may in the future be, committed against a law of the Commonwealth, or of a State or of a Territory'. In s 4(1), 'federally relevant criminal activity' is defined to include 'a relevant criminal activity, where the relevant offence is an offence against a law of the Commonwealth'.

253 The term 'relevant offence' is defined in s 4(1) to mean an offence, relevantly:

(a) that involves 2 or more offenders and substantial planning and organization;

(b) that involves, or is of a kind that ordinarily involves, the use of sophisticated methods and techniques;

(c) that is committed, or is of a kind that is ordinarily committed, in conjunction with other offences of a like kind; and

(d) that is of a prescribed kind or involves any of the following:

...

(iii) tax evasion;

(iv) money laundering.

254 The Telecommunications (Interception) Act 1979 (Cth) (the Interception Act) is an Act to prohibit the interception of telecommunications, except where authorised in special circumstances or for the purpose of tracing the location of callers in emergencies, and for related purposes.

255 Section 7(1) of the Interception Act provides that a person shall not:

(b) authorise, suffer or permit another person to intercept; or

(c) do any act or thing that will enable him or her or another person to intercept,

a communication passing over a telecommunications system.

Where an agency applies to an eligible Judge or nominated AAT member for a warrant in respect of a person and the Judge or nominated AAT member is satisfied, on the basis of the information given to the Judge or nominated AAT member under this Part in connection with the application, that:

(a) Division 3 has been complied with in relation to the application; and

...

(d) information that would be likely to be obtained by intercepting under a warrant communications made to or from any telecommunications service that the person is using, or is likely to use, would be likely to assist in connection with the investigation by the agency of a class 1 offence, or class 1 offences, in which the person is involved;

...

the Judge or nominated AAT member may, in his or her discretion, issue a warrant authorising interceptions of communications made to or from any telecommunications service that the person is using, or is likely to use.

257 At the material time, s 5 of the Interception Act defined the term 'class 1 offence' to mean:

(a) a murder, or an offence of a kind equivalent to murder; or

(b) a kidnapping, or an offence of a kind equivalent to kidnapping; or

(c) a narcotics offence; or

(ca) an offence constituted by conduct involving an act or acts of terrorism; or

(d) an offence constituted by:

(i) aiding, abetting, counselling or procuring the commission of;

(ii) being, by act or omission, in any way, directly or indirectly, knowingly concerned in, or party to, the commission of; or

(iii) conspiring to commit;

an offence of a kind referred to in paragraph (a), (b), (c) or (ca);

and, except for the purposes of an application for a warrant by an agency other than the Authority, includes an offence in relation to which the Authority is conducting a special investigation within the meaning of the Authority Act. (emphasis added)

258 At the material time, s 5(1) of the Interception Act defined the term 'Authority' to mean the National Crime Authority and the term 'Authority Act' to mean the National Crime Authority Act 1984 (Cth). At the material time, s 4(1) defined 'special investigation' to mean 'an investigation that the Authority is conducting in the performance of its special functions', that is, pursuant to s 11(2) of the NCA Act.

259 Section 49 of the Interception Act specifies the form and content of a warrant. It provides, relevantly:

(1) A warrant shall be in accordance with the prescribed form and shall be signed by the Judge or nominated AAT member who issues it.

...

(7) A warrant shall set out short particulars of each serious offence in relation to which the Judge or nominated AAT member issuing the warrant was satisfied, on the application for the warrant, as mentioned in:

(a) in the case of a warrant issued under section 48 - paragraph 45(d) or 46(1)(d), as the case requires; or

(b) otherwise - paragraph 45(d), 45A(d), 46(1)(d) or 46A(1)(d), as the case requires. (emphasis added)

260 The term 'serious offence' is defined in s 5(1) to include, relevantly, an offence that is or has been a class 1 offence.

261 Section 74 of the Interception Act is concerned with the giving of information in evidence in 'exempt proceedings'. It provides, relevantly:

(1) A person may give lawfully obtained information (other than foreign intelligence information) in evidence in an exempt proceeding.

(2) For the purposes of applying subsection (1) in relation to information, the question whether or not a communication was intercepted in contravention of subsection 7(1) may be determined on the balance of probabilities.

262 The term 'exempt proceeding' is defined in s 5B of the Interception Act to include, relevantly, a proceeding by way of a prosecution for a 'prescribed offence' (par (a)). The term 'prescribed offence' is defined in s 5(1) to include, relevantly, a 'serious offence' (par (a)) or any offence punishable by imprisonment for life or for a period, or maximum period, of at least 3 years (par (d)).

263 Section 75 of the Interception Act makes provision for giving information in evidence where there has been a defect in connection with a warrant. Section 75 reads:

(1) Where a communication has been intercepted in contravention of subsection 7(1) but purportedly under a warrant (other than a warrant under section 11A, 11B or 11C), a person may give information obtained by the interception in evidence in an exempt proceeding, being a proceeding in a court or before a tribunal, body, authority or person, if the court, tribunal, body, authority or person, as the case may be, is satisfied that:

(a) but for an irregularity, the interception would not have constituted a contravention of subsection 7(1); and

(b) in all the circumstances, the irregularity should be disregarded.

(2) A reference in subsection (1) to an irregularity is a reference to a defect or irregularity (other than a substantial defect or irregularity):

(a) in, or in connection with the issue of, a document purporting to be a warrant; or

(b) in connection with the execution of a warrant, or the purported execution of a document purporting to be a warrant.

