R (Cth) v Milne [2010] NSWSC 1467 | Case summary

R (Cth) v Milne [2010] NSWSC 1467 | Case summary | Zoe

[16]

17 On or around 16 January 2003, the Offender entered into a Mandate Agreement with Sinitus Treuhand AG ("Sinitus") concerning Clairmont Holdings & Finance Limited ("Clairmont Holdings & Finance"). 18 Sinitus was a Swiss financial services company. Urs Meisterhans was a partner in Sinitus. As will be seen, Mr Meisterhans was a significant participant in events connected to the offences. He was not called to give evidence at the trial. Clairmont Holdings & Finance was a company incorporated in the British Virgin Islands. 19 The Mandate Agreement provided that, in return for a fee to be paid by the Offender, Sinitus would act as directors and/or officers of Clairmont Holdings & Finance, and would act exclusively on instructions received from the Offender or his attorney. On this basis, the Offender controlled Clairmont Holdings & Finance. 20 In or around May 2003, the Offender was introduced to Kim Goodall. Mr Goodall had previously been involved in a Swiss software development company known as Temenos Group AG ("Temenos"). Mr Goodall was a Crown witness at the trial, whose evidence on a number of issues was strongly challenged by the Defence. 21 As at 21 May 2003, Global Technology Limited ("GTL") was owed a debt of approximately $11 million by Global Technology Australasia Limited ("GTAL"). GTL was a company registered in South Africa and was the holding company of GTAL, which was a publicly listed company registered in Australia. GTAL had no funds to pay the debt. 22 As part of a complex series of negotiations, on 21 May 2003, GTL and Clairmont Holdings & Finance signed a Debt Assignment Agreement. 23 Pursuant to the Debt Assignment Agreement, on 21 May 2003, GTL sold this debt (referred to at [21]) to Clairmont Holdings & Finance for one dollar, payable if and when demanded. Consequently, GTAL owed a debt of approximately $11 million to Clairmont Holdings & Finance. The total amount of the assigned debt ultimately turned out to be $7,902,152.02. 24 On 8 July 2003, the Offender was appointed as an executive director and acting chief executive officer of GTAL and its subsidiaries. 25 On 10 July 2003, GTAL changed its name to Admerex. 26 On 15 August 2003, on instructions from the Offender, Baret Advisory Pty Limited was registered with the Australian Securities and Investments Commission. The name of this company was changed to "Barat Advisory Pty Limited" on 24 November 2003. From the time of its incorporation, the Offender has been the sole director and shareholder of Barat Advisory. Accordingly, the Offender was, at all relevant times, the controlling mind of Barat Advisory. 27 In or around October 2003, the Offender and Mr Goodall decided to acquire approximately $7.9 million of the debt owed by Admerex to Clairmont Holdings & Finance. 28 On 18 November 2003, Clairmont Holdings & Finance sold $2,236,459.00 of the debt owed to it by Admerex to Barat Advisory. This debt was part of the debt acquired by Clairmont Holdings & Finance on 21 May 2003 (at that time said to be in the sum of approximately $11 million), before GTAL changed its name to Admerex. 29 In consideration for obtaining the debt owed by Admerex in the sum of $2,236,459.00, Barat Advisory was required to pay $1.5 million to Clairmont Holdings & Finance by 20 November 2003. 30 Barat Advisory did not pay the $1.5 million it owed to Clairmont Holdings & Finance as consideration for its acquisition of the debt owed by Admerex in the sum of $2,236,459.00. 31 On 18 November 2003, Clairmont Holdings & Finance sold $5,665,692.00 of the debt owed to it by Admerex to Atticus Investments Assets Inc ("Atticus"), a company operated by Mr Goodall. This debt was part of the debt acquired by Clairmont Holdings & Finance on 21 May 2003, before GTAL changed its name to Admerex. 32 In consideration for obtaining the debt owed by Admerex in the sum of $5,665,692.00, Atticus was required to pay $3.8 million to Clairmont Holdings & Finance by 20 November 2003, and such a payment was made on or around 20 November 2003. 33 On 24 November 2003, Mr Goodall was appointed as a director of Admerex, and he continued thereafter to be a director of Admerex. 34 On 19 December 2003, Barat Advisory opened bank account number [A] with the Commonwealth Bank of Australia ("the Barat Advisory CBA Account"). This bank account was opened at the direction of the Offender, in his capacity as the sole director and shareholder of Barat Advisory. Barat Advisory operated the Barat Advisory CBA Account during the period from 19 December 2003 until 19 November 2007. The Offender was the only person authorised to operate the Barat Advisory CBA Account. 35 Barat Advisory also operated bank account number [B] with St George Bank ("the Barat Advisory St George Account"). 36 On 30 April 2004, an allotment of 55,911,475 shares in Admerex was issued to Barat Advisory, at a value of four cents per share, to repay the debt of $2,236,459.00 owed by Admerex to Barat Advisory. As will be seen, the steps taken by the Offender concerning this parcel of shares constituted a central issue in the trial. 37 On 30 April 2004, an allotment of 141,642,300 shares in Admerex was issued to Atticus, at four cents per share, to repay the debt of $5,665,692.00 owed by Admerex to Atticus. 38 The issue of Admerex shares on 30 April 2004, in order to repay the debts owed by Admerex to Barat Advisory and Atticus, was the subject of an independent expert's report, which concluded that the issue of shares was fair and reasonable to other Admerex shareholders, and was approved at an annual general meeting of Admerex shareholders on 30 April 2004. 39 On 7 January 2005, the Offender resigned as a director of Admerex.

[55]

(e) 11,100,000 Admerex shares were held on behalf of the Vaillendourf Europe EFG Bank Account. 63 It was understood by Ms Harley that these parcels of the Admerex Shares were transferred on the basis of vendor finance loans from Barat Advisory to each of the Stichting Group companies. 64 While he was in Switzerland in June 2004, the Offender said to Mr Goodall that he had sold the 55 Million Admerex Shares to give himself a tax position in Australia, that capital gains tax would be payable on that disposal, but that he did not have a tax liability on any further increase in the value of the Admerex Shares. 65 On 16 November 2006, the Offender signed financial statements for Barat Advisory for the financial year ended 30 June 2004 ("the 2004 Barat Advisory Financial Statements") which were prepared on instructions from the Offender by the accounting firm Grant Thornton Services (NSW) Pty Limited ("Grant Thornton"). By signing the 2004 Barat Advisory Financial Statements, the Offender declared that they gave a true and fair view of Barat Advisory's financial position as at 30 June 2004. 66 On 16 November 2006, the Offender also signed financial statements for Barat Advisory for the financial year ended 30 June 2005 ("the 2005 Barat Advisory Financial Statements") which were similarly prepared on instructions from the Offender by Grant Thornton. By signing the 2005 Barat Advisory Financial Statements, the Offender declared that they gave a true and fair view of Barat Advisory's financial position as at 30 June 2005. 67 The statements of the Barat Advisory CBA Account do not show any payment to Barat Advisory by any of the Stichting Group companies in consideration for the transfer of the 55 Million Admerex Shares to the Stichting Group companies on or around 11 June 2004. 68 Likewise, the statements of the Barat Advisory St George Account do not show any payment to Barat Advisory by any of the Stichting Group companies in consideration for the transfer of the 55 Million Admerex Shares to the Stichting Group companies on or around 11 June 2004. 69 Neither the 2004 Barat Advisory Financial Statements nor the 2005 Barat Advisory Financial Statements record any debt owed to Barat Advisory by any of the Stichting Group companies for the transfer of the 55 Million Admerex Shares to the Stichting Group companies on or around 11 June 2004. 70 The guilty verdicts indicate that the jury was satisfied that the transfer of the 55 Million Admerex Shares to the Stichting Group companies, on or around 11 June 2004, involved the transfer of the legal title only. The beneficial ownership of the shares remained with Barat Advisory. This occurred in circumstances where the Offender was the controlling mind of Barat Advisory and of each of the Stichting Group companies, with Mr Meisterhans (a director of each of the five companies) acting as the Offender's agent for that purpose. It was the Offender's intention that the Stichting Group companies would hold the 55 Million Admerex Shares on trust for Barat Advisory. By its verdicts, the jury accepted the Crown submission that the Offender was effectively dealing with himself, on both sides of the table, as it were, to bring about this result.

