R v Senese [2004] VSCA 136

10. After hearing a plea in mitigation made on the applicant's behalf, in the course of which no prior convictions were alleged against him, on 4 October 2002, the applicant was sentenced on each count of false accounting, other than counts 53 and 54, to two years' imprisonment and the sentencing judge directed that these

sentences be served concurrently on the basis that they represented a course of conduct. Her Honour imposed a sentence of 18 months' imprisonment on each of counts 53 and 54 and directed that six months of the sentence in respect of count 54 be served cumulatively on that imposed on count 53. In respect of counts 25 and 26 the sentencing judge imposed sentences of four years' and three years' imprisonment respectively, but considered that, although the counts reflected two separate, substantial misappropriations, nevertheless the circumstances called for a degree of concurrency. Accordingly, her Honour directed that two years of the sentence imposed on count 26 be served concurrently with that imposed on count 25. The applicant was sentenced in respect of count 52 to four months' imprisonment to be served concurrently with the other sentences. Her Honour said that, having regard to the principles of proportionality and totality and the requirement not to impose a crushing sentence, she would direct that 12 months' of the sentence imposed on counts 2 to 24 be served cumulatively on the sentences imposed on counts 25 and 26, and that 12 months of the sentence imposed on counts 53 and 54 be served cumulatively with that imposed on the previous counts. Thus, the applicant was sentenced to a total effective sentence of seven years' imprisonment and her Honour directed that he serve five years' imprisonment before being eligible for parole.

14. The applicant now seeks leave to appeal against his conviction, or alternatively, the sentences imposed on him on the grounds set out in notices of appeal, each dated 16 October 2002, and the grounds that were added by order of the Registrar on 5 April 2004.

18. The circumstances of the offending were these. During the 1990s the applicant was involved in the finance and investment industry through a number of companies that he controlled. They were known as the Euro Capital Group and included EC Consolidated Capital Ltd. ("ECCCL"). From about September 1992 onwards the applicant offered to members of the public the opportunity to acquire "A" class preference shares in ECCCL on the basis that 40% of the money invested would be applied to the purchase of certificates of deposit with Dresdner AG Bank ("Dresdner"), which was a "AAA" credit rated institution, and the balance would be invested in international money markets to generate income so as to fund the cost of operations of ECCCL, with the balance of the income being distributed amongst the shareholders. The applicant represented to the subscribers that the certificates of deposit that were then to be acquired from Dresdner were to mature at the end of ten years, at which point the proceeds from those deposits would be at least equal in amount to the capital that the subscribers outlaid in the purchase of the preference shares. It was part of the arrangement that the certificates of deposit would be held by a third party, National Registries Pty Ltd, pursuant to an agency agreement dated 2 December 1992, the intention being that ECCCL would not have access to the deposits before they matured unless it first obtained the investors' consent to access the funds. The subscribers were told that, in this way, they were to be quarantined from the risk of losing their capital investment in the "A" class preference shares. They were also told that they had a good prospect of receiving significant returns from the money that was to be applied to trading on the international money market.

21. In the result, between approximately December 1992 and December 1995, ECCCL received over $11m. from members of the public by way of subscription for "A" class preference shares. In accordance with the subscription agreement**,** until some time in 1994, 40% of the investment moneys - in the order of $5m. - was used to purchase certificates of deposit from Dresdner. It seems that in 1994 the applicant received taxation advice that the interest paid by Dresdner on its certificates of deposit was not competitive and, more importantly, that the interest earned was subject to Australian taxation. It was the applicant's case that, as a consequence, with the investors' consent, he varied the agency agreement with National Registries Pty Ltd, so as to enable ECCCL to redeem the Dresdner certificates of deposit and reinvest the proceeds with other, more competitive "AAA" credit rated institutions as selected by the company. In the event, sometime after 4 June 1994, a deed of variation was executed and, at the applicant's behest, the certificates of deposit with Dresdner were redeemed. The proceeds were later used to obtain certificates of deposit from Westpac Banking Corporation ("Westpac") and NatWest Bank ("NatWest"). Significantly, however, the certificates issued by Westpac and NatWest were obtained in the name of the Euro Capital Group and were never lodged with National Registries Pty Ltd.

24. On 22 November 1995, the applicant caused the Westpac certificates, which were then valued at approximately $4.3m., to be redeemed and for the proceeds to be paid into ECCCL's cash management account with its bank. Several months later, on 28 March 1996, the applicant directed that the certificates issued by NatWest also be redeemed and that the proceeds be paid into the same ECCCL account. The applicant did not inform the holders of ECCCL "A" class preference shares of these transactions. It seems that by 1995, or in the course of that year, for reasons which are not relevant for present purposes, the applicant and his companies were experiencing significant financial difficulties. The Crown alleged that, in order to deal with this situation, the applicant withdrew, progressively from about 24 November 1995, first the proceeds of the Westpac certificate and then those that came from the NatWest certificate - a total that was well in excess of $5m. - and used the money to pay the running costs and debts of ECCCL and those of his associated companies and to fund his personal expenditure, including payment of $800,000 for the building of his house in Brighton. Thus, the Crown said, the applicant stole the money belonging to the subscribers. These thefts were the subject of counts 25 and 26 and were the main focus of attention at the applicant's trial. The Crown stated its case against the applicant in two ways. Its primary case was that the applicant stole the proceeds of the deposits when he placed them into his company's cash management accounts, namely, on 22 November 1995 and 28 March 1996 respectively. Later in the trial the Crown contended, in the alternative, that if the jury were not satisfied that the applicant stole the money on those occasions, they should conclude that the theft occurred at or about the time when he commenced to draw on the funds, namely, very shortly after their deposit into the cash management account. Counts 27 to 51 were, as I have mentioned, alternative to counts 25 and 26 and related to the progressive withdrawals by the applicant from the cash management account. In any event, by 30 June 1996 the subscribers' capital investment, which had been placed in certified deposits, first with Dresdner and then with Westpac and NatWest, had been dissipated by the applicant in the way I have described.

