R v Rich

Supreme Court of Victoria|2009-02-06|Before: LASRY J

CRIMINAL LAW - Betterment - Admissibility of expert evidence - Whether witness qualified - Whether expert evidence - Incriminating explanation - Discretion to exclude.

1 The accused is charged with armed robbery, murder and other related offences, the details of which have appeared in other rulings I have delivered in this matter.[1] Between 25 August and 30 October 2008, I heard argument on a number of pre-trial issues. The Crown case against the accused is that on 8 March 2005 at the Blackburn North Shopping Centre, he, assisted by others, carried out an armed robbery resulting in $162,000 being stolen from Chubb security guards who were delivering money to the Commonwealth Bank of Australia. During the course of the robbery, one of the guards, Mr Erwin Kastenberger, was fatally shot. The Crown case is that the person responsible for causing the death of Mr Kastenberger was the accused, Hugo Alistair Rich.

2 The essential issue in the trial is whether the accused was a participant in the armed robbery and, if he was, whether he fatally shot Mr Kastenberger.

3 As part of the Crown case proposed to be led before the jury, the prosecutor intends to call the witness Paul Francis Byrden. On 13 March 2008, Mr Byrden made a statement in his capacity as an accountant and, in particular, as a forensic accountant employed by Victoria Police since May 2002.

4 Since Mr Byrden's expertise is in issue, it is relevant to note that he graduated with a Bachelor of Business, with a major in accounting, from Monash University in 1990 and holds a Graduate Certificate in Fraud Investigation from Latrobe University (2005) and a Graduate Diploma in the same field of endeavour (2008).

5 Mr Byrden's police statement of 13 March 2008, which has a variety of attachments, is in the form of a report. In that statement Mr Byrden asserts that he has 18 years of experience in the preparation and presentation of financial analyses. He states that he has given evidence in the Victorian Magistrates' Court, the County Court of Victoria, the Supreme Court of Victoria and the Federal Court of Australia in respect of financial matters, although the provision of evidence has not always involved him being in the witness box and being examined and cross-examined. Since May 2002 he has been employed by Victoria Police as a forensic accountant. That role involves the compilation, analysis, preparation and presentation of reports and statements in respect of financial transactions. He has had previous audit experience having been employed with the Serious Non-Compliance Investigations Division of the Australian Taxation Office. He has also been involved as an investigative accountant for the Insolvency and Trustee Service Australia conducting bankruptcy investigations.

6 Mr Byrden has examined a number of financial accounts of the accused, Mr Rich. He states that the financial analysis has been conducted for the specific purpose of obtaining an estimate of Mr Rich's financial transactions between 4 October 2004 and 30 April 2005. At the conclusion of his statement he says:

During the relevant period Hugo Rich spent $196,765 or approximately $6,558.83 per week for a period of approximately 30 weeks. During this period his income including Centrelink benefits was $7,128 or approximately $237.60 per week. The shortfall between his expenditure and income was financed by two major items being $141,866 in loans and $36,869 in unsourced deposits.

7 As will be seen below, it is a substantial proportion of the unsourced deposits which the Crown points to as an indication, coupled with other circumstantial evidence, of the participation and benefit to Mr Rich from his involvement in the armed robbery at Blackburn North on 8 March 2005. As I understand it, that is the central purpose for the Crown wishing to lead this evidence and a question for me to consider is whether the jury need the assistance of an expert witness like Mr Byrden to deal with the issue of whether or not those cash deposits after 8 March 2005 are in fact unsourced.

8 In his statement, Mr Byrden identifies the limitations on his financial analysis. He notes that his analysis is restricted to the detected documented transactions and the records are incomplete. He notes that the records he examined do not identify the source of the cash deposits or cash payments and the application of the cash withdrawals has not been provided.

9 Mr Byrden also identifies his "methodology". His primary method of identifying unexplained transactions appears to be consolidating all accounts following which an examination of each transaction is conducted on a "line by line basis" to identify transactions between accounts that are specifically related. He gives as an example a mortgage payment by direct transfer from a savings account to a mortgage account. In respect of this method, Mr Byrden's statement recites that "[t]hese transactions can be eliminated as they provide no additional cash flow. They are classified in the cash flow estimates as 'related transfers'." Where Mr Byrden has been unable to identify a match for the particular transaction he has nominated the deposit into the account as an unsourced cash deposit.