264 Section 77 of the Interception Act provides that intercepted material is not admissible except as provided in the Act. By s 77(1):

Where a communication passing over a telecommunications system has been intercepted, whether or not in contravention of subsection 7(1), then:

(a) subject to paragraph (b), neither information, nor a record, obtained by the interception is admissible in evidence in a proceeding except in so far as section 63A, 74, 75, 75A, 76 or 76A permits a person to give in evidence in that proceeding information so obtained; and

(b) for the purpose of determining the extent (if any) to which section 63A, 74, 75, 75A, 76 or 76A permits a person to give in evidence in a proceeding information obtained by the interception:

(i) a person may communicate to another person, make use of, make a record of, or give in evidence in the last-mentioned proceeding, information so obtained; and

(ii) information, or a record, so obtained is admissible in evidence in the last-mentioned proceeding.

265 Form 2 in sch 3 of the Telecommunications (Interception) Regulations 1987 (Cth) prescribes the form of warrants issued under s 45A of the Interception Act.

266 Paragraph (2) of form 2 requires the eligible judge or the nominated AAT member, as the case may be, to state that he or she is satisfied, on the basis of the information given to him or her by the applicant agency, relevantly, that:

information that would be likely to be obtained by intercepting, under a warrant, communications made to or from any telecommunications service that the named person is using, or is likely to use, would be likely to assist in connection with the investigation by the agency of the following ∗class 1 offence**/**∗class 1 offences, in which that person is involved:

[short particulars of the class 1∗ offence**/**∗offences].

Ground 3 of the notices of contention: the form of the warrants

267 Warrant B01179/00, issued on 23 October 2001, by Stanley Desmond Hotop, a nominated member of the Administrative Appeals Tribunal (AAT), reads, relevantly:

(2) I am satisfied, on the basis of the information given to me by the applicant agency, that:

(c) information that would be likely to be obtained by intercepting, under a warrant, communications made to or from any telecommunications service that the named person is using, or is likely to use, would be likely to assist in connection with the investigation by the agency of the following class 1 offences, in which that person is involved, namely:

• Defrauding the Commonwealth through tax evasion contrary to section 29D of the Crimes Act 1914; and
• Money laundering within the meaning of section 81 of the Proceeds of Crime Act 1987
• Offences in relation to which the National Crime Authority is conducting a special investigation within the meaning of the National Crime Authority Act 1984.

268 Warrant B01179/01, issued by Mr Hotop on 16 January 2002, reads, relevantly:

(2) I am satisfied, on the basis of the information given to me by the applicant agency, that:

(c) information that would be likely to be obtained by intercepting, under a warrant, communications made to or from any telecommunications service that the named person is using, or is likely to use, would be likely to assist in connection with the investigation by the agency of the following class 1 offences, in which that person is involved, namely;

• Defrauding the Commonwealth through tax evasion contrary to section 29D of the Crimes Act 1914 and section 135.1 of the Criminal Code Act 1995;
• Money laundering within the meaning of section 81 of the Proceeds of Crime Act 1987;
• Offences in relation to which the National Crime Authority is conducting a special investigation within the meaning of the National Crime Authority Act 1984.

Ground 3 of the notices of contention: Mr Mansfield's and Mr Kizon's submissions

269 Counsel for Mr Mansfield and counsel for Mr Kizon argued before the trial judge, and reiterated before this court, that the nomination in each warrant of 'offences in relation to which the National Crime Authority is conducting a special investigation within the meaning of the National Crime Authority Act 1984' failed to comply with s 49 of the Interception Act. It was submitted that, while the nomination identified a category of offences, no particulars (short or otherwise) were given of the offence or offences to which the warrant related (s 49(1)) or of each serious offence in respect of which satisfaction under s 45A(d) was required to exist (s 49(7)).

270 According to counsel, it was not possible therefore to know from the face of either warrant which class 1 offence or offences Mr Mansfield was alleged to be involved in to the satisfaction of Mr Hotop. This, so it was submitted, vitiated the warrants, because it negated the operation of the statutory scheme, which seeks to protect privacy by requiring particulars of the class 1 offence or offences to be specified and, thereby:

(a) establishing jurisdiction governing their issue; and

(b) rendering each warrant amenable to judicial review of the sufficiency of the grounds for its issue.

271 It was submitted that the inclusion in each warrant of a category - 'offences in relation to which the National Crime Authority is conducting a special investigation' - was indicative of a failure by Mr Hotop to appreciate that the nature and scope of the discretionary power conferred by s 45A(d) required him, as a precondition to the issue of the warrant, to be satisfied that not only would the interception of Mr Mansfield's communications be likely to assist in connection with the investigation by the Authority, but that such assistance was in relation to a class 1 offence or offences in which Mr Mansfield was involved. According to counsel, the failure to nominate specific offences (which, it was submitted, was required by the Interception Act) strongly suggested that regard was only had to the former but not the latter.