27. It was the applicant's case at trial that he believed that he was entitled to deal with the certified deposits, and with their proceeds, in the way he did, having regard to the following. He claimed in his evidence that he effectively reinvested the funds that reflected the Westpac and NatWest certified deposits through a company called Menota Pty Ltd ("Menota") pursuant to an agreement made in about November 1995 whereby ECCCL (notionally) paid the proceeds to Menota in exchange for promissory notes issued by it. According to the applicant, they were backed by mortgages and had a future maturative value of not less than $10m. Menota then (notionally) lent the same amount back to ECCCL. The actual proceeds of the certified deposits, however, remained in ECCCL's cash management account and, on the applicant's case, were made available to ECCCL as loans from Menota. This arrangement, said the applicant, entitled him to draw on the proceeds as he did. He contended that the agreement with Menota was made in order to minimise the exposure of the invested funds to Australian taxation and in order to gain a greater return for the shareholders. Although the applicant's case was that the agreement with Menota was evidenced by an exchange of correspondence, this claim was not put to relevant Crown witnesses by his counsel, as will be mentioned again later. The Crown contended that this explanation by the applicant for appropriating the proceeds was but a tissue of lies and that in truth the applicant stole the money that belonged to the subscribers. It is apparent from the jury's verdicts that they rejected the applicant's contention as to his entitlement to deal with the proceeds of the certified deposits. As I will explain later, the Crown called evidence that, at the time when the Australian Securities and Investments Commission and the auditors were investigating the applicant's companies in March and April 1997, he procured a director of Menota, Dr Francken, to sign a letter on 22 April 1997, which the applicant had drafted and back-dated to 22 November 1995, that purported to reflect the agreement that he contended existed between ECCCL and Menota in respect of the proceeds of certified deposits. He also sent Dr Francken a facsimile on 25 April 1997 in which he purported to confirm earlier requests by ECCCL to Menota to liquidate the promissory notes and thereby put ECCCL in funds. These fraudulent letters were the subject of counts 53 and 54.

30. It was also claimed by the Crown that, contrary to the applicant's promise to the subscribers, he failed to invest the balance of their subscriptions in international money markets. Instead, the bulk of the money was used to pay ECCCL's operating expenses and those of other companies in the Euro Capital Group. This offending conduct was the subject of counts 2 to 24, which alleged, as I have noted, that the quarterly statements sent by the applicant's company to the subscribers misstated the true position of the investments thereby leading them to believe that their investments were dealt with as was promised.

33. Count 52, to which the applicant pleaded guilty, alleged that he wrongfully obstructed an auditor of ECCCL in the performance of his duty. The circumstances of the offending were these. Between 30 May 1996 and 28 May 1997, the auditors of ECCCL sought information they considered necessary for the proper conduct of the audit of the company for the year ended 31 December 1995. It was said that the applicant persistently concealed from them his dealings with the Westpac and NatWest deposits, and in particular, his dissipation of their proceeds. It was also claimed that the applicant positively misled the auditors in relation to other aspects of the operations of ECCCL and he did so in an endeavour to prevent them from discovering the truth in respect of his own, and ECCCL's, conduct affecting, inter alia, the subscribers' funds. To that end, the Crown alleged, the applicant succeeded in preventing the auditors from discovering until May 1997 that the certificates of deposit had been redeemed by him and that the funds invested by the subscribers for the "A" class shareholders had been entirely dissipated. Later, the subscribers successfully sued their former solicitors in negligence in respect of their losses and recovered from them an amount equal to their capital investments in ECCCL.

36. It is convenient to mention at this stage that, at the beginning of her charge, the trial judge provided to the jury, for their assistance, a folder ("the black folder") that contained, amongst other matters, a number of summaries of the elements of the offences that were the subject of the various counts. As will be explained later, during her charge, the learned judge substituted fresh summaries for some of those that were provided earlier to the jury. Her Honour made reference to the material in the black folder during the course of her charge and although, as will be seen later, the applicant's counsel before us was critical of some of this material, no objection was taken at trial to its provision to the jury as an aide memoir.

40. I now turn to consider the grounds that were pressed by the applicant in support of his application for leave to appeal against conviction and I do so in the order in which these grounds were argued by Mr Croucher for the applicant.

Ground 4 - Verdicts on counts 25 and 26 Unsafe and Uncertain

44. This ground was argued first. The essential complaint, as initially put by counsel, was that the verdicts on those counts are unsafe and unsatisfactory because they suffer from latent duplicity, given the alternative ways in which they were left with the jury. These counts, it will be recalled, allege that on or about 22 November 1995 and 28 March 1996 respectively, the applicant stole the proceeds of the Westpac and NatWest certificates of deposits. The applicant's argument under cover of this ground was that the Crown opened its case in relation to those counts on the basis that the theft took place at the time when the applicant redeemed the certified deposits and deposited the proceeds in ECCCL's cash management account, namely, on the two dates to which reference has just been made, yet in its closing address the Crown relied on an additional basis for conviction, namely, that, if there was no theft by the applicant at the time the proceeds were deposited into ECCCL's account, the applicant wrongfully appropriated them when he started to use the money on 24 November 1995. Mr Croucher pointed out that, in the written material that was provided to the jury in the black folder, her Honour spoke of the principal issue in respect of counts 25 and 26 being whether the applicant acted dishonestly at the time he paid the proceeds of the deposits into the company's cash management account, but in her verbal charge the learned judge reminded the jury that the Crown case on counts 25 and 26 was that the money was stolen either when it was paid into the cash management account or when the applicant first started "dipping into it". The judge explained in her charge that, according to the Crown case, even if the applicant's "intention on 22 November 1995 was honest by the time he started dipping into it on 24 November and following it, he starts treating it as his own... and therefore he appropriated it at that stage."