[56]

Opening of SwissFirst Bank AG Account 6009 in The Name of Admerex (Ireland) Limited and Transfer of Five Million Temenos Shares to SwissFirst Bank AG 71 On 1 April 2004, Admerex (Ireland) Limited ("Admerex (Ireland)") was incorporated in Ireland. The Offender was appointed as one of the directors of Admerex (Ireland). 72 In or around November 2004, Admerex started to explore a capital raising transaction involving a Swiss bank known as SwissFirst Bank AG ("SwissFirst Bank"). 73 It was anticipated that, as part of this capital raising transaction, Admerex (Ireland) would provide to SwissFirst Bank five million shares in Temenos. The five million Temenos shares, to be provided by Admerex (Ireland) as security to SwissFirst Bank, were owned by Mr Goodall. 74 On or around 7 December 2004, Mr Goodall signed documentation to open a bank account with SwissFirst Bank in the name of Admerex (Ireland). This bank account was identified as SwissFirst Bank account number 6009 ("SwissFirst Bank Account 6009"). 75 On 8 December 2004, Mr Goodall gave instructions for five million Temenos shares, owned by him, to be transferred to SwissFirst Bank, as security for a loan by SwissFirst Bank to Admerex (Ireland) in accordance with the terms of the proposed capital raising transaction. 76 On 10 December 2004, Admerex entered into a letter of intent with SwissFirst Bank ("Letter of Intent"). The Letter of Intent set out the basis upon which Admerex and SwissFirst Bank would be interested in structuring a capital raising transaction. As part of this proposed transaction, SwissFirst Bank was to provide a bridge loan to Admerex (Ireland). The bridge loan would be secured by five million Temenos shares, owned by Mr Goodall, to be assigned and transferred to SwissFirst Bank by Admerex (Ireland). 77 On 14 December 2004, Mr Goodall sent an email to the directors of Admerex, including the Offender, expressing concern about the lodging of his five million Temenos shares with SwissFirst Bank. 78 On 15 December 2004, after discussions with the Offender and others, Mr Goodall agreed to proceed with the transfer of his five million Temenos shares to SwissFirst Bank. 79 On 17 December 2004, Ms Harley contacted SwissFirst Bank and acknowledged that the documentation to open SwissFirst Bank Account 6009, which nominated Mr Goodall and the Offender as signatories to the account, was inaccurate. Ms Harley instructed Mr Meisterhans to destroy this documentation and provided Mr Meisterhans with replacement documentation which nominated the Offender and Mr Meisterhans as the authorised signatories for SwissFirst Bank Account 6009. This replacement documentation was signed by the Offender. 80 On or around 24 December 2004, the five million Temenos shares owned by Mr Goodall were transferred to SwissFirst Bank as security for the bridge loan to Admerex (Ireland), in accordance with the Letter of Intent. The five million Temenos shares were placed in a SwissFirst Bank holding account identified as account number 7900 ("SwissFirst Bank Account 7900"). 81 The SwissFirst Bank transfer documentation records the cost price of the Temenos shares to be 9.4 Swiss Francs ("CHF") each, as at the time of the transfer into SwissFirst Bank Account 7900 on 24 December 2004. This was approximately equivalent to $10.71 per share. On this basis, the cost price of the five million Temenos shares at that time was approximately equivalent to $53,550,000.00. 82 On or around 27 December 2004, SwissFirst Bank Account 6009 was opened on the basis of the replacement documentation which nominated the Offender and Mr Meisterhans as the authorised signatories. 83 On or around 10 August 2005, the signatories to SwissFirst Bank Account 6009 were changed to Mr Goodall and Mr Carney. 84 On or around 14 September 2005, SwissFirst Bank Account 6009 was closed on instructions from Mr Goodall and Mr Carney, on behalf of Admerex (Ireland).

[57]

Opening of Challinor Equities SwissFirst Bank Account 6048 and Swap of 48 Million Admerex Shares for One Million Temenos Shares 85 On 30 January 2005, the Offender travelled to Switzerland on behalf of Admerex and Admerex (Ireland) to renegotiate with SwissFirst Bank the capital raising transaction described in the Letter of Intent. 86 Events which occurred in early February 2005 were of central importance to the offences. The liability to pay capital gains tax arose at this time. 87 On or around 2 February 2005, while he was in Switzerland, the Offender telephoned Mr Goodall from Zurich. The Offender told Mr Goodall that the capital raising deal was going to be changed and that the security provided by Admerex (Ireland) would only need to be three million Temenos shares, not five million Temenos shares as was previously required under the Letter of Intent. 88 During this telephone conversation, the Offender told Mr Goodall that Mr Goodall would get eight million Temenos shares back, and said he (the Offender) would take one million Temenos shares for 49 million Admerex shares. Mr Goodall replied "Okay, the deal needs to be renegotiated and we'll discuss it when we get back". This was the share swap, which the jury was satisfied constituted a contract for disposal of at least 48 Million Admerex shares, and thus a capital gains tax event. As will be seen, the Offender (with the aid of Mr Meisterhans) was soon acting in a manner consistent with there being such an arrangement, with transactions occurring concerning the one million Temenos shares, and funds being directed for the use of the Offender. 89 On 2 February 2005, Admerex (Ireland) and SwissFirst Bank agreed to terminate the Letter of Intent. The agreement to terminate the Letter of Intent was signed by the Offender, on behalf of Admerex (Ireland), and was authorised by Mr Goodall. 90 On 2 February 2005, Admerex (Ireland) sent a security delivery order which instructed SwissFirst Bank to transfer one million Temenos shares to a safe custody account with SwissFirst Bank in the name of Challinor Equities, in accordance with the termination of the Letter of Intent. The security delivery order also instructed SwissFirst Bank to transfer another one million Temenos shares to EFG Bank, also in accordance with the termination of the Letter of Intent. The security delivery order was signed by Mr Meisterhans. 91 On 2 February 2005, Challinor Equities wrote to SwissFirst Bank providing documentation to open an account in the name of Challinor Equities with SwissFirst Bank. The letter, which was also signed by Mr Meisterhans, indicated that, as had been discussed, the account was to be opened so that it could hold the one million Temenos shares which were to be transferred by SwissFirst Bank to Challinor Equities following the termination of the Letter of Intent. 92 On 2 February 2005, account number 6048 was opened with SwissFirst Bank in the name of Challinor Equities ("Challinor Equities SwissFirst Bank Account"). Mr Meisterhans was nominated as one of the authorised signatories to the Challinor Equities SwissFirst Bank Account, together with two other directors of Sinitus. The Offender was identified as the beneficial owner of the assets held in the Challinor Equities SwissFirst Bank Account, but was not nominated as a signatory to the account. 93 On 3 February 2005, SwissFirst Bank confirmed that, as instructed by Mr Meisterhans, it had transferred one million Temenos shares from SwissFirst Bank Account 7900 into the Challinor Equities SwissFirst Bank Account. 94 On 3 February 2005, SwissFirst Bank confirmed that, as instructed by Mr Meisterhans, it had transferred one million Temenos shares from SwissFirst Bank Account 7900 to EFG Bank. 95 The effect of the transactions described above was that, as a result of the termination of the Letter of Intent, SwissFirst Bank released two million of the five million Temenos shares owned by Mr Goodall, which had previously been required to secure the bridge loan to Admerex (Ireland) under the Letter of Intent. Of the two million Temenos shares which were released, one million Temenos shares were transferred to the Challinor Equities SwissFirst Bank Account. The remaining one million Temenos shares were transferred to EFG Bank to be held on behalf of Mr Goodall. 96 The SwissFirst Bank transfer documentation indicated that the cost price of the Temenos shares was CHF9.4 per share, as at the time they were placed into the Challinor Equities SwissFirst Bank Account. On this basis, the cost price of the one million Temenos shares was equivalent to approximately $10,141,331.00 as at 3 February 2005. 97 The account opening documentation for the Challinor Equities SwissFirst Bank Account stated that the starting inventory for the account was one million Temenos shares valued at CHF8.8 million. On this basis, the value of the one million Temenos shares was equivalent to $9,494,012.30 as at 3 February 2005. 98 On 3 February 2005, Temenos shares traded on the Swiss stock exchange at a value of between CHF7.85 and CHF8.09 per share. On this basis, one million Temenos shares were valued on the Swiss stock exchange at the equivalent of between approximately $8,469,090.00 and $8,728,018.00 as at 3 February 2005. 99 In exchange for the transfer on 3 February 2005 of the one million Temenos shares into the Challinor Equities SwissFirst Bank Account, the Offender arranged for 48 Million Admerex shares to be held, on behalf of Mr Goodall, in accounts in the names of Stichting Group companies, as follows:

