R v Nicholson; ex parte DPP

Judgment (71 paragraphs)

[1]

CRIMINAL LAW - APPEAL AND NEW TRIAL AND INQUIRY AFTER CONVICTION - APPEAL AND NEW TRIAL - PARTICULAR GROUNDS - MISDIRECTION AND NON-DIRECTION - GENERAL MATTERS - CONSIDERATION OF SUMMING UP AS A WHOLE - where each appellant was convicted by a jury in the District Court of attempting to defraud the Commonwealth - whether the learned trial judge erred in his direction to the jury concerning the failure of the respective appellants to give evidence

[2]

CRIMINAL LAW - APPEAL AND NEW TRIAL AND INQUIRY AFTER CONVICTION - APPEAL AND NEW TRIAL - APPEAL AGAINST SENTENCE - APPEAL BY ATTORNEY-GENERAL OR OTHER CROWN OFFICER - APPLICATIONS TO INCREASE SENTENCE - OTHER OFFENCES - where Hyde-Harris was sentence to three years imprisonment to be released after serving nine months - where Nicholson was sentenced to two and a half years imprisonment, to be released after six months - where the Commonwealth Director of Public Prosecutions appeals against the sentences imposed - whether the sentences imposed were manifestly inadequate

[3]

Azzopardi v R [2001] HCA 25; (2001) 205 CLR 50, cited

[4]

R v Cappadona (2001) 122 A Crim R 52; [2001] NSWCCA 194, considered

[5]

R v Kazacos; ex parte Commonwealth Director of Public Prosecutions [1999] QCA 218; (1999) 106 A Crim R 252, distinguished

[6]

R v Keevers; R v Filewood [2004] QCA 207; CA No 90 of 2004; CA No 91 of 2004; CA No 98 of 2004; CA No 132 of 2004, 18 June 2004, cited

[7]

R v Macris [2004] NSWCCA 261, considered

[8]

R v McFarlane, unreported, Queensland District Court, Indictment No 434 of 2003, 30 January 2004, considered

[9]

R v Stewart [1992] QCA 266; [1993] 2 Qd R 322, cited

[10]

R v Thomson, unreported, Queensland District Court, Indictment No 2 of 2002, 8 May 2003, considered

[11]

R v To & Do; ex parte Director of Public Prosecutions (Cth) [1998] QCA 106; [1999] 2 Qd R 166, considered

[12]

R v Van Nhan Nguyen & Huu Duc Phan [1997] 1 VR 386, cited

[13]

R v Wall [2000] QCA 292; (2000) 113 A Crim R 445, considered

[14]

A J MacSporran for the appellant/respondent, Nicholson

[15]

A J Kimmins for the appellant/respondent, Hyde-Harris

[16]

A J Rafter SC for the respondent/appellant, Commonwealth Director of Public Prosecutions

[17]

Legal Aid Queensland for the appellant/respondent, Nicholson

[18]

Jacobson Mahony Lawyers for the appellant/respondent, Hyde-Harris

[19]

Commonwealth Director of Public Prosecutions for the respondent/appellant

[20]

[1] de JERSEY CJ: Each appellant was convicted by a jury in the District Court of attempting to defraud the Commonwealth. The sole ground of appeal against conviction is that the learned trial judge erred in his direction to the jury concerning the failure of the respective appellants to give evidence. (Neither gave evidence, although one called evidence.)

[21]

[2] The offences were committed in the following circumstances. Domain Names Pty Ltd, the appellant Hyde-Harris' company, lodged a 'Business Activity Statement' with the Australian Taxation Office, claiming credit for goods and services tax paid in the amount of $882,500. The refund was sought in reliance on a tax invoice issued by the appellant Nicholson's company, Boggo Road Pty Ltd, in respect of the purported sale of 29 internet domain names to Hyde-Harris' company, for the total consideration of $9,707,500. The Crown case, which must be taken to have been accepted by the jury, was that for various reasons the sale agreement between the two companies was not genuine. For example, the purchaser Domain Names Pty Ltd lacked any financial capacity to complete the transaction. Further, despite agreeing to pay that substantial price, the appellant Hyde-Harris had not even checked the availability or status of the names with the domain name registrar. There were other considerations - to illustrate, one of the names to be purchased, for the substantial sum of $192,500, was very similar to a name Hyde-Harris had already registered in his own name.