47. Mr Croucher submitted that, given the different ways in which each of counts 25 and 26 was left to the jury, the resulting convictions on those counts is uncertain, or is bad for latent duplicity, or latent multiplicity. Counsel argued that each withdrawal by the applicant from the cash management account on and after 24 November 1995, was separate in time and circumstance from the alleged theft that was said to have been constituted by the deposit of the proceeds of the certificates of deposit into the cash management account. Thus, it was said by way of example, the theft on 22 November 1995 was a separate offence from the offences constituted by each of the periodic withdrawals from that account which commenced two days later. Counsel claimed that the vice in these convictions is that it is not possible to know, in respect of the conviction on count 25, for example, whether the jury were unanimous that the theft took place on 22 November or 24 November, or whether some jurors considered that the theft occurred on 22 November while other jurors concluded that the dishonest appropriation occurred at a later time. In support of his claim that the conviction on count 25 is bad, counsel relied on the decision of the Full Court in R. v. Trotter[4]. He argued that the case for uncertainty here was more compelling than in Trotter given that, in relation to count 25, the subsequent withdrawals were all separate acts and, therefore, arguably separate thefts in themselves. The same argument was put in respect of count 26.

50. In analysing this contention it is convenient to consider it first in the context of count 25, and put to one side for the moment count 26. It is apparent that the resolution of the complaint in relation to count 25 will apply equally to the challenge to the conviction on count 26.

53. It is plain enough from a practical or common sense point of view[5] that the counts themselves did not suffer from duplicity because neither charged the applicant with having committed two or more distinct offences.[6] It also seems clear enough that it could not be said that the evidence led by the prosecution revealed two or more offences in respect of each of the two counts, so that there is no uncertainty as to what offence the Crown said was committed by the applicant. It should be said in fairness to Mr Croucher that he did not press these points. Rather, as I have said, his principal case was that there was, what he called, latent duplicity in the verdict because, although the jury may have been unanimous in their conclusion that the applicant dishonestly appropriated the money in question, it could not be said whether there was unanimity as to the date when the appropriation occurred. The term "latent duplicity" was explained by Phillips and Buchanan, JJ.A., with whom Ormiston, J.A. agreed, in R. v. Walsh[7]:

"As we apprehend it, a count is bad for duplicity if it charges more than one offence; on the other hand, if the count charges but one offence and evidence is led of more than one instance of such offending, then the verdict, if against the accused, will be uncertain. This last is sometimes called latent uncertainty because it depends, not so much upon the terms of the count, as upon the case sought to be made by the Crown."[8]

"... the question of unanimity can arise when only one offence is charged and only one offence is proved but the jury is presented through the evidence led with more than one route by which to determine guilt. The question which has then arisen, in a number of cases, is whether the jury must be directed to be unanimous, not only in the verdict, but also in the route by which the verdict is reached."

Their Honours then examined a large number of cases, in each of which the question whether there was sufficient unanimity in the verdict was considered and summarised their review of the authorities in the following terms[10]:

"... it seems that the cases give rise to two situations at least. ... The first is that exemplified by the cases concerning murder and manslaughter, where, when alternative legal bases of guilt are proposed by the Crown but depend substantially upon the same facts, there is no need for a direction on `unanimity' about one or other or more of those bases, at least if they do not `involve materially different issues or consequences'....The second situation is where one offence is charged, such as obtaining property by deception, but a number of discrete acts is relied upon as proof and any one of them would entitle the jury to convict. If those discrete acts go to the proof of an essential ingredient of the crime charged, then the jury cannot convict unless they are agreed upon that act which, in their opinion, does constitute that essential ingredient. In this type of case, much will depend `upon the precise nature of the charge, the nature of the prosecution's case and the defence and what are the live issues at the conclusion of the evidence'."

61. In light of the analysis of this issue in Walsh, it is more appropriate to ask whether the verdict in this case lacked the necessary unanimity, rather than considering if it is vitiated by reason of latent duplicity. Be that as it may, Mr Croucher argued that, given the way in which the Crown put its case as to when the theft took place for the purposes of counts 25 and 26, some of the jury may have been satisfied, to the requisite standard, that it occurred, in relation to the Westpac funds on 22 November 1995, while others may have concluded that it took place on 24 November 1995. Therefore, counsel said, there was no unanimity in the jury verdict on this issue and thus, the conviction is vitiated by reason of uncertainty.

64. Before proceeding to deal with the applicant's argument under this ground, it is convenient to look briefly at Trotter on which, as I have said, the applicant relied in support of his case under this ground. It was one of the cases that was examined by Phillips and Buchanan, JJ.A. in Walsh in the context of their Honour's illustration of circumstances that constitute latent uncertainty or lack of unanimity in verdicts. In Trotter the uncertainty was as to which of the two offences disclosed by the evidence was the applicant convicted - having only been charged with one. The accused was charged with one count of indecent assault upon a boy, but in the course of the trial the boy gave evidence of an assault in the bedroom and of an assault in the bathroom. The Crown made no election between the two and, when the jury found the accused guilty, the verdict was set aside on appeal on the ground that it was tainted with uncertainty. As Phillips and Buchanan, JJ.A. pointed out, there was no way of knowing of which assault the jury had been persuaded; it might have been the first or the second or both, as each of the incidents relied upon, one in the bathroom and one in the bedroom, constituted, in itself, the offence as charged. Although there was no duplicity in the charge an ambiguity arose out of the evidence. In the course of its judgment the court in Trotter said[11] that it was:

"impossible to know whether there was unanimity on the part of the jury in respect of one or other of the two acts of the indecent assault. All members of the jury might have been unanimous on the fact that the applicant had committed an indecent assault on [the boy], but some members of the jury might have arrived at that conclusion on the basis of the bathroom assault and others on the basis of the bedroom assault".