[62]

Transfer of Shares and Funds from the Challinor Equities SwissFirst Bank Account 102 As explained in detail above, on 3 February 2005, one million Temenos shares were transferred into the Challinor Equities SwissFirst Bank Account. 103 Between 3 February 2005 and 14 June 2005, all of these one million Temenos shares were sold and the proceeds were deposited to the Challinor Equities SwissFirst Bank Account. The only funds deposited to that account were from the sale of the Temenos shares, interest received, or the proceeds of sale of shares purchased with the proceeds of sale of Temenos shares. 104 A table of the sale and purchase of shares in the Challinor Equities SwissFirst Bank Account was attached to Trial Exhibit B (as Appendix 1). The average sale price of the Temenos shares was CHF7.78 per share. This was approximately equivalent to $8.28 per share. 105 The funds from the sale of the Temenos shares were soon being deployed by the Offender, with the aid of Mr Meisterhans, to make purchases or payments to serve his own interests. 106 On 7 February 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer 160,000 Euros ("EUR") from the Challinor Equities SwissFirst Bank Account to a bank account in the name of "Art et Antiquites" in Paris. The payment instruction explained that the transfer was to cover a purchase of a painting by the Offender. The transfer was made on that day, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF249,865.06. This was approximately equivalent to $266,352.27. 107 On 16 February 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer US$72,000.00 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of "Exclusive Resorts LLC - Member Deposits". The payment instruction explained that the transfer was to cover membership of the Offender. The transfer was made on 17 February 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF86,785.40. This was approximately equivalent to $93,147.36. 108 On 3 March 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer $1,000,000.00 from the Challinor Equities SwissFirst Bank Account to the Barat Advisory CBA Account. The payment instruction stated that this transfer was "on account of Clairmont". The transfer was made on 7 March 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF924,525.17. As a result of the transfer, $999,967.48 (being $1,000,000.00 less bank transfer fees) was deposited into the Barat Advisory CBA Account on 7 March 2005. 109 On 29 March 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer $2,500,000.00 from the Challinor Equities SwissFirst Bank Account to the Barat Advisory CBA Account. The payment instruction stated that this transfer was "on account of Clairmont". The transfer was made on that day, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF2,321,775.05. As a result of the transfer, $2,499,967.63 (being $2,500,000.00 less bank transfer fees) was deposited into the Barat Advisory CBA Account on 30 March 2005. 110 In relation to this transfer of $2,500,000.00 to the Barat Advisory CBA Account on 29 March 2005, an employee of SwissFirst Bank sent an email to Mr Meisterhans asking for the background to the transfer. In an email dated 29 March 2005, Mr Meisterhans replied: "As with the last transfer, this is concerning a return of capital in form of a credit to the company of Michael, i.e. Barat. He buys with it real estate property in Sydney." 111 On 22 April 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer US$313,000.00 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of "Exclusive Resorts LLC - Member Deposits". The payment instruction explained that the transfer was to cover the remaining payment for the membership of the Offender. The transfer was made on that day, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF369,834.47. This was approximately equivalent to $401,993.99. 112 On 24 May 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR7,367.23 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of Citco Amsterdam. The payment instruction explained that the transfer was to cover servicing fees. The transfer was made on 26 May 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF11,555.02. This was approximately equivalent to $12,329.30. 113 On 4 July 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer the entire CHF balance from the Challinor Equities SwissFirst Bank Account to an account with UBS AG in Zurich ("UBS Bank"), being account number [C] in the name of Challinor Equities ("Challinor Equities UBS Bank Account"). The transfer was made on 5 July 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF3,270,004.00. This was approximately equivalent to $3,348,355.52. 114 On 26 August 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR29,300.00 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of "Galerie Ariane Dandois SA" in Paris. The transfer was made on that day, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF45,879.82. This was approximately equivalent to $48,401.54. 115 On 7 September 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR13,066.24 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of "Citco Amsterdam". The payment instruction explained that the transfer was to cover servicing fees. The transfer was made on 9 September 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF20,447.85. This was approximately equivalent to $21,380.02. 116 On 2 January 2006, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer the entire CHF balance (except CHF100,000.00) from the Challinor Equities SwissFirst Bank Account to the Challinor Equities UBS Bank Account. The transfer was made on 3 January 2006, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF400,004.00. This was approximately equivalent to $414,254.35. 117 On 16 January 2006, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR6,068.39 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of Citco Amsterdam. The payment instruction explained that the transfer was to cover servicing fees. The transfer was made on 18 January 2006, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF9,533.94. This was approximately equivalent to $9,945.69. 118 On 19 December 2006, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR7,861.55 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of Citco Amsterdam. The payment instruction explained that the transfer was to cover servicing fees. The transfer was made on 21 December 2006, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF12,812.79. This was approximately equivalent to $13,403.90. 119 As a result of the transfers of funds from the Challinor Equities SwissFirst Bank Account, the balance on that account as at 31 December 2007 was CHF78,736.09. This was approximately equivalent to $81,490.47. 120 The total value of the Temenos shares sold from the Challinor Equities SwissFirst Bank Account was CHF7,935,362.30. This was approximately equivalent to $8,441,970.12. 121 The total amount of funds transferred from the Challinor Equities SwissFirst Bank Account was CHF7,723,022.57. This was approximately equivalent to $8,129,563.94.