[22]

[3] The direction given by the learned judge, which is the subject of the ground of each appeal against conviction, was in these terms:

[23]

"In this case both of the accused men have exercised their right not to give evidence in their own defence. I tell you as a matter of law that neither of them was under any obligation to give evidence in this trial ... indeed, never in a criminal trial is an accused person under any obligation to give evidence. As I said to you, the responsibility of proof lies with the Crown. It never shifts from the Crown. At no stage does it ever shift to an accused person, and at no stage does an accused ever undertake any responsibility for proving his or her innocence. I direct you as a matter of law that you must not draw any inference adverse to either of the accused because they have exercised their right not to give evidence in their defence. The accused - the fact that they have so exercised their right does not make the task that confronts the Crown any easier. It does not change the fact that the Crown retain the responsibility to make out the guilt of the accused."

[24]

[4] Counsel for the appellants submitted that the direction did not meet requirements laid down by the majority of the High Court in Azzopardi v R [2001] HCA 25; (2001) 205 CLR 50, 64. Their Honours said (para 51):

[25]

"... [I]f an accused does not give evidence at trial it will almost always be desirable for the judge to warn the jury that the accused's silence in court is not evidence against the accused, does not constitute an admission by the accused, may not be used to fill gaps in the evidence tendered by the prosecution, and may not be used as a make-weight in assessing whether the prosecution has proved its case beyond reasonable doubt."

[26]

[5] The directions given by the learned judge did not in terms say:

[27]

(a) that the accused's silence was "not evidence against the [accused]";

[28]

(b) that the silence "[did] not constitute an admission by the [accused]";

[29]

[30]

(d) that it "may not be used as a make-weight ...".

[31]

But what the judge did say covered each of those points, although not by use of that language.

[32]

[6] As to (a) and (b), his Honour's direction that the jury must not draw any inference adverse to the accused, from the failure to give evidence, necessarily carried with it the direction that that failure had no evidentiary impact. I consider the (lay) jury should be taken to have appreciated that. It was not a complicated concept. As to (c), the direction that the failure of the appellant to give evidence "does not make the task that confronts the Crown any easier" necessarily carried with it the warning that the jury might not rely on that circumstance to supplement the evidence given, as by "filling in gaps". As to (d), the direction just mentioned, together with the final statement by the judge that the failure "does not change the fact that the Crown retains the responsibility to make out the guilt of the accused", was another way of saying that the jury might not rely on the failure in order to enhance or supplement the evidence in fact led.

[33]

[7] We were referred to R v Macris [2004] NSWCCA 261 as an example of a strict application of Azzopardi. Macris is distinct in that the jury in specific terms asked the trial judge why the accused "was not put on the stand and questioned", arguably enlivening an obligation in the judge to provide the jury with more comprehensive assistance than would otherwise be necessary.

[34]

[8] As was said in R v Stewart [1992] QCA 266; [1993] 2 Qd R 322, 324, "...summings up [must] be tailored to the needs of the particular case and ... a slavish insistence upon a formula, or a statement of reasons for [a] rule, is not necessary". I note also that their Honours in Azzopardi spoke in terms of desirability, not necessity. I do not read what was said in Azzopardi as obliging a trial judge, for example, to direct in the precise terminology advanced there, provided of course the directions given sufficiently highlight the limitations expressed in para 51 of that judgment.

[35]

[9] While it is true that the Queensland Supreme and District Courts Bench Book reproduces, in terms, what was said in the above passage extracted from Azzopardi, one notes that the following statements appear in the introduction to the bench book:

[36]

"The particular form and style of a summing-up, provided it contains what must on any view be certain essential elements, must depend not only on the particular features of the particular case, but also on the judge's view as to the form and style which will be fair, reasonable and helpful.

[37]

These notes are not intended as an elaborate specification to be adopted religiously on every occasion. A summing-up, if to be helpful to the jury, should be tailored to fit the facts of the particular case, and not merely taken ready made 'off the peg'."

[38]

[10] Judges are encouraged ordinarily to utilize the Bench Book sample directions (cf R v Keevers; R v Filewood [2004] QCA 207). But where, as here, the precise terms of the relevant direction have not been employed, it is necessary to examine the acceptability of what was said in the context of binding authority. For the reasons I have expressed, I consider that the direction given here was appropriate and sufficient.

[39]

[11] I would dismiss each appeal against conviction.

[40]

[12] The Commonwealth Director of Public Prosecutions appeals against the sentences imposed, on the ground of manifest inadequacy.

[41]

[13] Hyde-Harris was sentenced to three years imprisonment to be released after serving nine months, upon his giving security for a recognizance in the sum of $1,000 to be of good behaviour for three years. He was then 57 years old. He had old convictions for burglary and receiving, but no relevant recent criminal history.

[42]

[14] Nicholson was sentenced to two and a half years imprisonment, to be released after six months on a bond in similar terms. He was 51 years old, and had no significant prior criminal history. The learned judge considered Nicholson's role to have been somewhat less substantial than that of his co-offender, which explains the lesser term.