In that case there was one offence, but the discrete acts established by the evidence - the assault in the bedroom and the assault in the bathroom - went to the proof of matters beyond the essential ingredients of the crime charged and, therefore, before the jury could convict, they had to be agreed as to the act which constituted the offence. As their Honours said,[12] the real vice in the case was that the prosecution was not required to specify which of the two assaults described in evidence was the subject of the relevant count, which left it open to the Crown to prove the offence on the basis of either of the assaults, where each should properly have been the subject of a separate count**.**

69. The situation here was materially different from that in Trotter. There was no suggestion by the Crown that the appropriation of funds by the applicant on 22 November or 24 November amounted to separate offences. Rather, the Crown case was, in the context of count 25, for example, that there was but one theft of the one amount of money, but that this theft occurred on either of the two days. The Crown's primary case was that the applicant dishonestly appropriated the money on 22 November. But, it said, if the jury were not satisfied beyond reasonable doubt that it occurred on that date, then it certainly occurred by the time he started "dipping into" the cash management account, namely, on 24 November. It is plain enough that it was never the Crown's case that each of the subsequent withdrawals amounted to a separate theft. Such withdrawals were the subject of the alternative allegations, namely, those in counts 27 to 51.

72. Put another way, here the crime charged was theft, an essential ingredient of which was dishonest appropriation by the applicant of the certain funds. It is that aspect of the charge on which there had to be unanimity by the jury and it was irrelevant that they may not have been unanimous as to the date on which that dishonest appropriation occurred. The date on which it took place was not an essential aspect of the charge. Consequently, since it is plain that the jury were unanimous in their conclusion that the applicant wrongfully appropriated the money, the fact that they may have differed as to whether it occurred on the first date or the second did not make their verdict uncertain.

75. Moreover, as the court pointed out in Trotter[13], the real test to determine whether the verdicts were bad for uncertainty in that case was whether, if the applicant had been indicted again on a presentment in the same terms as the one on which he was convicted, but specifying one or other of the two indecent assaults, he could have pleaded autrefois acquit. In Trotter, because of the uncertainty as to which offence the jury convicted the applicant, the answer would have to have been in the negative. This question, however, would not be the relevant question to ask in the context of this case because the evidence here disclosed only one offence which took place on one or other of two dates. A more relevant question here might be whether, if the applicant were indicted again on a presentment on the count of theft of the money specified in count 25, but on the basis that he committed it on, say, 24 November 1995, could he plead autrefois convict? In my view, such a defence would be open to him because he has been convicted of the offence of theft of that money, on or about 22 November 1995. Thus, I consider that, unlike the situation in Trotter, here there would be no relevant uncertainty as to the applicant's convictions as to the two counts in question.

78. It follows that, in my view, the verdicts here are not unsafe and unsatisfactory due to any uncertainty as to the jury's unanimity in their conclusion that the applicant was guilty of the counts of theft with which he was charged. Consequently, I consider that this ground has not been made out.

82. The next ground that was argued by Mr Croucher was ground 2, under cover of which he submitted that her Honour erred in the following ways:

(a) By effectively directing the jury that it was for the applicant to establish, or that it was an element of the defence of lack of dishonesty, that he had a legal right to do what he did.

(b) The effect of her directions was to reverse the onus of proof and/or undermine the standard of proof in relation to dishonesty. In that context it was contended that her Honour did not sufficiently direct the jury that the onus was on the Crown to establish that the applicant did not have the honest intent for which he contended and her Honour wrongly failed to direct the jury that a failure to exclude the reasonable possibility of dishonest intention might nevertheless be relevant to whether the Crown had proved beyond reasonable doubt that the applicant had acted dishonestly.

(c) By giving directions to the effect that willingness to pay for the appropriated property was not an answer to the issue of dishonesty.

It is plain, therefore, that the complaints are essentially directed to aspects of her Honour's charge that dealt with dishonesty, which was the key issue in the applicant's trial since it was an ingredient of all the counts other than count 52. There was no disagreement between the parties as to the existence of the financial transactions that formed the context in which the alleged offending conduct took place. It was accepted by the applicant at his trial that the financial transactions occurred broadly as the Crown alleged and, as I have said, the substantial area of dispute was whether the applicant had acted dishonestly in relation to his appropriation of the funds in the cash management accounts.

(a) Proof of legal right

88. It is apparent that there are two aspects of this complaint. The first is the claim that her Honour wrongly told the jury that an ingredient of the applicant's defence of lack of dishonest intention, which was put forward by the applicant, was that he had a legal right to do what he did and that her Honour effectively told the jury that it was for the applicant to establish such a defence. The second aspect of the complaint really forms part of the complaint under paragraph (b) and it is more appropriate to consider it in that context. For the present, I shall deal with the first aspect of Mr Croucher's complaint under this paragraph.

91. Mr Croucher first pointed to the early part of her Honour's oral charge where she told the jury that, for the purposes of the counts before them, dishonesty meant that the applicant engaged in the impugned conduct when he had no legal right to do so and with knowledge that he had no such right. Counsel pointed by way of example to what her Honour relevantly said in respect of counts 1 to 24:

"Dishonestly, in respect of these offences, means having no legal right to do so, and knowing that he had no legal right to do so at the time the entries were made ..."

As to the judge's directions concerning the defence of lack of dishonesty, as Mr Croucher pointed out, her Honour said this at the early stages of her charge in the context of counts 25 and 26:

"...dishonestly refers to the accused's state of mind, and here that means that at the time of taking did the accused believe he had any right to take it, and did he have any legal right to take it. The law says a person's appropriation of property belonging to another is not to be regarded as dishonest if he appropriates, that is takes, the property in the belief that he has in law the right to deprive the other of it on behalf of himself or a third person, or if he appropriates the property in the belief that he would have had the other's consent if the other knew of the appropriation and the circumstances of it."

It can be assumed for present purposes that her Honour gave like directions in respect of counts 27 to 51 and counts 53 and 54.