[99]

(c) a payment on 30 March 2005 of $2,499,967.63 was a loan from Challinor Equities, which was associated with the Rothschild Bank family in Zurich. 138 The next record of a meeting between the Offender and Grant Thornton is a file note taken by Mr Shew dated 25 September 2006. At that meeting, Mr Shew again asked for information from the Offender in relation to the financial affairs of Barat Advisory and any share transactions that had been undertaken by Barat Advisory. 139 On or around late September or early October 2006, Colin Samuel, a manager at Grant Thornton, took over from Mr Thurn the task of preparing tax returns for Barat Advisory and the Offender. For that purpose, Mr Samuel continued to seek information from the Offender and from the Offender's bookkeeper. 140 On 5 October 2006, Mr Samuel sent an email to the Offender and his bookkeeper which attached incomplete draft profit and loss statements and ledgers for Barat Advisory. The email included a request by Mr Samuel for a list of share transactions by Barat Advisory for the period from 1 July 2003 to 30 June 2006. 141 Later that day, the Offender sent an email to Mr Samuel which attached information in relation to share transactions by Barat Advisory for the period from 10 October 2005 until 16 August 2006. This information made no reference to the Admerex Shares. 142 On 6 October 2006, Mr Samuel sent an email to the Offender and his bookkeeper seeking details of share transactions by Barat Advisory for the financial year ended 30 June 2005. 143 On 19 October 2006, Mr Samuel sent an email to the Offender which noted that, as discussed, Grant Thornton continued to have queries for the financial year ended 30 June 2005. This email repeated Mr Samuel's request for details of share transactions by Barat Advisory during the financial year ended 30 June 2005, and included the following statement: "We note on 7 March 2005 there was a deposit of $1,000,000 which you previously said related to Clairmont." 144 Later that day, the Offender sent an email to Mr Samuel asking for a meeting to discuss the queries raised in Mr Samuel's email of 19 October 2006. This meeting was later scheduled to take place on 31 October 2006. 145 On 25 October 2006, Mr Samuel received an email from Bell Potter Securities, which attached a printout of share transactions by Barat Advisory for the period from 1 January 2004 to 25 October 2006. That printout made no reference to the Admerex Shares. The 55 Million Admerex Shares had been transferred by means of an off-market transaction. 146 On 27 October 2006, Mr Shew sent an email to the Offender, which attached notes provided by Mr Samuel, in preparation for the meeting which was to occur on 31 October 2006. The email advised that more information was required to support tax returns by the Offender and Barat Advisory, and suggested that the Offender should build a timeline of events and transactions. The email included the following queries:

[114]

Summary of Findings of Fact Concerning the First and Second Counts 162 It is appropriate now to draw together, from this detailed narrative, specific findings to be made concerning the two counts in the indictment, consistent with the verdicts of the jury. Written directions were given to the jury concerning tax law, the elements of the two offences and the matters which the Crown had to prove beyond reasonable doubt before the jury could convict the Offender (Trial MFIs 27 and 40). What follows will take into account those matters explained to the jury orally and in writing, which shed light upon the necessary findings of the jury culminating in a verdict of guilty on each count. 163 Competing submissions were made at the sentencing hearing concerning the creation of the Stichting Group structure in 2004. It was submitted for the Offender, both before the jury at trial and before me on sentence, that the setting up of the Stichting Group structure by Ms Harley was not part of a plan by the Offender to evade the payment of capital gains tax on the sale of the 55 Million Admerex Shares. It was submitted for the Offender at trial and on sentence that what was driving Ms Harley's work prior to 11 June 2004 was the Offender's desire to have something in place before a meeting in early June 2004, all of this being in the context of possible takeover interest by Admerex in Temenos. Both at the trial and on sentence, the Crown submitted that the establishment of the Stichting Group structure was primarily tax driven, and was not for the purposes of takeover or merger with Temenos. The Crown submitted at trial and on sentence that the genesis of the Offender's desire to make favourable tax arrangements lay with the so-called windfall in 2003 where, for $1.00, he and his company, Barat Advisory, obtained a multi-million dollar benefit. 164 I pause at this stage to record a number of specific findings. I am satisfied beyond reasonable doubt of the following factual matters:

[122]

First Count 165 The verdict of the jury in relation to the first count means that the jury accepted that the Offender exchanged, in February 2005, the 48 Million Admerex shares for one million shares in Temenos, with the intention of facilitating the evasion of capital gains tax payable on the disposal of the 48 Million Admerex shares. 166 Likewise, it follows from the verdict that the jury accepted the prosecution case that the Offender sought to maximise the financial benefits to be derived from the allocation of the 55 Million Admerex Shares to Barat Advisory as the result of the debt for equity swap in satisfaction of the debt acquired from GTL, by establishing arrangements in which capital gains tax would not be paid on the proceeds of the subsequent disposal of the Admerex shares. 167 It is important to keep in mind that the offence contained in the first count was alleged to have been committed between about 30 April 2004 and about 30 September 2005, an extended period of time. Following the erection of the Stichting Group structure in June 2004, a capital gains tax event occurred on or about 3 February 2005 arising from the share swap. The factual matters which constitute the money laundering offence include a series of steps taken by the Offender, one after the other, over a period of months, involving intentional criminal wrongdoing on the part of the Offender, and an intention on his part that the shares would be used to facilitate the commission of an offence by Barat Advisory. 168 Although it was Ms Harley's proposal that the Stichting Group structure be used, in her view in a proper way, it was not the intention of the Offender to use the Stichting Group structure in that way. His misuse of the Stichting Group structure was part of the factual matrix leading to the verdict of guilty on the first count. 169 The jury accepted that Barat Advisory did not dispose of the beneficial ownership of the 55 Million Admerex shares on 11 June 2004 when the shares were transferred to the five Stichting Group companies. The jury also accepted that the 48 Million Admerex shares were disposed of, in the course of the exchange of one million Temenos shares on or about 3 February 2005. 170 It is consistent with the verdict that the jury found that the transfer of only the legal title to the 55 Million Admerex Shares to the five overseas companies was for the purpose of establishing a position which would enable the subsequent disposal by Barat Advisory of the beneficial ownership of the shares, in circumstances in which it would be easier to avoid paying capital gains tax. 171 It is consistent with the verdict that the Offender took the opportunity, when it presented itself on 3 February 2005, to exchange 48 Million Admerex shares for one million Temenos shares, in circumstances where he believed that the Stichting Group structure would conceal Barat Advisory's beneficial ownership of the 48 Million Admerex shares, and facilitate the non-disclosure of that capital gain in order to avoid the payment of tax. 172 The Offender's actions involved a systematic and deliberate course of conduct, intended to obtain a capital gains tax advantage for Barat Advisory. 173 The Offender is guilty of the offence in the first count without regard being had to his deliberate deception of the Grant Thornton accountants, and his ultimate dishonest act in causing to be lodged, in November 2006, an intentionally false tax return for Barat Advisory. That said, the fact that the Offender acted in a deliberate and dishonest way in his dealings with the Grant Thornton accountants and by causing to be lodged a knowingly false tax return, sheds light upon the Offender's motivation in the period between April 2004 and September 2005, when the money laundering offence was committed. 174 Ultimately, the Offender's reliance (in submissions) upon Ms Harley's belief concerning the transfer of legal and beneficial ownership and her understanding concerning capital gains tax consequences, provides no real assistance to him. This is because the evidence revealed, and the jury accepted, that what the Offender actually did with respect to the 55 Million Admerex Shares, the five stichtings and the Stichting Group companies did not, in truth and reality, involve putting into effect the elements of the scheme devised by Ms Harley. 175 The evidence reveals that, soon after the share swap on or about 3 February 2005, steps were taken by the Offender and Mr Meisterhans to sell parcels of the one million Temenos shares, with the proceeds returning ultimately to Australia to be used to the benefit of the Offender in the acquisition of real property and other items including a yacht, a motor vehicle and works of art. 176 In my view, the verdicts indicate acceptance by the jury of the Crown case theory that, at all relevant times, the Offender exercised control over the 55 Million Admerex Shares, 48 Million of which came to be swapped on or around 3 February 2005 for one million Temenos shares, the proceeds of the sale of which were then directed to the benefit of the Offender.