Ground 3 of the notices of contention: the trial judge's reasons

272 The trial judge, in his reasons, upheld the validity of the warrants on the following basis:

In warrant BO1179/00 it is indicated that the information that would [be] likely to be obtained by interception under a warrant 'would be likely to assist in connection with the investigation by the agency of the following Class 1 offences'. The warrant then identifies two offences joined together with the conjunctive word 'and' and concludes with the statement 'offences in relation to which the National Crime Authority is conducting a special investigation within the meaning of the National Crime Authority Act 1984'. That statement, in the context in which it appears, clearly refers to the two nominated offences, which being subject of a special investigation become by definition Class 1 offences. Warrant BO1179/01 is essentially in similar form and although the conjunctive word 'and' has been omitted, in my view it necessarily takes its character from the earlier warrant.

...

In my view none of the relevant warrants under attack, rationally interpreted, are invalid on their face and/or disclose jurisdictional error in their issue. [55] - [58].

Ground 3 of the notices of contention: Mr Mansfield's and Mr Kizon's criticism of the trial judge's reasoning

273 Counsel for Mr Mansfield and counsel for Mr Kizon noted that the trial judge, in holding warrant B01179/00 to be valid, said that the use of the conjunctive 'and' between the offence nominated in the first dot point and the offence nominated in the second dot point, followed by the statement in the third dot point, meant the statement in the third dot point 'clearly referred to the two nominated offences, which being subject of a special investigation become by definition Class 1 offences' [55]. It was submitted that if it is assumed that each offence nominated against the first and second dot points was the subject of a special investigation, then the warrant can be read in the manner found by his Honour. However, according to counsel, no such assumption can be made. Counsel referred to s 11(1)(b) of the NCA Act and submitted that it was not possible to determine from the face of the warrant whether the offences nominated against the first and second dot points were being investigated by the Authority pursuant to its general power, (s 11(1)) or its special power (s 11(2)).

274 Further, it was submitted that the validity of a warrant must be evident on its face. It was not open to interpret warrant B01179/00 in the manner adopted by the trial judge. The language of the warrant is equivocal and it is open to a variety of interpretations. It necessarily followed, so it was submitted, that the warrant failed strictly to comply with the statutory conditions governing its issue and, in consequence, it was invalid.

275 As to warrant B01179/01, it was submitted that no 'conjunction' exists between the first, second and third dot points. Nevertheless, the trial judge held that the warrant was valid because 'it necessarily takes its character from the earlier warrant' [55].

276 Counsel submitted that this was an impermissible line of reasoning. It was not open for his Honour to interpret warrant B01179/01 by reference to warrant B01179/00. The lawfulness of warrant B01179/01 must be evident on its face. It was not evident, so it was submitted, and so the warrant was invalid.

277 Finally, in the context of ground 3 of the notices of contention, it was submitted that, as a result of the invalidity of the warrants, the information material obtained was rendered inadmissible by operation of s 77 of the Interception Act. No exercise of discretion arises. In the absence of the telephone calls intercepted pursuant to the impugned warrants, the evidence at the close of the Crown's case was incapable of sustaining convictions on the counts in the indictment.

The merits of ground 3 of the notices of contention

278 Before the trial judge, it was not in dispute between the parties that:

(a) the person who applied on behalf of the Authority for warrants B01179/00 and B01179/01 was an officer of the Authority acting on its behalf; and

(b) the Authority was, at the material time, conducting a 'special investigation', as defined in s 4(1) of the NCA Act, known as the 'Freshnet reference' and another special investigation known as the 'Swordfish reference': [2009] WADC 108 [6].

279 Section 49(1) of the Interception Act states that a warrant 'shall be in accordance with the prescribed form' and s 49(7) states that a warrant 'shall set out short particulars of each serious offence' in relation to which the eligible judge or nominated AAT member issuing the warrant was satisfied of the requirements of s 45A(d).

280 Section 49(7) merely requires that the offences in question be identified in a conceptual sense. It is unnecessary to include particulars of the essential ingredients of fact in relation to those offences in the particular case. See Flanagan v Commissioner of the Australian Federal Police (1996) 60 FCR 149, 196 - 197 (Beaumont, Ryan & Lindgren JJ); R v Solomon [2005] SASC 265; (2005) 92 SASR 331 [26] - [27] (Doyle CJ, Duggan & Sulan JJ agreeing).

281 In Flanagan, a warrant to tap telephone services which had been issued under the Interception Act recited the satisfaction of the eligible judge, as follows:

(c) information that would be likely to be obtained by intercepting under a warrant communications made to or from the service would be likely to assist in connection with the investigation by the agency that applied for this warrant of the following class 2 offences in which that person is involved namely Conspiracy to Defraud the Commonwealth contrary to s 86(1)(e), and now s 86A of the Crimes Act 1914; and Defrauding the Commonwealth contrary to s 29D of the Crimes Act 1914 (172 - 173). (emphasis added)

282 The Full Court of the Federal Court held in Flanagan that the warrant complied with the requirements of s 49(7). It was not necessary that the warrant set out, as was submitted on behalf of the applicants in the proceedings, 'particulars' of parties to the suspected conspiracy or the alleged agreement and its subject matter (197).

283 As Doyle CJ noted in Solomon in the context of a warrant issued in relation to a class 2 offence:

The warrant is sought with a view to collecting information that will disclose the commission of an offence, and this will often be an offence yet to be committed. Factual particulars of an offence yet to be committed could not be provided. Of course, the applicant for the warrant can be expected to provide information supporting a conclusion that a class 2 offence will be or may be committed, but there is no reason to think that Parliament would have expected the issuer of the warrant to specify in the warrant the circumstances of a yet to be committed offence. It is sufficient if the warrant identifies the offence by name or by reference to a statutory provision, as long as the issuer is satisfied that having regard to its nature, or having regard to the circumstances in which it will be committed, the offence is a class 2 offence [26].