98. It will be noted that one of the things her Honour told the jury in those passages was that an ingredient of the defence of lack of dishonesty was that the applicant had a legal right to take the property, saying nothing about his belief on this issue, a direction which was plainly inadequate. But, as the applicant's counsel acknowledged, shortly after that direction, the prosecutor pointed out this "deficiency" to her Honour.[14] Whilst, in terms, the prosecutor made his above submissions when speaking in the context of counts 27 to 51, on a fair reading of the transcript it is quite apparent that he was referring to dishonesty as it related to all the relevant counts. Importantly, the prosecutor submitted that her Honour should "clarify" her direction on dishonesty when she resumed her charge. Counsel for the applicant agreed with what the prosecutor had said, but emphasised that he favoured a short redirection because "detailed explanations tend inadvertently to shift the burden of proof around". I note for completeness that the inadequacy in her Honour's charge to that point in time was not one that was raised by defence counsel.

101. In the result, on the next sitting day, her Honour effectively redirected the jury on the relevant elements of dishonesty, omitting any reference to dishonesty being made out upon proof of absence of legal right. The learned judge began by referring the jury to what she had told them earlier in her charge about the element of dishonesty, which was "relevant to all the sets of counts, but in particular to false accounting and the improper use of position offences". Her Honour then told the jury, albeit in the context of the false accounting counts, that before they could convict the applicant they had to be satisfied that he falsified the accounts "... without any belief that he had a legal right to do so". In relation to the charges of improperly using his position of officer of the company, her Honour said that dishonesty would be established if the applicant "caused the sum [in question] to be drawn without any belief that he had a legal right to cause that particular sum to be drawn in the circumstances in which it was". Relevantly, her Honour went on to say: "You must bear in mind that it is for the prosecution to prove ... dishonesty beyond reasonable doubt..." The learned judge then went on to summarise the evidence and counsels' addresses. It is true, as I have said, that in terms, the redirection was made in the context of counts 1 to 24 and counts 53 and 54, but I consider that, looking at the charge as a whole, it would have been plain enough to the jury that what her Honour there said about dishonesty by way of redirection was to apply also to the theft counts.

104. I note for completeness that, notwithstanding counsel's justified criticism of the judge's early directions on dishonesty, her Honour had told the jury on a number of occasions during that phase of her charge that conduct is not dishonest if it is committed in the belief that the offender had the right to act as he did - relevantly, for present purposes, if he believed that he had the right to liquidate the deposits either because there was a continuing approval of the investors, which authorised that course, or because he believed that if their consent to the transaction was sought, it would have been forthcoming.

107. At the conclusion of her charge, her Honour gave the jury, for insertion into the black folder, to which I have referred, substitute pages that set out revised summaries of the elements of the offences, the terms of which accorded with the discussion the judge had with counsel as to the meaning of dishonesty. In the context of the theft counts, the summary relevantly provided that the Crown was required to prove beyond reasonable doubt, inter alia, that the applicant's impugned conduct was dishonest and "dishonesty" was said to mean "without any belief that he has a legal right to the property" and that "'belief' [included] genuine mistaken belief". The summary went on to state, amongst other things:

"(a) A person's appropriation of property belonging to another is not to be regarded as dishonest if: i he appropriates the property in the belief that he has in law the right to deprive the other of it on behalf of himself or of a third person, or ii he appropriates the property in the belief that he would have the other's consent if the other knew of the appropriation and the circumstances of it".

Her Honour then took the jury through the terms of the revised summaries and, in the context of the theft counts, effectively told them, as I have mentioned, that even if they were satisfied that the applicant had acted lawfully on 22 November when he paid the proceeds of the Westpac deposit into the company's cash management account, once he commenced drawing on those funds for his own purposes, the "taking of them became a dishonest taking". Her Honour then reminded the jury that the principal issue in dispute before them was "whether the Crown has proved beyond reasonable doubt that the applicant was acting dishonestly at the time when he caused the sums [in question] to be paid into the ECCCL cash management account". It is to be noted that neither counsel took exception to her Honour's charge, a matter to which I will return.

112. Be that as it may, Mr Croucher argued that her Honour's directions were wrong in the following respects. First, it was said, her Honour did not make it clear to the jury that it is no bar to a defence of "lack of dishonesty that an asserted belief in a legal right was unfounded in either law or fact", citing in support of this contention R. v. Bernhard[15]. I consider that there is no substance in this complaint. Whilst counsel's basic contention that a mistaken but honest belief in a state of relevant facts can afford a defence to a charge of dishonesty is correct, I consider that, on a fair reading of her Honour's charge as a whole, there was no failure by the judge to convey that to the jury. It will be recalled that her Honour's summary in the black folder made it plain that there was no dishonesty if the appropriation was made in the genuine, but erroneous, or, as her Honour put it, "mistaken", belief as to legal entitlement.

115. Secondly, counsel claimed that the directions confused the jury by reason of the fact that the first redirection made reference only to counts 1 to 24 and 53 and 54. I think that this point is also baseless. As I have already mentioned, looking at her Honour's charge as a whole, there was no sensible possibility that the jury were relevantly confused by her Honour's redirection as is claimed by the applicant. First, the learned judge said near the outset of her redirection that it related to dishonesty in respect of "all the sets of counts". Secondly, that her Honour's definition of dishonesty, in its redefined form, was applicable also to the theft charges was made plain by the rest of her Honour's charge where she deals with dishonesty, as I have already explained.

118. It was next said for the applicant that further confusion was likely to have been engendered in the minds of the jury by her Honour's failure to tell them to ignore her earlier direction on the meaning of dishonesty that her Honour herself recognised as being inadequate. Again, I consider that there is no sensible likelihood that the jury would have been confused as the applicant contends. A fair reading of the redirection makes it apparent that her Honour was effectively telling the jury to ignore what she had earlier told them as to the meaning of dishonesty and to "take it from [her]" what meaning they should attribute to that term for the purpose of determining if the applicant was guilty of, inter alia, the theft counts.

121. Importantly, as I explain later, I consider that there is no reasonable likelihood that the jury would have formed the impression from the charge as a whole that it was for the applicant to establish that he believed that he had the legal right to do what he did. Her Honour made it sufficiently clear, I think, in her written and oral directions that the onus of proof was on the prosecution and, in her redirection, it was made apparent that mere proof of absence of legal right to an appropriation did not establish dishonesty.

