R (Cth) v Petroulias

R (Cth) v Petroulias - [2007] NSWSC 1005 - NSWSC 2007 case summary — Zoe

[31]

Relevant Legal Principles 9 Section 38 Evidence Act 1995 abrogates the common law rule relating to hostile witnesses: R v Lozano (NSW Court of Criminal Appeal, 10 June 1997, unreported, BC9702441, page 6). The intention of the Australian Law Reform Commission was to ensure (via s.38) that courts are not deprived of relevant testimony which had been excluded by operation of the hostile witness rule: R v Lozano at page 6. Subject to several discretionary considerations, s.38 permits a party, by leave, to cross-examine a witness who meets any of the criteria in s.38(1) of the Act. It is a section that needs to be applied with some care in criminal trials: R v Fowler [2000] NSWCCA 142 at [120]; R v Parkes (2003) 147 A Crim R 450 at 463 [73]. 10 Section 38 is not confined to the situation where a party calling a witness is confronted unexpectedly by evidence that is unfavourable or inconsistent with prior statements or by a witness who unexpectedly appears not to be making a genuine attempt to give evidence: R v Fowler at [121]; R v Parkes at 462 [70]. 11 The word "unfavourable" in s.38 (1)(a) of the Act does not mean "adverse"; it means "not favourable" to the party making the application: R v Souleyman (1996) 40 NSWLR 712 at 715; R v Lozano at page 6; R v Fowler at [121]; R v Ronen [2004] NSWSC 1298 at [49]. 12 Section 38 permits the applicant party to question "as though … cross-examining the witness" but only "about" the three subjects described in s.38(1)(a)-(c). As Heydon JA observed in R v Le at 486 [66]-[67], cross-examination "about" the subject should not be narrowly confined: "One purpose of a s 38 examination must be to enable counsel calling the witness to demonstrate that the evidence in chief which led to the s 38 order is false. Another must be to enable counsel to demonstrate that any prior statement inconsistent with it is true. That latter purpose is assisted by s 60, which permits a prior inconsistent statement to be considered as evidence of what is represented, not merely as a matter affecting credibility. But s 60 by itself is not wholly effectual unless the questioner is able to interrogate with a view to demonstrating the truth of the prior inconsistent statement. There would be little point in permitting s 38 examinations otherwise and no point in the existence of s 38(3). The purposes described can be assisted by obtaining concessions from the witness about matters tending to indicate the falsity of the impugned evidence. One of these is the lateness with which the impugned story is advanced. Another is the inherent improbability of the impugned story. These purposes must also be capable of being assisted by the eliciting of evidence tending to show the truthfulness of prior statements inconsistent with the impugned evidence, such as the fact that they were made under conditions conducive to accurate recollection and expression and conducive to sincerity.