284 In the present case, I am of the opinion that the third dot point in par (2)(c) of each warrant, namely 'Offences in relation to which the National Crime Authority is conducting a special investigation within the meaning of the National Crime Authority Act 1984', must be read in the context of the first and second dot points and the applicable statutory framework.

285 In warrant B01179/00, the first and second dot points read:

• Defrauding the Commonwealth through tax evasion contrary to section 29D of the Crimes Act 1914; and
• Money laundering within the meaning of section 81 of the Proceeds of Crime Act 1987.

286 In warrant B01179/01, the first and second dot points read:

• Defrauding the Commonwealth through tax evasion contrary to section 29D of the Crimes Act 1914 and section 135.1 of the Criminal Code Act 1995;
• Money laundering within the meaning of section 81 of the Proceeds of Crime Act 1987.

287 The term 'relevant offence', as defined in s 4(1) of the NCA Act, includes an offence that involves 'tax evasion' or 'money laundering'. Also, by s 4(1), 'relevant criminal activity' is defined to include any circumstances implying, or any allegations, that a relevant offence may have been, may be being, or may in future be, committed against a law of the Commonwealth. The term 'special investigation', as defined in s 4(1), means an investigation that the Authority is conducting in the performance of its special functions. The special functions of the Authority, as set out in s 11(2), include the investigation of a matter relating to a federally relevant criminal activity. In s 4(1), 'federally relevant criminal activity' is defined to include a relevant criminal activity, where the relevant offence is an offence against a law of the Commonwealth. An offence that involves tax evasion or money laundering is a federally relevant criminal activity.

288 By s 5(1) of the Interception Act, a 'class 1 offence' is defined to include an offence in relation to which the Authority is conducting a special investigation within the meaning of the NCA Act.

289 In my opinion, the first and second dot points in warrant B01179/00 identify two offences and the first and second dot points in warrant B01179/01 identify three offences. Each of these offences is a 'relevant offence' (within the meaning of s 4(1) of the NCA Act) and each of them is referable to a 'federally relevant criminal activity' (within the meaning of s 4(1) of the NCA Act).

290 On a fair reading of the third dot point of each of warrants B01179/00 and B01179/01, the offences referred to in the third dot point (in relation to which the Authority is conducting a special investigation) are those set out in the first and second dot points. I am therefore satisfied that each of the warrants was issued in respect of a 'class 1 offence', as defined in s 5(1) of the Interception Act.

291 Further, I am satisfied that each of warrants B01179/00 and B01179/01 identifies the offences in question in a conceptual sense. Each offence is identified by name and by reference to a statutory provision. There are therefore 'short particulars' which comply with s 49(7) of the Interception Act.

292 In any event, even if (contrary to my opinion) there was any substance in any of the complaints made on behalf of Mr Mansfield and Mr Kizon, it would have been appropriate for the trial judge to have exercised the discretion under s 75(1) of the Interception Act and admitted

the evidence comprising the recorded telephone calls. Any defect or irregularity in the warrants could not reasonably be characterised as a 'substantial' defect or irregularity within s 75(2). Also, the only reasonable conclusion open in the circumstances is that, but for the defect or irregularity, the telephone intercepts would not have constituted a contravention of s 7(1) of the Interception Act and, in all the circumstances, the defect or irregularity should be disregarded. Generally, see New South Wales Crime Commission v Vuletic [2005] NSWSC 614; (2005) 64 NSWLR 301 [51] - [54] (Johnson J).

293 The trial judge did not make an error in holding that the warrants were valid, or in failing to hold that the warrants were invalid and that the information obtained thereby was inadmissible.

295 I would allow the appeal. Grounds 1, 2 and 3 of the Crown's appeal have been made out. The judgments of acquittal entered by the trial judge on 22 March 2010 should be set aside. A new trial of Mr Mansfield and Mr Kizon should be ordered. The Crown, in its orders wanted, sought a retrial only on the AdultShop-related counts (that is, counts 1, 1A - 1G, 4, 5, 6, 7, 8, 9, 9A - 9E, 14, 14A, 14B, 21, 21A - 21H, 22, 23 and 23A). The order for a new trial should be limited to these counts.

296 MURRAY J: In this matter I have had the very considerable advantage of access to a draft of the reasons published by Buss JA and I have also had the advantage of being able to read, in draft, the reasons published by McLure P. I need not canvass the ground so thoroughly dealt with, in particular in the reasons of Buss JA.

297 It is convenient to turn first to the notices of contention and the three matters raised by both respondents by way of argument supporting the outcome that the decision of His Honour the trial judge should be upheld, and his Honour's dismissal of the overwhelming number of the charges should not be interfered with.

298 In relation to the grounds of contention, I need only say that I have nothing to add to the reasons of Buss JA. I agree that the evidence led at trial was capable of establishing, beyond reasonable doubt, that the alleged inside information was not generally available, for the reasons given by his Honour.

299 Further, I agree that there is no merit in ground 2 of the notices of contention. For the reasons given by his Honour, the evidence was capable of establishing the elements of the conspiracies alleged against the respondents, beyond reasonable doubt.

300 Ground 3 of the notices of contention challenged the validity of telephone interception warrants, and again, for the reasons given by his Honour, that challenge cannot succeed and the evidence obtained as a result of the execution of the warrants was admissible.