124. For these reasons, I consider that paragraph (a) of ground 2 has not been made out.

128. Mr Croucher's main argument under this paragraph of ground 2 was that her Honour did not sufficiently explain to the jury that, because the applicant raised as a defence his belief that he had the right to deal with the funds in question, it was for the Crown to establish beyond reasonable doubt that the applicant did not hold such a belief or, put another way, exclude the reasonable possibility that he so believed. Counsel argued that, although on several occasions her Honour correctly told the jury that the Crown must prove beyond reasonable doubt that the applicant acted dishonestly at the relevant time, these directions were totally undermined by directions on the meaning of dishonesty or absence of dishonesty. Her Honour's charge, said counsel, would have led the jury to understand that it was for the applicant to establish that he held such a belief or, at the very least, there was a reasonable risk that the jury would have so understood her directions. Thus, it was said, her Honour's charge had the effect of reversing the onus of proof and/or undermining the standard of proof on the defence of lack of dishonesty. In support of this submission, counsel emphasised:

- that in the passages of her Honour's charge to which reference has been made earlier, the judge posed the question as to whether the applicant held the belief for which he contended in negative terms, thereby giving rise to the risk that the jury might conclude that by reason of that it was a matter for the applicant to establish - counsel pointed to the above passages in her Honour's charge such as: "did the [applicant] believe that he had a legal right ... " and "if he believed that he had such a right ...".

- that a significant number of such rhetorical questions were effectively linked to the applicant's claim in his evidence that he believed he acted lawfully when dealing with the money in question - such as: "that is what the accused man says ..." - which might have been understood by the jury as requiring the applicant to establish that he had acted dishonestly.

133. Moreover, said counsel, the judge failed to tell the jury that it was for the Crown to prove beyond reasonable doubt that the applicant did not hold such a belief and that they could not properly conclude that he had acted dishonestly unless they were satisfied beyond reasonable doubt that the Crown had excluded the reasonable possibility that the applicant held the belief for which he contended. It was not sufficient, it was claimed, for her Honour merely to state the relevant provisions of the Crimes Act dealing with theft and not explain how those principles operated, or could operate, in the context of the present case. In all the circumstances, said Mr Croucher, the jury might not have understood that they could not properly convict the applicant of the dishonesty offences unless they were satisfied beyond reasonable doubt that he did not have the belief for which he contended. Counsel contended that her Honour's charge effectively relieved the prosecution of the obligation of disputing the applicant's claim that he held this belief and in support of that contention counsel relied on certain observations of Gaudron, J. and Hayne and Gummow, JJ. in Murray v. The Queen[16]. In particular, Mr Croucher pointed to the statement by Gaudron, J.[17] that the issue for the jury was not whether they should accept the applicant's version, but whether the prosecution had negatived his explanation as being reasonably open. In that case, the defence was that the accused did not intend to pull the trigger that discharged the shotgun and killed the deceased. In the circumstances, said her Honour, the impugned direction misstated the issue for determination in a way that relieved the prosecution of proving its case beyond reasonable doubt. Similarly, Gummow and Hayne, JJ.[18] pointed out that it was erroneous for the trial judge to tell the jury that it was for them to decide which version of events they would accept - that of the prosecution or the accused. The question for the jury, said their Honours, was whether the prosecution had proved the relevant elements of the offence beyond reasonable doubt. Their Honours concluded that the trial judge's direction about accepting the applicant's version of events "was apt to mislead the jury about the decision they have to make, which was whether the prosecution had proved the relevant elements of the offence beyond reasonable doubt".

136. Counsel further argued that her Honour's failure to tell the jury that it was for the Crown to negative the applicant's claimed belief was similar to directing the jury on self-defence[19] without telling them that it was the obligation of the Crown to exclude the reasonable possibility that it was necessary for the applicant to do what he did in self defence and that if the Crown failed to exclude such a reasonable possibility the accused could not be convicted of the offence.

139. Thus, said Mr Croucher, if one looks at her Honour's charge it is apparent that the judge inadvertently reversed the onus of proof or there was a reasonable risk that she did so. But in determining whether her Honour erred as counsel contended, it is necessary to have regard to the whole of the judge's charge and the context in which the relevant aspects of it were made. As Kirby, J. explained in The Queen v. Zoneff[20], a principal consideration in reviewing the judge's direction to a jury is to establish that there was such error that the applicant was thereby deprived of a fair trial according to law.

"That is why it is always important to consider the judicial directions complained about in the context of the issues that were fought at the trial, the addresses that have preceded it and the requests (if any) for redirection. There could be few developments more destructive to the character of a jury trial, as it has been conducted for centuries, than a minute and pernickety attention to the words of the judge's charge, divorced from their context and expressed purposes. Legal accuracy is demanded. But in most cases, particular verbal formulae are not. The judge is speaking to a jury. The regurgitation of a fixed form of words, read out to render the directions appeal-proof, would significantly alter the character of a jury trial. It would distort effective oral communication with the jury." [Citations omitted.]

It is unfortunate that the trial judge here did not take greater care to emphasise in terms more than she did that, given that the applicant raised the defence of honest belief that he had a right to use the funds as he did, it was for the Crown to prove beyond reasonable doubt that the applicant did not hold such a belief. Nevertheless, the essential question is whether, because of her Honour's failure to state the requirement sufficiently in terms, there was a relevant risk that the jury did not understand or appreciate that they could not properly convict the applicant unless they were satisfied beyond reasonable doubt that the Crown had established that the applicant did not hold the belief for which he contended.