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In my opinion, on the true construction of s 38, leave may be granted under s 38 to conduct questioning not only if the questioning is specifically directed to one of the three subjects described in s 38(1), but also if it is directed to establishing the probability of the factual state of affairs in relation to those subjects contended for by the party conducting the questioning or the improbability of the witness's evidence on those subjects. In establishing the probability or improbability of one or other state of affairs, the questioner is entitled to ask questions about matters going only to credibility with a view to shaking the witness's credibility on the s 38(1) subjects." 13 The further observations of Heydon JA in R v Le at 493 [90] are also pertinent to this question: "Section 38 permits the testing of the evidence in chief with a view to establishing the probability of the truth of the matters asserted in the prior inconsistent statement. Hence it permits examination of the witness on matters of credit with a view to the jury accepting the prior inconsistent statement and rejecting the later sworn evidence. It also permits an examination of the background at the time with which the statements are dealing, the background at the time when the prior inconsistent statement is made, and the background at the time when the witness moves to a version different from the prior inconsistent statement. It permits an inquiry into the possible reasons for the change, including the motives for the change. Judicial rulings which prevented these techniques being employed where application is made for leave to question under s 38 would not be giving full effect to the section." 14 The interests of justice, the public interest and the administration of justice may be served by the testing of the evidence of a witness by way of a s.38 examination: R v Le at 487 [68]; R v Ronen at [71]. The grant of leave may permit a truer picture of the situation to be presented to the jury than would have been the case had the Crown been refused leave to cross-examine. This is the very purpose underlying s.38: R v Parkes at 464 [81], [83]. 15 The factors which bear upon the exercise of discretion where application is made under s.38 are not confined. There are express statutory factors referred to in s.38 (6) and s.192 Evidence Act 1995. In addition, in R v Le at 493 [90], Heydon JA observed that, in a s.38 application, the Court ought give consideration to s. 137 Evidence Act 1995, whether or not the parties make submissions with respect to that provision. 16 Section 192(2)(b) requires the court to consider whether a grant of leave would be unfair to a party (the Crown or the accused) or to a witness. With respect to any suggested unfairness to an accused, it is important to note that the defence can test the evidence led in a s.38 examination by defence cross-examination of the witness: s.38(4); Adam v The Queen [2001] 207 CLR 96 at 107 [30]. To refuse a s.38 application, in some circumstances, may be unfair to the Crown: R v Ronen at [70]. 17 It is necessary to keep in mind the risk that s.38 cross-examination may convert the focus of the trial from the guilt of the accused for the crime charged to whether the witness is lying to protect the accused: R v Hogan [2001] NSWCCA 292 at [5], [76]; R v Le at 492-493 [89]; R v Ronen at [32], [72]. The Court should be alert to the risk of being sidetracked into collateral issues by way of grant of leave under s.38: R v Ronen at [32].

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The Specified Topics 18 Before moving to the specific topics to which this judgment relates, it is useful to describe shortly the way in which the Crown places Mr Aivaliotes as a witness in the Crown case. At all relevant times between 1997 and 1999, Mr Aivaliotes was an officer in the Australian Taxation Office ("ATO"). It is the Crown case that the Accused effectively manipulated Mr Aivaliotes over a period of time, taking advantage of his limited experience in the areas which are the subject of these proceedings and his relative subservience (T2544-2545). 19 The Crown submits that Mr Aivaliotes has altered his evidence in a number of significant respects from that given by him at the first trial before Sully J and a jury in 2005. Put shortly, the Crown submits that, contrary to what he said at the 2005 trial, the evidence of Mr Aivaliotes in the present trial has been to the effect that much of the work was done by him and that he acted in a way which reflected his own views on matters, rather than following the views given to him in drafts which had been prepared by the Accused (T2544.54). In substance, the Crown contends that Mr Aivaliotes has altered his evidence so as to elevate his own role, in relevant respects, from that of an officer with limited knowledge and experience acting at the direction of the Accused to a person exercising his own skill, knowledge and judgment in reaching an independent view of the issues under consideration. 20 In this way, the Crown submits that there is a pattern in the evidence of Mr Aivaliotes at the present trial which differs from that given by him in the first trial in 2005. Although the Crown does not submit that the s.38 application ought be resolved in a rolled-up or global way, it is submitted that this broad change in the stance of Mr Aivaliotes underlines the applications concerning some of the specified topics. 21 It is the Crown case that the Accused had an association with (in particular) Mr Richard Morgan, Mr Nick Panos, Mr Geoff Strong and Mr John McLaren, and their associated corporate entities, and that the Accused exhibited favouritism to them as against other taxpayers not having such an association. It is contact and correspondence between the ATO and these persons and entities in 1998 and 1999 which is a central feature of the evidence of Mr Aivaliotes. 22 In support of the application, the Crown produced a schedule (MFI80) setting out the topics and relevant transcript references. Extracts from the evidence of Mr Aivaliotes at the 2005 trial and the present trial (and, in one area, the second trial in May 2007) will be reproduced in this judgment. The extracts will provide the context for the particular (emphasised) answers which are relied upon by the Crown as unfavourable evidence and/or prior inconsistent statements. As will be seen, documents have retained the same exhibit numbers at each of the three trials.