301 I turn then to the grounds of appeal, in respect of which I note that McLure P and Buss JA have come to a different view. I agree with Buss JA, essentially for the reasons his Honour gives, but in deference to the different views expressed by their Honours I shall briefly indicate why I have come to the conclusion that the appeal should be allowed, the judgments of acquittal set aside and a new trial ordered of those counts of the indictment in respect of which the appellant seeks that order.

302 The grounds of appeal essentially challenge the conclusion reached by his Honour the trial judge that, in respect of the alleged conspiracy offences and in respect of the substantive charges of insider trading, contrary to s 1043A(1)(d) of the Corporations Act 2001 (Cth), the term 'information' necessarily connoted information which was true or factually correct, a factual reality.

303 Buss JA has set out, as an addendum to his Honour's reasons, the particulars of the alleged inside information which the Crown provided. It is sufficient for present purposes to note that the information of which the two accused were possessed was alleged to be, in relation to the corporate entity known as AdultShop, that the expected profit of the company had risen substantially, in line with a substantial increase in its turnover, information which had been obtained as a result of statements made privately to a confidant by a Mr Day, the managing director of the company.

304 I agree that it is sufficient to consider the offence of insider trading as defined by s 1043A. That section focuses attention upon 'inside information'. Section 1042A defines 'information' to include:

(a) matters of supposition and other matters that are insufficiently definite to warrant being made known to the public; and

(b) matters relating to the intentions or likely intentions of a person.

305 It is noteworthy that the definition is one which is inclusive. I agree with Buss JA that, in the context of this legislation, the definition is meant to build upon the ordinary meaning of the word 'information' and to extend that meaning, or to make clear what is included within the term 'information'.

306 There is nothing in the statutory context to indicate that the word is to be given a special or confined meaning. There is nothing in what Buss JA perceives to be the underlying policy considerations to which the legislation is designed to give effect (with which I agree) to show that the word 'information' should be given a confined or restricted meaning. To my mind, the word 'information' in this context bears its ordinary meaning as extended by the definition.

(1) Something which is communicated by words or deed. Paragraph (a) of the definition shows that it may include matters of supposition, ie, matters in respect of which the information is conveyed by inference from statements made or conduct.

(2) To be information, the thing communicated must concern a matter of fact. Paragraph (b) of the definition says that 'information' includes matters relating to the intentions or likely intentions of a person. A person's intention or likely intention is, of course, a matter of fact.

308 I can see no reason concerned with the policy to which this legislation is designed to give effect, or arising out of the meaning of the word 'information', to suppose that a factual communication ceases to be information because it is false or an invention, and can see no reason why the information needs to be true or, as his Honour the trial judge put it, a 'factual reality'. The fact that information is untrue does not cause it to cease to be information.

309 Further, the information may be, at the one time, a statement about the source of the information as well as a statement about what was said. In this case, the information might, for example, be that Mr Day said things about AdultShop and its prospects. The information might, at the one time, be that it was Mr Day who said these things and, at the same time, the information would be what he said.

310 I see no reason to suppose that such information might not be 'inside information' as defined in s 1042A to mean:

information in relation to which the following paragraphs are satisfied:

(a) the information is not generally available;

(b) if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of particular Division 3 financial products.

311 The information may be price-sensitive, not only because of its nature, as alleged in this case, but also because of the source connected with the company concerned from which the information was said to be derived.

312 It is essentially for those reasons that, in my respectful opinion, Buss JA is correct and the appeal should be allowed.

Count 1

In relation to AdultShop, the information of which the two accused were possessed was to the effect that:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 1A

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 1B

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 1C

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 1D

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 1E

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 1F

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 1G

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 2

In relation to My Casino, the accused Mansfield was possessed of information to the following effect:

1. Michael O'Donnell, the Chairman of My Casino, was about to lodge a complaint with the Australian Securities and Investments Commission concerning alleged fraudulent share transactions by some of My Casino's directors or associates;
2. Those share transactions included an allocation of 11 million shares to one Reitmeier, a significant shareholder and former director of My Casino, or his associates without shareholder approval;

1. The said complaint to the Australian Securities and Investments Commission included allegations against two former directors of My Casino;

1. Michael O'Donnell had spent hundreds of hours investigating matters concerning the share transactions of My Casino directors or associates prior to lodging the complaint;
2. The said complaint had been lodged with the Australian Securities and Investments Commission;
3. The Australian Securities and Investments Commission was considering the said complaint;
4. The information at sub-paragraphs a. to b. above had been obtained on or about 14 December 2001 as a result of [a] private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant;
5. The information at sub-paragraph c. above had been obtained on or about 17 December 2001, as a result of [a] private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant;
6. The information at sub-paragraph d. to f. above had been obtained on or about 24 December 2001, as a result of [a] private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant.