144. In considering this question, it is relevant to note first that her Honour and counsel, each of whom is very experienced in this area of the law, fully understood that it was for the Crown to prove beyond reasonable doubt that the applicant did not hold the belief for which he contended, and it would be surprising, to say the least, if they also did not appreciate that it was critical that the jury understood this. Thus, for example in the course of the charge, during discussions between Bench and Bar in the absence of the jury, when the prosecutor pointed out to her Honour the inadequacy of the early part of her charge as I have described, the applicant's counsel made it plain to her Honour that he considered that it was for the Crown to prove that the applicant had no belief in a legal right to the money. At least at one stage during these discussions there seems to have been a difference of view between the Crown and defence as to whether the applicant's belief had to be that the applicant had a right to deal with the money, or that he believed he had a legal right to do so. In the end, however, this difference was resolved and the next few pages of the transcript make it plain that the prosecutor and the judge, as well as counsel for the applicant, were of the view that the Crown had to establish the absence of such a belief in the applicant.

147. There is no doubt that her Honour told the jury on a number of occasions in the course of her charge that it was for the Crown to establish every element of the offence, including dishonesty. Thus, in the final version of the black folder, for example, the judge wrote - with agreement of counsel - in relation to counts 25 and 26, that the Crown's obligation to prove beyond reasonable doubt each of the elements of the offence of theft, including that the applicant's impugned conduct was dishonest, meant that the conduct was pursued "without any belief that he has a legal right to the property [and that "belief" included a genuine though mistaken belief]". Similarly, in her oral charge, the judge made it plain on a number of occasions that the Crown had to prove beyond reasonable doubt the elements of theft, including that the applicant did not hold the belief for which he contends. Towards the very end of the charge the judge reminded the jury that the principal issue in dispute in respect of the theft counts was whether the Crown had "proved beyond reasonable doubt that the accused was acting dishonestly at the time he paid the money in question into the cash management account".

150. Moreover, counsels' addresses proceeded on the basis that the Crown had to establish every aspect of the offence, including that pertaining to the applicant's alleged belief that he had the right to act as he did. In that context I note that the prosecutor spent some time in explaining to the jury that what the applicant had raised in his defence (as to his relevant belief) was "plainly not true". The applicant's trial counsel also told the jury in his final address that in respect of the theft counts, it was for the prosecution to prove beyond reasonable doubt that the applicant's explanation as to his appropriation of the funds was "not right" and that he had acted dishonestly. Counsel pointed out that it would be unfair if the applicant had to prove his innocence and asked rhetorically how does one prove that he acted honestly.

153. Moreover, in his opening to the jury the prosecutor told them a number of times that the Crown has undertaken the burden of proving beyond reasonable doubt that the applicant was acting dishonestly when he appropriated the funds. And, after counsel had made their opening addresses, her Honour gave the jury a summary of the case and said that the burden of proof rested with the Crown, "never on the applicant's shoulders" and did not shift at any stage during the trial.

156. It is also not irrelevant to bear in mind that the evidence that the applicant appropriated the funds in question without an honest belief as to the right to do so was overwhelming. The applicant's contention that he believed he was entitled to use the funds because the right to them had passed to Menota which, in turn, lent the money to ECCCL, was obviously nonsense and was plainly not believed by the jury.

159. It is also relevant that, notwithstanding that both the prosecutor and defence counsel were clearly aware that it was for the Crown to establish that the applicant did not hold the belief for which he contended, no exception was taken by either of them to her Honour's charge on the ground that her Honour did not sufficiently make that plain to the jury. It is unlikely, I think, that if the applicant's experienced trial counsel considered that her Honour's charge did not sufficiently convey to the jury that the onus of disproving the applicant's claimed honest belief was on the Crown that he would not have taken a relevant exception to the charge. To say that her Honour's charge was relevantly deficient, as Mr Croucher contends, amounts to his saying, albeit impliedly, that trial counsel should have pointed that out to her Honour by way of exception to her charge. But as Phillips and Buchanan, JJ.A. pointed out in Walsh[21]:

"Trial counsel enjoys advantages not shared by his successors and it is important to observe that counsel now advocating these grounds was not counsel at the trial and therefore cannot be alive to all the nuances at trial, any more than can we as the appellate tribunal. To some degree at least, the challenges now made impugn the conduct of counsel at trial and, as in cases where a challenge is made more directly to the conduct of counsel at trial, it seems to us that we should proceed with caution, mindful of the difficulties facing us in reconstructing what must have been a difficult and complex proceeding. See the comments made by this Court in R. v. Challoner[22] and in R. v. Camilleri[23] and in the High Court in Crampton v. R.[24]."

In the context of this case, I consider that the failure by the applicant's counsel at trial to criticise her Honour's charge as Mr Croucher now does is a strong indication that counsel, who was obviously alive to this issue and understood the atmosphere and nuances at the trial, did not consider that there was failure on the part of the judge to explain this matter sufficiently to the jury. In the circumstances, counsel's failure to object must be taken to be "an obstacle in the path of the applicant" in seeking to establish error on her Honour's part in respect of the directions she gave to the jury.[25]

164. In considering the content of the direction that a trial judge must give to the jury on the issue of dishonesty it is relevant to note what the majority[26] said in Macleod v. The Queen[27]. Their Honours cited with approval the following passage in the judgment of Toohey and Gaudron, JJ. in Peters v. The Queen[28]:

"In a case in which it is necessary for a jury to decide whether an act is dishonest, the proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest ... If the question is whether the act was dishonest according to ordinary notions, it is sufficient that the jury be instructed that that is to be decided by the standards of ordinary, decent people."

In Macleod the appellant unsuccessfully appealed against his conviction of the statutory offence of fraudulently taking property of a company for a purpose or use other than for the purpose or use of that company. The appellant claimed that the trial judge had erred in giving adequate directions on dishonesty and claim of right, particularly in not addressing the "subjective criterion" attending a claim of right. The majority observed[29] that "...the directions to be given about a claim of right must reflect the elements of the offence charged and the nature of the mens rea required". Their Honours found[30] that the trial judge had adequately identified the facts from which dishonesty was to be inferred and had contrasted "... the prosecution case with what the appellant had claimed was his genuine belief in his entitlement to act as he did". Their Honours went on to say[31]:

"The judge's directions, when read as a whole, (i) identified the knowledge, belief or intent which was said to render the conduct of the appellant dishonest, and (ii) instructed the jury to decide whether the appellant had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest, by reference to the standards of ordinary, decent people. The submission that the Court of Criminal Appeal erred in holding that these directions were adequate in the circumstances should be rejected."