10 The results of this analysis are set out in an exhibit to the witness's statement (PB-04) which is a chart entitled "Unsourced deposits and cash payments". That chart identifies cash deposits and cash payments between 4 January 2005 and 6 April 2005. Obviously, the most significant ones are those which occur after 8 March 2005. It is to be noted that there are cash deposits prior to that date although the cash deposits after 8 March 2005 are the majority of the transactions. Mr Byrden identifies each of the unsourced cash deposit vouchers as well as cash payments and untraced withdrawals.

11 Mr Byrden also gave evidence on the voir dire. Apart from the questioning concerning his qualifications, Mr Byrden said that the limitations on his analysis which he had identified were not quantifiable numerically. He was questioned about the manner in which he might relate cash deposits to prior cash withdrawals. He also identified the circumstances in which he would not set transactions off against each other and referred, for example, to time intervals of weeks which would affect how he categorised the transactions. He said that amounts which were the same and which were contemporaneous might be related. As I understand his evidence, contemporaneous refers to a three or four day period but he explained that it is necessary to look at the amount of the cash transaction and what he described as the consistency or proximity of the cash deposit or payment with other cash deposits and payments. Related transactions, he said, are transactions that do not provide any additional cash flow. In particular, Mr Byrden explained his analysis as follows:

You look at - for any particular cash payment or a cash deposit to account you look at, you examine all the accounts in totality, you have a look at if there's a series of prior cash withdrawals, you see if it - you look for a relationship, there may be three or four withdrawals that total more than that cash deposit, to see if they could be set off, because one of the limitations your analysis is you don't know the source of the cash deposits and you don't know the application of the cash withdrawals. ... So in order to produce a meaningful result you apply consistent methodology which reduces the limitations of your analysis.[2]

12 Mr Byrden agreed that his analysis involved assumptions, including the assumption that when a person goes to the bank to withdraw money they spend that amount or a large proportion of it. He also assumes that such a person returns to the bank for more because he or she no longer has the original amount at his or her disposal. He appeared to agree that his analysis might not take account of a person withdrawing a sum from the bank and then reinvesting it, or some part of it, some weeks later. He said that as to the assumptions he makes, it is important to specify the criteria which underline that assumption and the facts as well as the gaps of information on which it is based so that it can be queried.[3]

13 Mr Byrden was also questioned about the forensic accounting standard based on independence and reasonableness. He said that the assumptions he makes are required to be reasonable under the particular circumstances which applied. He added that he had sought access to other accounts of the partner of the accused, Ms Sandra Blackney, to see if they were related to his transactions and he concluded they were not.

14 Mr Byrden's position is that he spent a substantial amount of time examining documents for the purpose of reducing, to the extent that he could, the unexplained cash transactions.

15 The witness was also questioned about the limitations on his financial analysis to which he had referred in his written statement. In his statement the witness identifies the limitations on his financial analysis as including:

the information provided is restricted to detected documented transactions;
the records are incomplete;
the absence of information regarding cash deposits, cash payments and cash withdrawals, particularly:-
- the source of the cash deposits have not been provided;
- the source of cash payments have not been provided;
- the application of the cash withdrawals has not been provided.

16 The witness was cross-examined by counsel for the accused about the limitations he identified and said that apart from those listed in his statement, he was unaware of any others.[4] He was asked by Mr Desmond to quantify in percentage terms the "margin for error" and he expressed the view that it was not quantifiable. He explained that he sought to apply a consistent methodology in order to reduce the limitations of the analysis.[5]

17 It is worth noting that, as became clear in the cross-examination of the witness, the conclusions which he had reached concerned income on the one hand and expenditure on the other, whereas the portion of the evidence which is of central importance and primary relevance is the fact of the cash deposits after 8 March 2005.

18 The evidence of the witness both in the witness box and in his earlier statement illustrates that in order to identify transactions which are unsourced cash deposits or cash withdrawals it is necessary to eliminate related transactions. It seems to me clear therefore that his work does go beyond "the extraction, compilation and organisation of figures by an accountant, but, also, includes a number of assumptions formed and utilised ..." by the witness.[6]

19 The relevant part of the witness's statement describing this process is in the following terms:

A realistic approach to the cash flow estimates should recognise that a cash deposit into an account or a cash payment could be directly related to a prior untraced cash withdrawal from an account.

In order to minimize the limitations I adopted a method that would assist in eliminating transactions that could be "related" where specific information is not available. The method adopted is applied consistently throughout the analysis to ensure a uniform result.