[125]

Submissions Concerning Overlapping Criminality and Double Punishment 184 The Crown accepted that there was overlap between the Offender's criminality in relation to the two counts so that this is a case in which, after first determining the appropriate penalty for each offence, the Court must consider questions of cumulation, concurrence, and totality. The Crown accepted that, to the extent that both counts had common elements, the Offender should not be punished twice for those common elements. However, the Crown submitted that the sentences should properly reflect any additional criminality which arises from any particular count. The assessment of common elements, and any additional criminality arising from any particular count, should be assessed as a matter of common sense, not as a matter of semantics: Pearce v The Queen [1998] HCA 57; 194 CLR 610 at [40]-[50]. The Crown submitted that if one count adds "something more", or provides further "remnants of criminality", this should be reflected on sentence: Greaves v R at [24(g)]; R v Langdon [2004] VSCA 205; 11 VR 18 at 39 [117]. 185 The Crown submitted that the money laundering charge is directed to separate, earlier, conduct in which the Offender arranged for, and misused, an elaborate and sophisticated offshore structure in order to facilitate, at some future time, the evasion of capital gains tax arising from the disposal of the 48 Million Admerex shares in exchange for one million Temenos shares on or around 3 February 2005. The s.135.1(1) charge is directed to the subsequent conduct of the Offender when, on 13 November 2006, the tax return for Barat Advisory was lodged without disclosing the capital gain on that disposal of shares. 186 Accordingly, the Crown submitted that the money laundering offence involved significant additional criminality, over and above the criminality involved in the Offender's subsequent lodgement of the false tax return, and that such additional criminality should be reflected in the sentences to be imposed on the Offender. 187 Senior counsel for the Offender submitted that there are no remnants of criminality in the money laundering offence which add to the culpability of the Offender's conduct involved in the second count. It was submitted that the offences are not freestanding, insofar as there is an intimate link between the two counts, in that the money laundering offence was the means by which the dishonest obtaining offence was facilitated. It was submitted that the money laundering offence added nothing to the dishonest obtaining offence, so that there should be no separate sentence imposed for the money laundering offence, or that such a sentence should be entirely concurrent with the sentence imposed for the second count. 188 In the event that the Court was to reject the submission that there was no element of additional criminality involved in the money laundering count, it was submitted for the Offender that any additional criminality was minimal. It was submitted that a consecutive sentence should not be imposed on the money laundering count. 189 It was submitted for the Offender that if the Court found that any additional criminality in the money laundering offence was more than minimal, then the maximum penalty of imprisonment for five years for the dishonest obtaining offence was relevant, because the seriousness of the substantive offence in the second count ought reflect on the seriousness of the money laundering offence in the first count. Whilst the maximum sentence for the second count does not, in principle, operate as a limit on the total sentence which may be imposed, the Offender submitted that, in the circumstances of this case, any additional criminality which the Court may find within the money laundering offence, did not warrant adding to the primary offence, so as to bring the aggregate total for both offences above the maximum sentence for the second count. 190 Having regard to the fact that the conduct involved in the money laundering count was co-extensive with and subsidiary to (in that it was intended to facilitate) the substantive offence in the second count, it was submitted for the Offender that this is not a case warranting a separate sentence on the money laundering count, which itself exceeds the maximum penalty of five years' imprisonment available on the second count. 191 Senior counsel for the Offender disputed the Crown submission that the Offender had arranged for, and misused, an elaborate and sophisticated offshore structure in order to facilitate the evasion of capital gains tax. It was submitted that the Stichting Group structure was not elaborate and sophisticated, and it was emphasised that it was Ms Harley's idea to create such a structure.

[126]

Conclusion Concerning Overlapping Criminality and Double Punishment 192 The task of the Court is to ensure that there is no double punishment of the Offender, with this outcome to be achieved by assessment of the criminality reflected in each offence, and the fixing of a sentence for each offence, and then by application of the principles of cumulation, concurrency and totality: R (Cth) v Milne (No. 1) at [119]. The Court should adopt a common sense approach to the assessment of criminality with respect to each offence, without the use of excessive subtleties and refinements, in determining whether the same acts are common to the two offences and whether there are remnants of criminality in one of the offences, which are not present in the other. The focus must be upon the elements of the two offences (and their differences) as well as the factual matters relied upon in evidence which bears upon proof of those elements: R (Cth) v Milne (No. 1) at [137]. 193 In the course of refusing the permanent stay application in R (Cth) v Milne (No. 1), I said at [170]: "I accept the submissions of the Crown that there are significant additional features with respect to the areas of alleged criminality lying within the first and second counts. With respect to the money laundering charge, the alleged conduct of the Accused with respect to the Stichting Group is an elaborate additional feature. With respect to the dishonest obtaining charge, I accept the Crown submission that there was effectively a second phase of conduct, commencing with alleged communications between the Accused and his accountants which culminated in the lodging of the allegedly false return." 194 The conclusion expressed in that paragraph of my pretrial judgment was based upon the material and submissions placed before the Court on that application. Having seen and heard the evidence unfold at the trial, I am fortified in the conclusion which I reached at the pretrial stage. 195 There is a clear overlap between the two offences. However, the offence contained in the first count, in my view, involved significant additional criminality to be assessed, for sentencing purposes, apart from the criminality involved in the second count. The conduct of the Offender in erecting the Stichting Group structure, with the assistance of Ms Harley, was always intended by the Offender to have favourable tax consequences for him and Barat Advisory. However, the conduct of the Offender went beyond the implementation of the model advised by Ms Harley. The Offender utilised and misused Ms Harley's model, in a way which involved Mr Meisterhans acting as the agent of the Offender and at his direction in a number of respects, all of which was intended to ensure that the Offender maintained practical control over the 55 Million Admerex Shares in and after June 2004. The Offender intended to take advantage of the Stichting Group structure, when an opportunity presented itself, by using the 55 Million Admerex Shares over which he maintained control, to benefit himself and Barat Advisory and to evade the capital gains consequences which he expected to apply. 196 It is correct to say that capital gains tax was payable because of the CGT Event on or around 3 February 2005 when the share swap occurred, so that this event was linked to the false statement made in the Barat Advisory tax return lodged in November 2006. However, this does not mean that these aspects ought all be included under the umbrella of criminality surrounding the second count. I am satisfied beyond reasonable doubt that the Offender did erect an elaborate and sophisticated offshore structure as submitted by the Crown. This process involved an elaborate rerouting of shares, and ultimately funds, to assist the intentional wrongdoing of the Offender contained in the first count. 197 In my view, it would be wrong to approach the sentencing of the Offender upon the basis that all the circumstances which bear upon his criminal conduct in the period from April 2004 to November 2006 should all be placed under the umbrella of criminality surrounding the second count. There is, in my view, a substantial element of additional criminality revealed with respect to the first count, so that a significant sentence ought be imposed for that crime. 198 Of course, it will be necessary for the Court to have regard to principles of concurrency, cumulation and totality in the imposition of sentence. However, I am satisfied that the sentences which I will pass do not give rise to any injustice to the Offender because of double punishment for separate offences. Rather, the sentences to be imposed will reflect the criminality for each offence, with the final total sentence reflecting the total criminality revealed in the offences for which the Offender was found guilty by the jury.