Count 3

In relation to My Casino, the accused Mansfield was possessed of information to the following effect:

1. Michael O'Donnell, the Chairman of My Casino, was about to lodge a complaint with the Australian Securities and Investments Commission concerning alleged fraudulent share transactions by some of My Casino's directors or associates;
2. Those share transactions included an allocation of 11 million shares to one Reitmeier, a significant shareholder and former director of My Casino, or his associates without shareholder approval;

1. The said complaint to the Australian Securities and Investments Commission included allegations against two former directors of My Casino;

1. Michael O'Donnell had spent hundreds of hours investigating matters concerning the share transactions of My Casino directors or associates prior to lodging the complaint;
2. The said complaint had been lodged with the Australian Securities and Investments Commission;
3. The Australian Securities and Investments Commission was considering the said complaint;
4. The information at sub-paragraphs a. to b. above had been obtained on or about 14 December 2001 as a result of [a] private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant;
5. The information at sub-paragraph c. above had been obtained on or about 17 December 2001, as a result of [a] private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant;
6. The information at sub-paragraphs d. to f. above had been obtained on or about 24 December 2001, as a result of [a] private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant.

Count 4

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 5

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 6

The accused Mansfield directly communicated information to the effect that:

1. The stock market expected AdultShop to post a full year profit of about $3 million, but AdultShop was going to publish an increased forecast profit of $11.5 million;
2. The stock market expected AdultShop to post a full year turnover of about $40 million, but AdultShop was going to publish an increased forecast turnover of over $100 million;

1. The sources of the information at sub-paragraphs a. and b. above were 'the powers that be' in relation to AdultShop.

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. The information at sub-paragraphs a. and b. [directly] above had been obtained on or about 4 January 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confident.

Count 7

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 8

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 9

In relation to AdultShop, the information of which the two accused were possessed was to the effect that:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. Malcolm Day was of the opinion that the figures for AdultShop were still a good story;

1. AdultShop was getting huge figures;
2. It was expected that the market would be informed of the figures in March or April 2002;
3. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant;
4. The information at sub-paragraphs c. to e. above had been obtained on or about 7 February 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 9A

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. Malcolm Day was of the opinion that the figures for AdultShop were still a good story;

1. AdultShop was getting huge figures;
2. It was expected that the market would be informed of the figures in March or April 2002;
3. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant;
4. The information at sub-paragraphs c. to e. above had been obtained on or about 7 February 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 9B

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for Adultshop for the 2002 financial year had risen from between $30 million and $50 million to about $111 million;

1. Malcolm Day was of the opinion that the figures for AdultShop were still a good story;

1. AdultShop was getting huge figures;
2. It was expected that the market would be informed of the figures in March or April 2002;
3. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant;
4. The information at sub-paragraphs c. to e. above had been obtained on or about 7 February 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 9C

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. Malcolm Day was of the opinion that the figures for AdultShop were still a good story;

1. AdultShop was getting huge figures;
2. It was expected that the market would be informed of the figures in March or April 2002;
3. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant;
4. The information at sub-paragraphs c. to e. above had been obtained on or about 7 February 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 9D

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. Malcolm Day was of the opinion that the figures for AdultShop were still a good story;

1. AdultShop was getting huge figures;
2. It was expected that the market would be informed of the figures in March or April 2002;
3. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant;
4. The information at sub-paragraphs c. to e. above had been obtained on or about 7 February 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 9E

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. Malcolm Day was of the opinion that the figures for AdultShop were still a good story;

1. AdultShop was getting huge figures;
2. It was expected that the market would be informed of the figures in March or April 2002;
3. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant;
4. The information at sub-paragraphs c. to e. above had been obtained on or about 7 February 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 10

In relation to My Casino, the accused Mansfield was possessed of information to the following effect:

1. Michael O'Donnell, the Chairman of My Casino had identified a deal which would cost no money upfront;
2. The said deal would give an instant turnover of $30 million;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 13 February 2002 as a result of [a] private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant.

Count 11

In relation to My Casino, the accused Mansfield was possessed of information to the following effect:

1. Michael O'Donnell, the Chairman of My Casino had identified a deal which would cost no money upfront;
2. The said deal would give an instant turnover of $30 million;

1. Michael O'Donnell, the Chairman of My Casino had a huge potential deal on the table and had spent all week on it;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 13 February 2002 as a result of [a] private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant;
2. The information at sub-paragraph c. above had been obtained on or about 19 February 2002 as a result of [a] private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant.

Count 12

In relation to My Casino, the information of which the two accused were possessed was to the effect that:

1. Negotiations were taking place concerning a deal involving a business known as Europcar;
2. Michael O'Donnell, the Chairman of My Casino was going to release information concerning the abovementioned deal to the market within days;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 27 February 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant.

Count 12A

In relation to My Casino, the accused Kizon was possessed of information to the following effect:

1. Negotiations were taking place concerning a deal involving a business known as Europcar;
2. Michael O'Donnell, the Chairman of My Casino was going to release information concerning the abovementioned deal to the market within days;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 27 February 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant.

Count 12B

In relation to My Casino, the accused Kizon was possessed of information to the following effect:

1. Negotiations were taking place concerning a deal involving a business known as Europcar;
2. Michael O'Donnell, the Chairman of My Casino was going to release information concerning the abovementioned deal to the market within days;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 27 February 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant.

Count 12C

In relation to My Casino, the accused Kizon was possessed of information to the following effect:

1. Negotiations were taking place concerning a deal involving a business known as Europcar;
2. Michael O'Donnell, the Chairman of My Casino was going to release information concerning the abovementioned deal to the market within days;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 27 February 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant.