Each cash deposit and cash payment is examined against each prior untraced cash withdrawal taking into account all of the following criteria:-

Whether the cash deposit and/or cash payment was less than or equal to the untraced cash withdrawal;
The amount of the cash deposit/payment;
The proximity of the cash deposit/payment to the prior untraced cash withdrawal. (This period is generally 3-4 days. However this was flexible);
The proximity of the cash deposit/payment with other cash deposits/payments;
The consistency of the prior untraced cash withdrawal with other untraced cash withdrawals;
The source of the prior untraced cash withdrawal;
The denominations of the untraced cash withdrawal and cash deposit/payment.

In circumstances where the cash deposit/payment could be offset by a prior untraced cash withdrawal, that is the cash withdrawal was greater than or equal to the cash deposit/payment, the amount is offset.

All cash deposits that could be offset are considered to be "related". They are classified and recorded in the cash flow estimates as a "Related Transfer". Eg a $500 cash withdrawal from bank account "A" that offset a $500 cash deposit in bank account "B" is treated as a transfer from bank account "A" to bank account "B".

20 Mr Desmond, on behalf of the accused, sought the exclusion of the evidence and submitted that the evidence is not admissible, but if it is, the evidence should be excluded in the exercise of my discretion.

21 Mr Desmond's submissions asserted correctly that Mr Byrden's evidence cannot identify the source of the funds. Primarily, the submissions made on behalf of the accused complained that the evidence proposed to be led from Mr Byrden does not qualify as expert evidence because Mr Byrden himself is not an expert. That criticism is based on a claimed lack of qualifications, the fact that Mr Byrden has not previously given evidence in a criminal trial and that the analysis he has done does not require any form of expert qualifications. That submission seemed to primarily rely upon the frequency with which the witness had given evidence in court and whether or not he had previously given evidence in a criminal trial. As I observed during argument, the more important feature to examine is the nature of the financial analyses that the witness has conducted in the past rather than the nature of the proceedings in which he might have given evidence.

22 It was further submitted that an expert witness must have the requisite qualifications either through academic pursuits or experience and that a body of knowledge needs to be identified which the witness relies upon as a basis for his analysis.

23 Mr Desmond further submitted that Mr Byrden's analysis can be done by examining the records and that because the records are not complete, the evidence is unreliable. Mr Byrden would agree that the records are incomplete but whether his conclusions are consequently unreliable is another question. As I put to Mr Desmond during his submissions, it was open to him to demonstrate the unreliability of the conclusions of Mr Byrden by putting documents to him.[7] He responded by submitting that the accused was constrained by a lack of proper access to particular computer hardware and data although the later position of the accused seemed to be that the real difficulty he faced was that to explain these cash transactions he would be required to reveal other criminal activity by him. I will come to that issue later in this ruling.

24 Mr Desmond also submitted that the conclusion offered by the witness Mr Byrden is restating simply what he found by looking at the records and no more. He also pointed out that given the total sum of cash taken during the armed robbery and murder was $162,000, the sum of money which is highlighted as being unexplained after 8 March 2005 is an insignificant sum. The possibility that the money came from other sources apart from the armed robbery in this case cannot be excluded, submitted Mr Desmond.

25 In the course of submissions on behalf of the Crown, Mr Tinney SC accepted that the purpose of this evidence is quite straightforward. The evidence is aimed at putting before the jury, in a straightforward way, the fact that in the period immediately following 8 March 2005, when the offences were committed, the accused made several cash deposits to his bank account which are unexplained by other entries in his financial records. Mr Tinney added that the true total of the post-March cash transactions involved some $26,000 in cash, with $20,000 of that being deposited within a handful of days of the armed robbery and the balance several days afterwards.

26 The primary criticism of Mr Byrden's evidence is that he does not have sufficient expertise and that on his own admission the records which he has examined are not complete. Further, it was put that what Mr Byrden does is no more than stating what is in the records he has examined. In my opinion Mr Byrden is doing more than simply identifying cash transactions. His accounting expertise includes an analysis of whether the cash deposits are "unsourced". If the jury accept that they are "unsourced" then this is a piece of evidence which, coupled with other evidence, may lead to the jury inferring that the cash is a portion of the proceeds of the armed robbery on 8 March 2005.

27 Mr Desmond correctly submitted that the Crown cannot directly link the cash deposits on which it relies to the crime charged. He then made the following submission:

What is he supposed to do? Mr Rich, if he was to answer, if he's forced to answer the allegation is required to compromise potentially his defence in relation to the outstanding Bertoncello trial which there's another mention of in a week's time before Judge Rozenes.[8]

For the Crown to advance that any of these funds that have been documented by Byrden and the material he's relied upon come from a particular source as opposed to another denounces Byrden's own evidence because he can't say. All he can say is, "It's unsourced". The Crown cannot exclude the proposition that the accused may have been sitting on a limited cash nest-egg and rolling it over from time to time. The Crown can't exclude the proposition that he obtained unexplained funds from other endeavours, other than this armed robbery.[9]

HIS HONOUR: You seem to be saying that if your client were to explain the particular transactions, that's the post 8 March transactions, there would be a risk that in doing so he would reveal the fact that he had been charged with other offences?