[129]

Factors Under s.16A Crimes Act 1914 (Cth) 205 Section 16A(1) Crimes Act 1914 (Cth) requires the Court to impose a sentence that is of a severity appropriate in all the circumstances of the offence. 206 Section 16A(2) requires the Court, in addition to any other matters, to take into account certain specified matters as are relevant and known to the Court. 207 Section 16A(2)(a) requires the Court to take into account the nature and circumstances of the offences. 208 The nature and circumstances of the offences are reflected in the findings of fact which I have made above. These findings reflect the seriousness of each offence. I am satisfied that the second count constitutes a very serious example of a dishonest obtaining offence. I am also satisfied that the first count represents a serious example of a money laundering offence, involving the establishment and misuse of a sophisticated offshore structure for the specific purpose of avoiding the payment by Barat Advisory of a substantial amount of tax. 209 Section 16A(2)(c) requires the Court to consider whether the offences form part of a course of conduct consisting of a series of criminal acts of a same or similar character and, if so, to take into account that course of conduct. I am satisfied that these offences were committed in the context of a course of conduct between 2004 and 2006 which I have outlined earlier. 210 Section 16A(2)(e) requires the Court to take into account any injury, loss or damage resulting from the offence. There was a substantial loss to the revenue as a result of the offences, with the Commonwealth being deprived of capital gains tax in a sum of at least $1,964,727.00. 211 Section 16A(2)(f) requires the Court to take into account the extent to which the Offender has shown contrition for the offences. The Offender has shown no contrition for the offences. 212 Section 16A(2)(fa) requires the Court to take into account the extent to which the Offender has failed to comply with any orders or obligations about pretrial disclosure, or ongoing disclosure, in proceedings relating to the offence. I accept that the Offender fully complied with pretrial disclosure requirements. 213 Section 16A(2)(h) requires the Court to take into account the degree to which the Offender has co-operated with law enforcement agencies in the investigation of the offences or of other offences. Senior counsel for the Offender accepted that, apart from the manner in which he conducted himself when a search warrant was executed at his home, he has not co-operated with law enforcement agencies in the investigation of the offences or of other offences. 214 Section 16A(2)(j) requires the Court to take into account the deterrent effect that any sentence under consideration may have on the Offender. I am satisfied that the sentences to be imposed will have an appropriate effect, by way of specific deterrence, on the Offender. 215 Section 16A(2)(k) requires the Court to take into account the need to ensure that the person is adequately punished for the offences. I am satisfied that the sentences to be imposed will have this effect. 216 Section 16A(2)(m) requires the Court to take into account the character, antecedents, age, means and physical or mental condition of the Offender. I accept that the Offender has been a person of good character and has no criminal convictions. He is 55 years of age. A number of assets of the Offender are subject to a forfeiture application under the Proceeds of Crime Act 2002 (Cth). There are no physical or mental conditions of the Offender to be taken into account. 217 The Crown submitted that less weight should be afforded on sentence to the Offender's prior good character. The Crown pointed to the line of authority which says that less weight will be given to prior good character if, but for that good character, the Offender would not have been in a position to commit the offence. Although accepting that this principle did not apply strictly to this case, the Crown submitted, by analogy, that the Offender would not have been able to act in the way he did if he had not been a person of good character. 218 It was submitted for the Offender that he was entitled to call in aid on sentence his prior good character in accordance with the principles in Ryan v The Queen [2001] HCA 21; 206 CLR 267 at 275, and that the line of authority referred to by the Crown had no application because the Offender did not use his good character to place himself into a position to sell the shares and to not declare the capital gain. 219 The offences for which the Offender is to be sentenced are not offences involving, for example, misuse of his office as a director under the Corporations Law. The Offender has been convicted of offences of money laundering and dishonest obtaining under the general criminal law. That said, the offences were inextricably involved with his position as the sole director (and the controlling mind) of Barat Advisory. There was evidence before the jury that Ms Harley assured several European entities that the Offender was a successful businessman, and a man of good character, as part of the processes which saw the erection of the Stichting Group structure and banking arrangements at the European end. In this way, it might be said that the Offender's good character assisted him in the commission of the offences. 220 Generally speaking, good character is of lesser significance on sentence for white-collar crimes, since it is that factor which normally places the offender in a position whereby he is able to commit the offence: R v Rivkin [2004] NSWCCA 7 at [410]; R v Adler [2005] NSWSC 274 at [51]; R v Williams [2005] NSWSC 315; 152 A Crim R 548 at 579 [60]-[61]. 221 There is a basis upon which the Offender's good character may be given less weight in this case, because it assisted him to be in a position to commit, in particular, the money laundering offence. I will give weight to his good character on sentence. It is necessary, as well, to recognise the need for a very significant element of general deterrence in the imposition of sentence. As Wood CJ at CL said in R v Williams at 579 [61], the need for general deterrence may displace, to some degree, the benefit which might otherwise attach to prior good character. With these considerations in mind, I will have regard to the Offender's prior good character for the purpose of sentence. 222 Section 16A(2)(n) requires the Court to have regard to the Offender's prospects of rehabilitation. I am satisfied that the Offender's prospects of rehabilitation are good. 223 Section 16A(2)(p) requires the Court to take into account the probable effect that any sentence under consideration would have on any of the Offender's family or dependants. It is the regrettable and almost invariable consequence of the imprisonment of a father that adverse consequences will result to his family from that imprisonment. At common law, the hardship experienced by family members as a result of imprisonment of an offender must be exceptional before it can be given substantial weight. The requirement for exceptional hardship has been held to apply to s.16A(2)(p): R v Nguyen [2006] NSWCCA 369; 166 A Crim R 124 at 128-130 [21]-[29]. 224 The testimonials before the Court demonstrates that the probable effect that any sentences will have on the Offender's family and dependants will be substantial. I propose to take these matters into account on sentence.

[130]