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Submissions of the Parties 68 The Crown made detailed submissions in support of the application (T2541-2570, 2586-2589). With respect to the seven topics which were pressed, the Crown submits that, in each case, Mr Aivaliotes has given evidence that is unfavourable to the Crown and/or has, on prior occasions, made a prior inconsistent statement so that s.38(1)(a) and/or (c) have been satisfied. The Crown submits that the Court should, in the exercise of discretion, grant leave to the Crown to cross-examine Mr Aivaliotes about his evidence concerning these topics. The Crown submits that consideration of factors relevant to the exercise of discretion in s.38(6) and s.192 of the Act should lead to the relevant grant of leave. The Crown submits that it cannot be concluded that the probative value of the evidence is outweighed by the danger of unfair prejudice to the Accused so as to warrant exclusion of evidence under s.137 of the Act. 69 Mr Sutherland SC advanced a number of submissions concerning the application (T2571-2586). 70 Mr Sutherland SC concedes relevant inconsistency with respect to Topic 1, but submits that leave should not be granted on discretionary grounds. With respect to Topic 2, Mr Sutherland SC submits that the Crown's application is based upon a false premise, namely that the Productivity Incentive Trust Plans schemes ought to have been raised at the Moonee Ponds meetings. 71 With respect to Topics 3, 5 and 6, Mr Sutherland SC made compendious submissions. He submits that the documents contained within the various exhibits under these headings raise collateral questions, whereby the Crown seeks to adduce a form of tendency evidence relating to the association between the Accused and Mr Aivaliotes. He submits that it would be unfair to Mr Aivaliotes and the Accused to grant leave under s.38 with respect to these topics. 72 With respect to Topic 7, Mr Sutherland SC relies upon the defence submissions made for the purpose of the application determined in my judgment, R (Cth) v Petroulias (No. 16). 73 In relation to Topic 8, Mr Sutherland SC submits that a number of the questions asked of Mr Aivaliotes at the first and second trial were narrow in form, enquiring whether the Accused himself had said anything to Mr Aivaliotes concerning this topic. Although a number of other questions enquired whether Mr Aivaliotes had any knowledge of the Accused's association with these persons and entities, Mr Sutherland SC submits that care should be taken to construe these questions in conjunction with the narrower questions based essentially upon what, if anything, the Accused himself had said to Mr Aivaliotes in this regard. 74 With respect to s.38(6)(a), Mr Sutherland SC acknowledges that the Accused was aware, in a general sense, that a s.38 application was likely having regard to events at the second trial in May 2007. In these circumstances, he takes no point in this trial with respect to notice by the Crown. 75 Mr Sutherland SC submits, for the purpose of s.192(2)(a), that a grant of leave would be likely to add unduly to the length of the trial given the likely explanations to be proffered by Mr Aivaliotes for his change in accounts. Reference was made to Mr Aivaliotes' evidence at the second trial when cross-examined by the Crown pursuant to leave under s.38 (T1331, 4 May 2007). 76 For the purpose of s.192(2)(b), it was submitted that it would be unfair to the Accused and to Mr Aivaliotes to grant leave to the Crown. Mr Sutherland SC points to the risk of prejudice to the Accused which may flow from s.38 cross-examination in a manner which may lead the jury to conclude that Mr Aivaliotes had altered his evidence to assist the Accused and, perhaps, that he did so at the urging of the Accused. In this respect, Mr Sutherland SC refers to statements in R v Hogan at [5], [76] and R v Ronen at [72] concerning the need for caution in this regard on a s.38 application. 77 With respect to Topics 3, 5 and, in particular, 6, Mr Sutherland SC submits, for the purpose of s.192(2)(c), that the evidence is not important to the trial being a series of collateral documents against the background of an abundance of other evidence going to the same issue.