[43]

[15] Submitting that the sentences were manifestly inadequate, Mr Rafter SC, who appeared for the Director, fairly described the offence as involving "a persistent attempt by the respondents to defraud the Commonwealth of $882,500.00." While the learned judge observed that it was not an "elaborate or complex fraud", it did involve the creation of documentation, and the involvement of solicitors and accountants, all of which was designed to give the appearance that the transaction was genuine.

[44]

[16] The judge also expressed the view that "... throughout ... [the respondents] were each quite open with those who questioned [them]". That does not however sit comfortably with the continuing insistence of each of the men that the transaction was genuine.

[45]

[17] I consider his Honour approached the determination of penalty somewhat too sympathetically to the respondents. The large amount sought, and the deliberation and persistence which characterized the implementation of the scheme, lent it a serious complexion.

[46]

[18] It has frequently been said that a substantial consideration in cases of this character is the need for general deterrence.

[47]

[19] A range of factors bear on the gravity of revenue fraud. In R v Wright [1994] QCA 16; (1994) 74 A Crim R 152, 165, Pincus JA said this:

[48]

"The Victorian Sentencing Manual provides examples of the variety of considerations which bear upon the gravity of taxation offences. They include the extent of the fraud and the amount avoided, the potential loss of revenue, the length of time the fraud continued, the nature of the planning and execution, and whether professional or technical skills were used to facilitate the fraud. Many other matters may bear upon the seriousness of the offence, such as whether the fraud was due to desperate financial circumstances and whether there was an element of carelessness or self-delusion rather than undiluted dishonesty."

[49]

As applicable here, none of those considerations justified any particular leniency.

[50]

[20] The approach of the courts in sentencing for serious tax fraud has strengthened in recent years (cf R v Kazacos; ex parte Commonwealth Director of Public Prosecutions [1999] QCA 218; (1999) 106 A Crim R 252, 267-8). Fraud of this character impacts on all Australians, and attempts to commit it must be strongly discouraged. It is generally, as here, attended by deliberation and gross dishonesty inimical to the good order of the community. Therefore, when it is detected, salutary penalties should follow.

[51]

[21] Mr Rafter SC submitted that the sentences which should have been imposed - he contended the same for each respondent - were three to four years imprisonment accompanied by an order for release after the serving of one half of the term. As stressed by Mr Kimmins, for the respondent Hyde-Harris, the Director is to be taken to cavil only with the provision made by the learned judge for early release. In that regard, as said in R v Van Nhan Nguyen & Huu Duc Phan [1997] 1 VR 386, 389:

[52]

"The deterrent and punitive effects of [a] sentence should not be unduly diminished by allowing release from custody at an unduly early stage."

[53]

[22] We should not depart from the learned judge's conclusion that the role played by the respondent Nicholson was less substantial than that played by Hyde-Harris: it was Hyde-Harris who conceived of the idea, and it was he who in the main dealt with the solicitors and accountants to implement it. Further, he involved Nicholson at a time when Nicholson was personally and financially vulnerable. I would accordingly not differ from the approach of the learned judge in differentiating as he did between the respective penalties.

[54]

[23] Mr MacSporran, who appeared for the respondent Nicholson, placed emphasis upon Nicholson's personal circumstances: the charge effectively brought his business career to an end; at the time of the commission of the offence he was suffering from health problems which had affected his capacity to earn income; and as at the time of sentencing, he was suffering depression.

[55]

[24] Counsel for the respondents, in opposing the Director's appeal, submitted that the sentences imposed fell within a relevant range.

[56]

[25] Mr Kimmins additionally emphasised the moderation which traditionally attends the disposition of a Crown appeal of this character. On the other hand, not to interfere where otherwise justified leaves on the record penalties which, through their influence in subsequent sentencing situations, can actually work as reduction in the range being applied. In this case, as Mr Rafter SC emphasised, had there been pleas of guilty, there would - against this "precedent" - have been little scope for the ordering of actual imprisonment of an acceptable term.

[57]

[26] Counsel for the respondents particularly referred to two first-instance decisions placed before the learned judge: Thomson (R v Thomson, unreported, Queensland District Court, Indictment No 2 of 2002, 8 May 2003), who defrauded the Commonwealth of $832,554.49 and attempted to obtain a further $252,858, sentenced to two and a half years imprisonment to be released on a recognizance after eight months - following a trial; and McFarlane (R v McFarlane, unreported, Queensland District Court, Indictment No 434 of 2003, 30 January 2004), who pleaded guilty to attempting to obtain $595,089: his criminal history included offences of dishonesty and extortion. He was imprisoned for three years to be released upon a recognizance after eight months. The learned judge considered McFarlane provided the more reliable guidance, in that many of the other fraud cases to which he was referred were of greater complexity and deceitfulness than characterised this case.