Other Sentencing Factors 225 The Crown contends that general deterrence is especially important in this case: R v Huang [2007] NSWCCA 259; 174 A Crim R 370 at 381 [36]; R v Guo and Anor [2010] NSWCCA 170 at [91]. For the Offender, it was not disputed that appropriate weight must be given to the principle of general deterrence. 226 I accept the Crown submission that particular weight must be given to general deterrence in this case. With the advantages of his considerable resources and his experience and expertise in business and finance, the Offender established and misused a sophisticated offshore structure for the specific purpose of avoiding the payment by Barat Advisory of a substantial amount of tax. The conviction of the Offender, and the imposition of appropriate sentences, should operate to strongly deter other persons who may also have the capacity to engage in similar conduct, from committing such offences. 227 The Courts have a significant responsibility to protect the integrity of the revenue system by imposing punishments for deliberate dishonesty which are likely to deter others who may otherwise be tempted to indulge in the type of conduct committed by the Offender: Director of Public Prosecutions (Cth) v Rowson [2007] VSCA 176 at [24]. 228 Further, I accept that the imposition of appropriate sentences will assist in sending the message to the community that the relevant Commonwealth authorities will seek to enforce taxation obligations, in relation to all taxpayers, including those of substantial means and resources. 229 I accept the submission for the Offender that the convictions will make it more difficult for him to operate commercially, to obtain employment and to visit overseas for the purpose of employment and I take this into account on sentence. 230 It was submitted for the Offender that he had facilitated the course of justice by making admissions for the purposes of the trial, and by agreeing to the tender of Crown exhibits and not disputing the evidence of Mr Mark. It was submitted that this resulted in the Crown not being required to call a number of witnesses and served to reduce the duration of the trial by about three weeks. It was submitted that this conduct of the Offender should be taken into account to considerably reduce the sentences which would otherwise be appropriate. 231 The Crown submitted that all that the Offender had done was what an accused person is expected to do in the context of a criminal trial. The Crown submitted further that the approach of the Offender at trial had operated in his favour as well, by reducing the length of the trial, and thus his own legal expenses. 232 I am satisfied that the Offender took steps to facilitate the course of justice in a number of respects concerning the trial. It is true that the Offender pressed a number of pretrial applications which were the subject of my judgment on 19 August 2010 in R (Cth) v Milne (No. 1). It is also true that, in one significant respect, the Offender achieved a measure of success in his objection to the tender of Mr Mark's report dated 3 June 2010. 233 Given the date when the indictment was filed, the pretrial case management provisions now contained in ss.134-149F Criminal Procedure Act 1986 did not apply to this trial: R (Cth) v Milne (No. 1) at [3]-[4]. Following the delivery of my judgment on 19 August 2010, the legal representatives for the Crown and the Offender engaged in substantial discussions which reduced, in a number of significant respects, the issues to be determined at the trial. Agreement was reached concerning the relevant tax law directions and the number of witnesses were reduced. Substantial volumes of documents were tendered by the Crown, in an orderly fashion, without objection by the Offender at trial. Further, as mentioned earlier, a flowchart summarising many events, prepared by Mr Mark, was tendered without objection (Trial Exhibit A). Mr Mark gave evidence concerning many documents and the movement of shares and monies, without challenge and without cross-examination. 234 A convicted person is not to be penalised for having insisted on his right to trial: Siganto v The Queen [1998] HCA 74; 194 CLR 656 at 663 [22]. The question is whether the Offender is entitled to credit on sentence for the way in which he, and his legal representatives, prepared for and conducted the trial. 235 I accept that the Offender's approach to this trial, and a number of practical steps taken by him to narrow the issues for trial, should be taken into account in his favour on sentence, because these measures have facilitated the course of justice in the trial. There is some analogy between the utilitarian benefit arising from a plea of guilty which means that a trial is avoided and the community is spared the need for a trial. 236 The Offender's approach to this trial should see some benefit to him on sentence, upon the pragmatic and objective ground that his approach to the trial has demonstrated a willingness to facilitate the course of justice, and to reduce the cost and the demands upon the community by significantly shortening the trial itself. The principles in Cameron v The Queen [2002] HCA 6, 209 CLR 339 at 343-344 may be called in aid by the Offender, in the analogous circumstances which I have identified. 237 I do not see that the fact that the Offender also achieved some benefit, through the saving of legal expenses, should operate to deprive him of credit for the utilitarian benefits arising from his approach. 238 The recital of factual and legal issues earlier in these remarks reveals the complexities of the matter, and the potential for an unco-operative accused person to extend and complicate the trial. Instead, the Offender took a positive and practical approach to the trial, in the manner which I have outlined. In my view, this served the interests of justice and permitted the jury to come to terms with the real issues in dispute in the trial without significant delay. 239 I propose to give the Offender appropriate credit for his approach to the trial. Some Additional Factors Bearing on Sentence 240 In a decision handed down on 8 December 2010, the High Court of Australia laid down a number of principles applicable to the sentencing of Commonwealth offenders, in the context of tax fraud offences: Hili v The Queen; Jones v The Queen [2010] HCA 45. 241 In particular, the Court determined (at [13], [36]-[38]) that there was no judicially determined norm for a period of mandatory imprisonment under Commonwealth legislation in the order of 60%-66% (or otherwise) of the prescribed maximum penalty. Part 1B Crimes Act 1914 (Cth) is the fundamental starting point, and that Part makes exhaustive provision for setting non-parole periods and recognisance release orders (at [29]). In sentencing a Commonwealth offender, it is wrong to begin with an assumed percentage, and then seek to identify special circumstances justifying a departure from it in calculating a minimum term (at [44]). 242 The Court observed (at [40]) that s.16A(1) Crimes Act 1914 (Cth) provides that a court must impose a sentence or make an order that of a severity appropriate in all the circumstances of the case, and what is the "severity appropriate" is to be determined having regard to the principles identified in Power v The Queen [1974] HCA 26; 131 CLR 623; Deakin v The Queen [1984] HCA 31; 58 ALJR 367 and Bugmy v The Queen [1990] HCA 18; 169 CLR 525. A critical consideration is to determine the period of imprisonment that justice requires an offender must serve in custody (at [41]). In the cases before the High Court, the deterrent and punitive effects of sentences for serious tax fraud were to be reflected, both in the head sentence and also in fixing a non-parole period (at [41]). 243 The plurality in the High Court observed that the inadequacy of the sentences imposed at first instance in that case was evident from consideration of all the matters that were relevant to fixing a sentence (including the minimum term) of a severity appropriate in all the circumstances of the offence, and that the chief considerations which there pointed to inadequacy were the nature of the offending, and the sentences that had been imposed in cases most closely comparable with those cases (at [62]). The plurality referred to a number of features of the tax fraud offences before the Court (at [63]): "The applicants' offending was sustained over a long time. It was planned, deliberate and deceitful, requiring for its implementation the telling of many lies. The applicants acted out of personal greed. The amount of tax evaded was not small. Detection of offending of this kind is not easy. Serious tax fraud, which this was, is offending that affects the whole community. As was pointed out in Ruha [[2010] QCA 10 at [45]] , the sentences imposed had to have both a deterrent and a punitive effect, and those effects had to be reflected in the head sentences and the recognizance release orders that were made." 244 The Crown and the Offender before me made written submissions by reference to the matters referred to by the High Court in the preceding paragraph. The Crown submitted that these considerations apply equally to the present case, in a manner adverse to the Offender. It was submitted for the Offender that a number of the matters referred to by the High Court did not apply to the Offender. 245 I bear in mind that it is the provisions contained in Part 1B Crimes Act 1914 (Cth), including s.16A(1) and (2), together with other relevant sentencing principles, to which the Court must give attention in determining appropriate sentences to be passed for the Offender's crimes. However, the factors identified by the High Court judgment (in the passage cited at [243] above) constitute a helpful distillation of matters arising for consideration in the context of sentence for tax fraud offences. It is useful to express conclusions by reference to them. 246 Was the offending here "sustained over a long time"? For reasons explained earlier, I am satisfied that the Offender's course of criminal conduct extended over a significant period of time between 2004 and 2006. Contrary to the Defence submission, this is not a case where no offence was committed until the Offender caused the Barat Advisory income tax return to be lodged in November 2006. That act was the culmination of the course of criminal conduct which had extended over a lengthy period of time before then. 247 The Offender's course of criminal conduct may be characterised appropriately as being planned, deliberate and deceitful, requiring for its implementation a sustained period of deception by the Offender of the Grant Thornton accountants, culminating in the operative lie to the ATO contained in the Barat Advisory tax return filed in November 2006. 248 I am satisfied that the Offender was acting out of personal greed in the commission of the offences. There is no evidence of hardship affecting his conduct, and the proceeds flowing to him in 2005 and 2006 (including the sum of at least $1.9 million which was payable substantially as tax) were utilised essentially for the purchase of luxury items and real estate. 249 The amount of capital gains tax evaded was very substantial, exceeding $1.9 million. 250 It is accurate to state that detection of offending of the kind committed by the Offender is not easy. This bears upon the need for general deterrence. 251 Likewise, it is apt to state, in the circumstances of this case, that serious tax fraud of this type affects the whole community in a detrimental way. 252 The sentences to be imposed upon the Offender must have both a deterrent and a punitive effect, and those effects must be reflected in the head sentences and the minimum term to be fixed. 253 I am not satisfied that there is any other sentencing case which is closely comparable to that of the Offender. In reaching this view, I have had regard to the submissions of the Crown by reference to other sentencing decisions for money laundering offences under s.400 Criminal Code, for dishonest obtaining offences under s.135.1 Criminal Code and for cases falling within the broad description of Operation/Project Wickenby sentencing decisions. 254 I bear in mind what was said by the High Court in Hili v The Queen; Jones v The Queen (at [53]-[54]) with respect to the use of other sentencing decisions and statistics.