ACCUSED: Or engaged in something more serious.

MR DESMOND: Or engaged in other criminal behaviour.[10]

30 During the course of argument, I was referred to two rulings of Kaye J in R v Cox which bear directly on the issue confronting me.[11] With respect to his Honour, his analysis of the issues that arise with regard to such evidence seems entirely appropriate to this case. In the first of those rulings, his Honour ruled that the evidence of the forensic accountant, as it then stood, was inadmissible because it failed to properly and sufficiently identify the facts, assumptions and methodology relied upon by the witness to reach his conclusions concerning cash payments and unsourced cash deposits. The witness had also acted on assumptions as to the spending conduct of "normal" individuals which Kaye J considered were not within the province of a specialised field of learning nor was it an area in which the witness was an expert. In his ruling, Kaye J identified three legal prerequisites for the introduction of opinion evidence:

(a) The opinion evidence must be evidence in respect of which the tribunal of fact would not be able to form a correct judgment without the assistance of a suitably qualified expert.[12]

(b) Such opinion evidence may only be given if the witness is suitably qualified as an expert. That expertise cannot simply be general but must relate to the particular opinion which is sought to be given.[13]

(c) When such evidence is given, the expert must specify the precise criteria relied upon by him or her in order to enable the jury to evaluate for itself the validity of the expert's opinion.[14]

31 Subsequently, Kaye J admitted the evidence when the witness identified in more detail in a re-written report the methodology and assumptions employed by him in reaching his conclusions. He gave evidence as to the basis on which he formulated the assumptions on which he relied. He specifically rejected the suggestion that his assumptions were based on how a family unit save and spend their cash. The assumptions, he said, were based on accounting and his experience in preparing cash flows "over the years".

32 Justice Kaye was then satisfied from the evidence he had heard that the method of analysis employed by the witness was the "the product of the expertise and experience" of the witness.[15] In particular Kaye J was of the view that the witness' evidence would not usurp the role of the jury because the witness would not be giving evidence about the normal spending habits of individuals but rather his evidence would be confined to the application of criteria and assumptions developed by him in order to set off particular transactions against other payments or deposits in the accounts. He imposed appropriate qualifications on how the witness' evidence was to be given.[16] Specifically, his Honour directed that insofar as the witness' conclusions are based on transactions that do not appear in accounting documents but which were derived from the depositional material, those conclusions must be so expressed and the underlying transactions must be proved by admissible evidence. His Honour also imposed the qualification that the witness in that case would not be permitted to express a conclusion that his analysis "... indicates there was some other source of funding to account for" the cash deposits and payments" detected by him. He was also not to be permitted to make "unqualified use" of the term "unsourced" in describing the cash deposits and cash payments. As His Honour observed earlier in his ruling, "[w]hat conclusion is to be derived from such evidence is a matter for the jury."[17] Such reasoning also applied to the use of the word "unsourced" as being a means by which the witness identifies to the jury that an inference or conclusion has been drawn by him which he is expressing.

33 It seems to me that in this case the witness Mr Byrden is properly qualified to give evidence as an expert accountant the effect of which is to identify transactions by accounting analysis which he asserts are unsourced. Unlike the situation confronting Kaye J in R v Cox, this process is more straightforward and concerns an analysis leading to the conclusion that eight transactions after 8 March 2005 represented deposits of cash which were unsourced. However, as Kaye J observed in R v Cox (Ruling No. 2),[18] it is my view that in analysing the cash transactions on which the Crown relies, the jury would be unlikely to form a correct or meaningful judgment on them without the assistance of Mr Byrden. The jury would be assisted to understand the manner in which cash transactions which are "unsourced" are sought to be reduced according to the various steps applied by the witness in his analysis. I am satisfied that the witness has brought to bear his training and qualifications as an accountant and he has specifically referred in his evidence to the accounting concept of reasonableness.[19]

34 I would add that the limitations expressed by Kaye J in R v Cox (Ruling No. 2) to which I have just referred would apply equally here and the witness will not be permitted to use language in the presence of the jury which might indicate to them that he has reached any conclusion about the source of these cash deposits.