Count 13

In relation to My Casino, the information of which the two accused were possessed was to the effect that:

1. Negotiations were taking place concerning a deal involving a business known as Europcar;
2. There were about five such deals under consideration;

1. Michael O'Donnell, the Chairman of My Casino, was of the opinion that:
   1. Each deal was serious;
   2. Each deal would see the share price increase;
   3. There was no doubt that money could be made.

1. The information at sub-paragraphs a. to c. above had been obtained on or about 7 March 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant.

Count 13A

In relation to My Casino, the accused Mansfield was possessed of information to the following effect:

1. Negotiations were taking place concerning a deal involving a business known as Europcar;
2. There were about five such deals under consideration;

1. Michael O'Donnell, the Chairman of My Casino, was of the opinion that:
   1. Each deal was serious;
   2. Each deal would see the share price increase;
   3. There was no doubt that money could be made.

1. The information at sub-paragraphs a. to c. above had been obtained on or about 7 March 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant.

Count 14

In relation to AdultShop, the information of which the two accused were possessed was to the effect that:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. Malcolm Day was of the opinion that the figures for AdultShop were still a good story;

1. AdultShop was getting huge figures;
2. It was expected that the market would be informed of the figures in March or April 2002;
3. AdultShop was intending to release to the market its profit figures for the previous six months on Monday, 18 March 2002;
4. The profit figures for the previous six months were going to be alright but would not break any records;
5. AdultShop would announce the high or big quarterly figures to the market at the end of April 2002;
6. The release at the end of April 2002 would show two quarters of good figures;
7. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant;
8. The information at sub-paragraphs c. to e. above had been obtained on or about 7 February 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant;

1. The information at sub-paragraphs f. to i. above had been obtained on or about 12 March 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 14A

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. Malcolm Day was of the opinion that the figures for AdultShop were still a good story;

1. AdultShop was getting huge figures;
2. It was expected that the market would be informed of the figures in March or April 2002;
3. AdultShop was intending to release to the market its profit figures for the previous six months on Monday, 18 March 2002;
4. The profit figures for the previous six months were going to be alright but would not break any records;
5. AdultShop would announce the high or big quarterly figures to the market at the end of April 2002;
6. The release at the end of April 2002 would show two quarters of good figures;
7. The information at sub-paragraphs a. and b. above had been obtained on or about 4 January 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant;
8. The information at sub-paragraphs c. to e. above had been obtained on or about 7 February 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant;

1. The information at sub-paragraphs f. to i. above had been obtained on or about 12 March 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 14B

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. The expected profit for AdultShop for the 2002 financial year had risen from $3 million to $11 million;
2. The expected turnover for AdultShop for the 2002 financial year had risen from between $30 million and $50 million, to about $111 million;

1. Malcolm Day was of the opinion that the figures for AdultShop were still a good story;

1. AdultShop was getting huge figures;
2. It was expected that the market would be informed of the figures in March or April 2002;
3. AdultShop was intending to release to the market its profit figures for the previous six months on Monday, 18 March 2002;
4. The, profit figures for the previous six months were going to be alright but would not break any records;
5. AdultShop would announce the high or big quarterly figures to the market at the end of April 2002;
6. The release at the end of April 2002 would show two quarters of good figures;
7. The information at sub-paragraphs a. and b, above had been obtained on or about 4 January 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant;
8. The information at sub-paragraphs c. to e. above had been obtained on or about 7 February 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant;

1. The information at sub-paragraphs f. to i. above had, been obtained on or about 12 March 2002, as a result of private conversations between Malcolm Day, the Managing Director of AdultShop, and a person or persons the said Malcolm Day apparently treated as a confidant.

Count 15

In relation to My Casino the accused Mansfield was possessed of information to the following effect:

1. Negotiations were taking place concerning a $28 million deal involving an internet sports betting business;
2. The information at sub-paragraph a. above had been obtained on or about 12 March 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant.

Count 16

In relation to My Casino, the information of which the two accused were possessed was to the effect that:

1. Negotiations were taking place concerning a $28 million deal involving an internet sports betting business;
2. The due diligence would go forward;

1. Hans-Rudolf Moser, a Director of My Casino, had endorsed spending between $20 thousand and $50 thousand on preliminary due diligence in relation to the deal;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 12 March 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant;
2. The information at sub-paragraph c. above had been obtained on or about 12 March 2002 as a result of [a] direct private conversation between Malcolm Day and a person the said Malcolm Day apparently treated as a confidant.

Count 16A

In relation to My Casino, the accused Mansfield was possessed of information to the following effect:

1. Negotiations were taking place concerning a $28 million deal involving an internet sports betting business;
2. The due diligence would go forward;

1. Hans-Rudolf Moser, a Director of My Casino, had endorsed spending between $20 thousand and $50 thousand on preliminary due diligence in relation to the deal;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 12 March 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant;
2. The information at sub-paragraph c. above had been obtained on or about 12 March 2002 as a result of [a] direct private conversation between Malcolm Day and a person the said Malcolm Day apparently treated as a confidant.

Count 16B

In relation to My Casino, the accused Mansfield was possessed of information to the following effect:

1. Negotiations were taking place concerning a $28 million deal involving an internet sports betting business;
2. The due diligence would go forward;

1. Hans-Rudolf Moser, a Director of My Casino, had endorsed spending between $20 thousand and $50 thousand on preliminary due diligence in relation to the deal;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 12 March 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant;
2. The information at sub-paragraph c. above had been obtained on or about 12 March 2002 as a result of [a] direct private conversation between Malcolm Day and a person the said Malcolm Day apparently treated as a confidant.