[131]

255 Sentencing decisions for money laundering offences may provide assistance by way of statements of general sentencing principle for this class of offence, but not (at least at present) by way of identification of a range of sentence: R v Guo and Anor at [86]. 256 Consideration of statements of general sentencing principles with respect to money laundering offences involve consideration of a number of factors: R v Wing Cheung Li [2010] NSWCCA 125 at [41]; R v Guo and Anor at [87]-[91]; R v Nguyen [2010] NSWCCA 226 [58]-[59]. In reciting these factors, I record my acceptance of the Crown submissions, and rejection of the Defence submissions, made by reference to them. 257 Firstly, it is necessary to reach an exact appreciation of what the Offender did, the acts he performed, and with what authority he acted and over what period of time. I accept that, in this case, the Offender utilised the advantages of his considerable resources, experience and expertise in business and finance, and established and misused a sophisticated offshore structure for the specific purpose of avoiding the payment by Barat Advisory of a substantial amount of tax. This course of conduct commenced in June 2004 and continued until November 2006. 258 Secondly, it is necessary to have regard to the total value of the money or property involved. In this case, the 48 Million Admerex shares, which the Offender dealt with, intending that they would become an instrument of crime, were valued at between $8.4 million and $9.12 million. 259 Thirdly, it is necessary to consider whether the money or property belonged to the Offender or to another. In this case, the 48 Million Admerex shares were owned by Barat Advisory, a company for which the Offender was the sole shareholder and director and of which he was the controlling mind. 260 Fourthly, it is necessary to consider the degree of planning or deceit that led to the commission of the offence. In this case, there was a significant degree of planning and deceit. Consistent with the verdicts of the jury, the Offender misused the Stichting Group structure, contrary to the advice of Ms Harley from June 2004 onwards. On 3 February 2005, the Offender dealt with the 48 Million Admerex shares, intending that they would be used to facilitate the commission of an offence which involved him, at some time in the future, dishonestly obtaining a financial gain by causing Barat Advisory to lodge an income tax return that contained false information, because it did not include about the capital gain that Barat Advisory made when it swapped the 48 Million Admerex shares for one million Temenos shares on or around 3 February 2005. 261 Fifthly, it is necessary to consider whether actual loss resulted, and the extent of that loss. In this case, the amount of tax which was not paid, but which ought to have been paid, was no less than $1,964,727.00. 262 Sixthly, it is necessary to consider the precise nature of the proved belief of the Offender. In this case, by 3 February 2005, the Offender had formed the intention that the 48 Million Admerex shares would be used to facilitate, at some time in the future, the evasion of tax on the capital gain derived from the exchange for one million Temenos shares. 263 In light of these findings, I am satisfied that the Offender's conduct involved serious criminality, and that his offences should be characterised as serious examples of money laundering and tax evasion.

[132]

Determination of Appropriate Sentences 264 The maximum penalty for the Offender's money laundering offence under s.400.3(1) Criminal Code is imprisonment for 25 years. A wide range of conduct may be caught by this offence. It is necessary to consider the particular circumstances of the case at hand. In this case, I am satisfied that the Offender's money laundering offence is a serious example of criminality of this type. There are significant aspects of criminality referrable to this offence, which are not covered by sentence to be passed for the second count. 265 The maximum penalty for an offence under s.135.1(1) Criminal Code is imprisonment for five years. It will be apparent from the findings which I have made, that I do not accept the Defence argument that the Offender should be sentenced upon the basis that his criminality wholly or substantially lies under the umbrella of criminality relevant to the s.135.1(1) offence. There are significant aspects of his criminality which must be addressed on sentence for the money laundering offence. 266 I have had regard to the objective circumstances of the offences and the subjective circumstances of the Offender to which reference has been made, including factors to be taken into account under s.16A(2). The sentences to be imposed upon the Offender must contain strong elements to reflect the need for general deterrence and retribution. 267 In all the circumstances of the case, I am satisfied that the sentence which the Court must impose for the money laundering offence, is one of imprisonment for seven years. 268 I am satisfied that the sentence which the Court must impose for the dishonest obtaining offence is a sentence of imprisonment for three years and six months. 269 I turn to the issue of concurrency, cumulation and totality. In my view, it would be erroneous to make the sentences completely concurrent. Having regard to my findings, a level of cumulation is appropriate. I propose to order that the sentences be concurrent as to two years, and cumulative as to one year and six months. Accordingly, the total period of imprisonment to be imposed will be one of eight years and six months. 270 As the sentences for the two offences, in the aggregate, exceed three years, it is necessary that the Court fix either a single non-parole period in respect of the sentences or make a recognizance release order: s.19AB(1) Crimes Act 1914 (Cth). I propose to fix a single non-parole period. The non-parole period should provide for mitigation of the punishment of the Offender in favour of his rehabilitation through conditional freedom, once the Offender has served the minimum time that the Court determines justice requires that he must serve, having regard to all the circumstances of his offence: Power v The Queen at 629. The necessary deterrent and punitive effects of sentences must be reflected in the determination of the minimum term, as well as the head sentence: Power v The Queen at 628; Hili v The Queen; Jones v The Queen at [41]. 271 I am satisfied that the appropriate course is to set a single non-parole period of four years and nine months to date from today. I am satisfied that this is the minimum period that the Offender should spend in prison having regard to all the elements of punishment, including the objective seriousness of his crimes, specific and general deterrence, denunciation and the Offender's subjective circumstances, including his good prospects of rehabilitation. 272 Michael John Milne, in relation to each of the counts of which you were found guilty by the jury, I made an order on 2 December 2010 convicting you of each offence. In relation to the first count (the ss.400.3(1) offence), I sentence you to imprisonment for a term of seven years to date from 17 December 2010 and to expire on 16 December 2017. In relation to the second count (the s.135.1(1) offence), I sentence you to imprisonment for a term of three years and six months to date from 17 December 2015 and to expire on 16 June 2019. 273 I fix a non-parole period of four years and nine months to date from 17 December 2010 and to expire on 16 September 2015. 274 I am required by law to explain to you the effect of this sentencing order. You need to understand that the effect of that order is that you will serve a period of imprisonment of not less than four years and nine months and, if a parole order is made on or after 17 September 2015, you will also serve a period under supervision in the community, called the "parole period", so as to complete the overall sentence of eight years and six months. If a parole order is made, it will be subject to conditions, and it may be amended or revoked. In particular, it may be revoked if you fail without reasonable excuse to fulfil those conditions, in which event you may be returned into custody, pending further review and possible re-release, depending upon your behaviour and response to any rehabilitation opportunities which may be offered whilst you are in custody.

R (Cth) v Milne

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Judgment (133 paragraphs)

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Legislation Cited (2)

Cases Cited (23)

Cited By (4)