35 At the commencement of submissions, counsel for the accused informed me that the accused wished to give evidence on the voir dire. Indeed, the accused himself informed me of that intention. The purpose of the accused giving that evidence was to "lay the evidentiary foundation" to establish that the records on which Mr Byrden based his evidence were incomplete. Mr Desmond submitted that I should hear evidence from the accused in order to identify the prejudice that would flow from Mr Byrden's evidence being admitted. Originally I considered that the prejudice principally relied on did not need to be the subject of evidence. The prejudice was said to be that, on instructions from the accused, were he to have to explain this evidence before a jury, he would have to disclose other criminality on his part and, it was claimed, would compromise defending other charges which have been brought against him and in respect of which he is awaiting trial in the County Court of Victoria. As I understand it, that trial will not commence until the trial before me has been completed.

36 However, on reflection I considered that I should enquire into what it was specifically that the accused wished to put concerning the prejudice of meeting this evidence and I permitted him to give evidence on the voir dire for that purpose. On 17 December 2008, the accused said in evidence, as I understood it, after appropriate cautioning, that the funds which are the cash deposits identified by Mr Byrden in his statement and evidence are funds which came from activities in respect of which he has been charged with various offences of dishonesty by Senior Detective Bertoncello.[20]

37 Mr Desmond thus submitted that if I concluded that the evidence was admissible I should nonetheless exclude the evidence in the exercise of my discretion because, it was submitted, there is a particular prejudice in this evidence being given. The prejudice contended for is that in order to put evidence before a jury that the post 8 March 2005 cash deposits were not the proceeds of the Blackburn North robbery, thus consistent with Mr Rich not being involved, he would have to reveal that they might have been the proceeds of other criminal activity. Mr Desmond seemed to express two concerns - first, that Mr Rich would be required to reveal his defence in relation to another presentment currently before the County Court of Victoria and, second, that there is a prejudicial effect for this trial in that evidence being given.

38 I am not concerned with the first of those claims. If the accused needs to reveal other criminal behaviour on his part in order to explain this evidence, I am not concerned with the effect that might have on some other trial. What I am concerned with is what the prejudicial effect of that might be in this trial.

39 The accused has given evidence on the voir dire suggesting that the cash transactions, particularly the deposits that Mr Byrden refers to, are in fact not from the proceeds of the armed robbery on 8 March 2005 (which he denies participating in) but from other offending in the nature of fraudulent conduct. I note that Mr Byrden in his evidence before me said that he looked at the documents from the "Bertoncello Brief" which concerns what might be broadly described as the fraud matters and which are awaiting trial in the County Court of Victoria and found nothing relevant to his analysis.

40 There is a significant difference in quality between, on the one hand, financial fraud and violent armed robbery and murder. In my opinion the proposed explanation does not mean that the evidence cannot be admitted. The accused can describe where the money came from and the jury can be clearly directed that it is no part of their role, nor is it relevant to their determination of the issues, to decide whether such conduct amounts to a criminal offence or offences. Although there is an adverse effect in the accused giving the explanation he apparently proposes, in my opinion it can be properly dealt with by directions to the jury. I would also instruct the jury that having heard such evidence, if they consequently conclude the accused to be of bad character as a result they must not reason that he is therefore the type of person who would commit the crimes they are considering in this trial.

41 I propose to admit the evidence. As I discussed with counsel, the presentation of this evidence would not appear to need to be complex. The central part of the evidence concerns evidence of cash transactions after 8 March 2005 which are unsourced. There is a risk that unnecessary complexity in the presentation of it will create its own prejudice and that should be avoided.

[1] See, eg, R v Rich (Ruling No. 1) [2008] VSC 119R at [2]- [3]; R v Rich (Ruling No. 2) [2008] VSC 141 at [4]- [6].

[6] See R v Cox (Ruling No. 1) [2005] VSC 157 at [11] (per Kaye J).

[11] R v Cox (Ruling No. 1) [2005] VSC 157; R v Cox (Ruling No. 2) [2005] VSC 224.

[12] R v Cox (Ruling No. 1) [2005] VSC 157 at [12]. See also Clark v Ryan [1960] HCA 42; (1960) 103 CLR 486; R v Turner [1975] QB 834.

[13] R v Cox (Ruling No. 1) [2005] VSC 157 at [14].

[14] Ibid at [15]. See also Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705.

[15] R v Cox (Ruling No. 2) [2005] VSC 224 at [30].

At a glance

Court

Decision date

Before

Source

Judgment (60 paragraphs)

Parties

Cases Cited (2)