[58]

[27] Reference to decisions made at the appellate level is generally more helpful in determining the disposition of these appeals. I refer to two such decisions. In R v Wall [2000] QCA 297; (2000) 113 A Crim R 445, a 49 year old man convicted of defrauding the Commonwealth was subjected, following appeal, to three years imprisonment with release after 12 months. The court referred to a range of three to five years, so that Wall was sentenced at the lowest level. The point was made that with crime of this character, actual incarceration should be ordered. The respondents R v To & Do; ex parte Director of Public Prosecutions (Cth) [1998] QCA 106; [1999] 2 Qd R 166 pleaded guilty to defrauding the Commonwealth of $158,458 over a period of six years. They were respectively sentenced to three years imprisonment with release after four months, and, in the case of the major offender, four years with release after 18 months. Kazacos, to which I referred earlier, also pleaded guilty, and was sentenced to four years imprisonment with release after 15 months. He defrauded the Commonwealth of over $600,000.

[59]

[28] Mr Kimmins referred to R v Cappadona [2001] NSWCCA 194. Notwithstanding the gravity of the offences involved in that case - the amount defrauded, for example, exceeded $3.5 million, there were circumstances personal to the offenders which strongly influenced the determination of penalty. They pleaded guilty, and otherwise provided "high level co-operation" with the authorities, including naming the others involved and formally undertaking to co-operate in further proceedings, as by giving evidence. There were other related considerations absent here, including remorse and shame and humiliation. I do not consider Cappadona of great assistance in this situation.

[60]

[29] In the context of the decisions mentioned in para [27] above, it emerges that the learned sentencing judge apparently gave substantially too much weight to circumstances personal to the respondents, and to his views that it was not a particularly sophisticated sham and that the respondents had co-operated. In ordering release after nine months and six months respectively, with related head sentences of three years imprisonment and two and a half years imprisonment, his Honour was allowing for release after the serving of approximately only one quarter of the sentences. In my respectful view, that course was not justified.

[61]

[30] Albeit in a case of actual fraud, the range suggested in Wall was three to five years imprisonment. There is no suggestion made on behalf of the respondents in this case that the head sentences imposed were other than appropriate. But it appears to me that there was no warrant for ordering release at such early times.

[62]

[31] The respondents went to trial, a trial which extended over 12 days and was described before us as "hard fought". While they co-operated to an extent in streamlining the trial, that circumstance overall should not have featured substantially in alleviating the penalty otherwise to be imposed. Allowance must be made for the feature that the sham did not succeed, but notwithstanding that, it was in my view properly described as elaborate, the respondents persisted in it over a not insubstantial period, and when queries and investigations began, they persisted in their assertion that what was plainly a sham transaction, was genuine.

[63]

[32] In my view the penalties imposed should be strengthened, such that the respondents are released after, in the case of Nicholson 12 months, and in the case of Hyde-Harris 15 months.

[64]

2. That the sentence imposed in the case of the respondent Hyde-Harris be varied to provide for release after the serving of 15 months imprisonment, and otherwise confirmed;

[65]

3. That the sentence imposed in the case of the respondent Nicholson be varied to provide for release after the serving of 12 months imprisonment, and otherwise confirmed.

[66]

[34] JERRARD JA: In these appeals I have read and respectfully agree with the reasons for judgment and orders proposed by the learned Chief Justice. I add that the directions given by the learned trial judge were in conventional terms, and favourable to the appellants. They made clear that:

[67]

• no adverse inference could be drawn from exercising a right not to give evidence;

[68]

• exercise of that right did not make the Crown task any easier.

[69]

[35] These directions, although in conventional enough terms in this State, differ from those suggested in the Benchbook and do not include all the directions which the majority in Azzopardi hold should normally be given. Despite that, they were adequate to convey what the majority in Azzopardi considered to be almost always desirable. They did describe the unchanging onus of proof, the absence of any obligation to respond to the Crown case, and that nothing adverse to the appellants could be inferred because each exercised the right not to respond. Because they were sufficient to do that, no miscarriage of justice has occurred by reason of the omission of portions of the directions held to be almost always desirable in Azzopardi, and suggested in the Benchbook direction.

[70]

[36] The directions advised in Azzopardi, and not given, are ones that emphasise in different ways the critical direction, which was given, that no adverse inference is to be drawn against a defendant who does not give evidence.

[71]

[37] JONES J: I agree with the reasons of the Chief Justice and with the orders he proposes.

(2001) 205 CLR 50

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Judgment (71 paragraphs)

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