Count 17

In relation to My Casino, the information of which the two accused were possessed was to the effect that:

1. Negotiations were taking place concerning a $28 million deal involving an internet sports betting business;
2. The due diligence would go forward;

1. Hans-Rudolf Moser, a Director of My Casino, had endorsed spending between $20 thousand and $50 thousand on preliminary due diligence in relation to the deal;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 12 March 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant;
2. The information at sub-paragraph c. above had been obtained on or about 12 March 2002 as a result of [a] direct private conversation between Malcolm Day and a person the said Malcolm Day apparently treated as a confidant.

Count 18

In relation to My Casino, the accused Kizon was possessed of information to the following effect:

1. Negotiations were taking place concerning a $28 million deal involving an internet sports betting business;
2. The due diligence would go forward;

1. Hans-Rudolf Moser, a Director of My Casino, had endorsed spending between $20 thousand and $50 thousand on preliminary due diligence in relation to the deal;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 12 March 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of My Casino and a person the said Michael O'Donnell apparently treated as a confidant;
2. The information at sub-paragraph c. above had been obtained on or about 12 March 2002 as a result of [a] direct private conversation between Malcolm Day and a person the said Malcolm Day apparently treated as a confidant.

Count 19

In relation to [Euraust], formerly known as My Casino, the accused Mansfield was possessed of information to the following effect:

1. A heads of agreement had been signed for a deal concerning the acquisition of a business known as Megasports by [Euraust], formerly known as My Casino;
2. The information at sub-paragraph a. above had been obtained on or about 27 May 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of [Euraust] and a person the said Michael O'Donnell apparently treated as a confidant.

Count 20

In relation to [Euraust], formerly known as My Casino, the accused Mansfield was possessed of information to the following effect:

1. A heads of agreement had been signed for a deal concerning the acquisition of a business known as Megasports by [Euraust], formerly known as My Casino;
2. The information at sub-paragraph a. above had been obtained on or about 27 May 2002 as a result of [a] direct private conversation between Michael O'Donnell, the Chairman of [Euraust] and a person the said Michael O'Donnell apparently treated as a confidant.

Count 21

In relation to AdultShop, the information of which the two accused were possessed was to the effect that:

1. Packer had bought 4.9% of AdultShop;
2. The projected revenue for AdultShop for the following month would significantly exceed what had previously been forecast;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 6 June 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person the said Malcolm Day apparently treated as a confidant.

Count 21A

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. Packer had bought 4.9% of AdultShop;
2. The projected revenue for AdultShop for the following month would significantly exceed what had previously been forecast;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 6 June 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person the said Malcolm Day apparently treated as a confidant.

Count 21B

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. Packer had bought 4.9% of AdultShop;
2. The projected revenue for AdultShop for the following month would significantly exceed what had previously been forecast;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 6 June 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person the said Malcolm Day apparently treated as a confidant.

Count 21C

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. Packer had bought 4.9% of AdultShop;
2. The projected revenue for AdultShop for the following month would significantly exceed what had previously been forecast;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 6 June 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person the said Malcolm Day apparently treated as a confidant.

Count 21D

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. Packer had bought 4.9% of AdultShop;
2. The projected revenue for AdultShop for the following month would significantly exceed what had previously been forecast;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 6 June 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person the said Malcolm Day apparently treated as a confidant.

Count 21E

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. Packer had bought 4.9% of AdultShop;
2. The projected revenue for AdultShop for the following month would significantly exceed what had previously been forecast;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 6 June 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person the said Malcolm Day apparently treated as a confidant.

Count 21F

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. Packer had bought 4.9% of AdultShop;
2. The projected revenue for AdultShop for the following month would significantly exceed what had previously been forecast;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 6 June 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person the said Malcolm Day apparently treated as a confidant.

Count 21G

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. Packer had bought 4.9% of AdultShop;
2. The projected revenue for AdultShop for the following month would significantly exceed what had previously been forecast;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 6 June 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person the said Malcolm Day apparently treated as a confidant.

Count 21H

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. Packer had bought 4.9% of AdultShop;
2. The projected revenue for AdultShop for the following month would significantly exceed what had previously been forecast;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 6 June 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person the said Malcolm Day apparently treated as a confidant.

Count 22

In relation to AdultShop, the accused Kizon was possessed of information to the following effect:

1. Packer had bought 4.9% of AdultShop;
2. The projected revenue for AdultShop for the following month would significantly exceed what had previously been forecast;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 6 June 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person the said Malcolm Day apparently treated as a confidant.

Count 23

In relation to AdultShop, the information of which the two accused were possessed was to the effect that:

1. Packer had bought 4.9% of AdultShop;
2. The projected revenue for AdultShop for the following month would significantly exceed what had previously been forecast;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 6 June 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person the said Malcolm Day apparently treated as a confidant.

Count 23A

In relation to AdultShop, the accused Mansfield was possessed of information to the following effect:

1. Packer had bought 4.9% of AdultShop;
2. The projected revenue for AdultShop for the following month would significantly exceed what had previously been forecast;

1. The information at sub-paragraphs a. and b. above had been obtained on or about 6 June 2002 as a result of [a] private conversation between Malcolm Day, the Managing Director of AdultShop, and a person the said Malcolm Day apparently treated as a confidant.