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Resolution of Competing Submissions 78 With respect to each of the topics pressed by the Crown, I am satisfied that the requirements of s.38(1) have been met. Mr Aivaliotes has given evidence in the present trial that is clearly unfavourable to the Crown (s.38(1)(a)) concerning all seven topics. He has also made clear prior inconsistent statements in earlier evidence (s.38(1)(c)) with respect to each of the seven topics, with the inconsistency being stark with respect to Topics 1, 3, 5, 6, 7 and 9. 79 For the purpose of Topic 1, there has been a clear change in Mr Aivaliotes' evidence at the first trial concerning his attendance at the alleged meeting on 28 and 29 January 1998 and the occasion or occasions at which he met Mr Strong. 80 In relation to Topic 2, the issue is not whether it was reasonable to expect that the Productivity Incentive Trust Plan schemes would be mentioned at all at the 1998 Moonee Ponds meetings. The significance lies in the different explanations actually proffered by Mr Aivaliotes for his not mentioning the Productivity Incentive Trust Plan schemes at these meetings. The explanation given last week may be contrasted with that provided in 2005, and constitutes both evidence unfavourable to the Crown and a prior inconsistent statement. 81 I do not accept the submissions for the Accused that the documents relevant to Topics 3, 5 and 6 constituted collateral evidence of a type not important to this trial. It will, of course, be a matter for the jury to determine in due course the significance of these documents, viewed against the background of the totality of the evidence adduced in the trial. For present purposes, however, I am satisfied that this documentary evidence, taken with the oral evidence of Mr Aivaliotes at the first trial, is capable of demonstrating a process whereby the Accused, in effect, directed action favourable to those with whom he is alleged to have had an association, using Mr Aivaliotes as the formal face of the ATO for this purpose. I am satisfied that this evidence is important to the Crown case and to the trial generally. 82 I have had regard to the submissions made concerning Topic 7 for the purpose of my judgment, R (Cth) v Petroulias (No. 16). For the reasons contained in that judgment and the present judgment, I am satisfied that the Crown ought be granted s.38 leave in that respect. 83 There is clear inconsistency in Topic 9 concerning a most significant part of the Crown case. Mr Aivaliotes has asserted, for the first time, in the present trial that he was aware from late 1997 that the Accused had provided legal advice to persons involved in the Productivity Incentive Trust Plan and that he learned this when in the presence of the Accused. This evidence is clearly unfavourable to the Crown. Mr Aivaliotes has made clear prior inconsistent statements. Both s.38(1)(a) and (c) are triggered clearly in this respect. 84 Addressing the discretionary considerations in s.38(6), I am satisfied that the Crown gave notice to the Accused at the earliest opportunity of its intention to seek leave. As mentioned earlier, Mr Sutherland SC did not submit to the contrary. 85 With respect to s.36(6)(b), I am satisfied that the Accused will have an opportunity to cross-examine Mr Aivaliotes after the Crown has cross-examined pursuant to leave under s.38, on all specified topics and generally. 86 Consideration of these factors under s.38(6) supports the grant of leave in each case. 87 By reference to s.192(2)(a), it is apparent that the making of this application, and any consequential grant of leave, will add to the length of the trial. Section 192(2)(a) requires consideration to be given to the extent to which a grant of leave would add unduly to the length of the trial. Mr Aivaliotes is an important witness in the Crown case. In my view, the specified topics are all matters of importance to the Crown case, with some more important than others. I anticipate that any cross-examination by the Crown pursuant to a grant of leave will be focused and to the point. It is likely that explanations provided by Mr Aivaliotes for his changing accounts will extend his evidence, including any cross-examination on behalf of the Accused. In the context of the present lengthy trial, however, I do not consider that this would add unduly to the length of the trial.

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