It is plain that in this case her Honour's charge identified the applicant's intent, which rendered his conduct the same as for the purposes of counts 25 and 26, namely, to use the money in question for the benefit of himself and his company notwithstanding that it belonged to the subscribers. It is also clear, I think, from the whole of her Honour's charge that the jury were sufficiently told that it was for them to decide if the applicant had such an intent and, if so, to be satisfied beyond reasonable doubt that, on account of that, his conduct was dishonest.

171. For these reasons, I consider that her Honour did not fail sufficiently to instruct the jury that the onus was on the Crown to establish that the applicant did not have the honest intent for which he contended and, in the circumstances, her Honour's failure to tell the jury, in terms, that the Crown had to exclude the reasonable possibility of dishonest intention, did not detract from the sufficiency of her charge nor amount to a miscarriage of justice. It is also apparent from what I have said that I consider that there is no merit in the applicant's claim that the effect of her Honour's direction was to reverse the onus of proof. It follows that in my view this aspect of ground 2 should fail.

175. In the course of her charge, her Honour told the jury that a person's appropriation of property belonging to another may be dishonest notwithstanding that he is willing to pay for it. This statement accords with s.73(3) of the Crimes Act, but Mr Croucher claimed that the direction was "fundamentally flawed". First, counsel submitted that it was inapt to the present case and that seems to me to be so. Secondly, said Mr Croucher, the judge's explanation of the provision was "too dogmatic" and that the provision merely says that a willingness to pay does not necessarily exclude dishonesty. In my view, however, that is what her Honour said in substance. Counsel further argued that the way the provision was explained to the jury tended to reverse the onus of proof. I must say that, although it is not clear to me why her Honour mentioned this matter in her charge, whatever reason motivated her to do so does not persuade me that this surplusage would have been understood by the jury as reversing the onus of proof as Mr Croucher contended or that it otherwise vitiated the verdicts. I would reject this ground.

Ground 3 - Errors in directions on inferences

179. Under cover of this ground the applicant makes the following two complaints.

(a) Her Honour erred in directing the jury that if "there is an inference which suggests innocence on the one hand and an inference which suggests guilt on the other, you cannot draw the inference inferring guilt, there being equally open to you an inference of innocence".

(b) Her Honour wrongly failed to give a circumstantial evidence direction.

I will deal with these complaints separately.

(a) Inferences "equally open"

185. This complaint relates to her Honour's direction that was given in the above terms. Mr Croucher contended that the underlined words demonstrate material error in the charge because they would have conveyed to the jury the impression that the applicant was entitled to an acquittal only if, on the evidence, the inference consistent with innocence was of at least equal strength to the inference of guilt so that, if the inference consistent with innocence was weaker than the inference of guilt, the applicant was not entitled to an acquittal. Put another way, it was said, the jury would have gained the impression from this portion of her Honour's charge that, before they could acquit the applicant on the basis of inferences to be drawn from the evidence, the inference as to innocence must be of at least equal strength with the inference of guilt. Such a direction, said Mr Croucher, is inconsistent with what the majority said on this issue in Knight v. The Queen[32], namely, that it is wrong to say that the appellants can only succeed if the two inferences that are said to be open - one consistent with innocence and the other consistent with guilt - were equally open. Their Honours went on to observe[33] that "... there are not, as Dixon, C.J. observed in Plomp v. The Queen[34] , degrees of consistency and, if a reasonable jury ought to have found that an inference or hypothesis consistent with innocence was open on the evidence, then it ought to have given the appellant the benefit of the doubt necessarily created by that circumstance."

188. In my view, counsel's argument proceeds on the misinterpretation of what her Honour said, an error which, I think, is unlikely to have been made by the jury. It seems to me plain enough that the jury would have construed this aspect of her Honour's charge as saying no more than that if there are two inferences open on the evidence, one consistent with innocence and the other consistent with guilt, they could not act on the inference that is consistent with guilt. Put another way, in those circumstances the accused must be given the benefit of the inference that is consistent with innocence. I consider that fairly read, the word "equally" in the above part of her Honour's charge attaches to the word "open" or, put another way, in context, "equally" means "also".

191. Thus, I would reject Mr Croucher's claim that her Honour's charge would have left the jury with the impression that an inference as to guilt and an inference as to innocence must be equally open before an accused can be acquitted. As I have said, I think that, fairly read, her Honour's charge would have been understood by the jury as telling them that even if they draw, on the evidence, an inference of guilt, they could not convict the applicant if there is, also, an inference consistent with innocence that can be properly drawn from the evidence. In the circumstances, I would dismiss this complaint.

195. Mr Croucher argued under cover of this ground that since the case was a "circumstantial case", her Honour should have given, but failed to give, a standard direction on circumstantial evidence. As I understood counsel, his claim that the case was "circumstantial" was based on the fact that the Crown sought to establish the applicant's dishonesty by way of inference from surrounding circumstances. Assuming that this case can be properly characterised as a "circumstantial case", it is plain enough that, although her Honour did not, in terms, tell the jury that the Crown had to exclude every reasonable hypothesis consistent with innocence, the jury was not left without assistance on this issue, given that, as Mr Croucher pointed out in his written submissions in support of ground 3(a), her Honour told the jury: "... You must not draw an inference as to the existence of an element of the crime charged or the guilt of the accused unless you are satisfied beyond reasonable doubt of any facts necessary to the process of reasoning involved and are also satisfied that the inference is the only reasonable inference to be drawn from the facts." This is one of the few passages in her Honour's charge to which counsel referred and which he did not criticise, and I think he was right in not doing so. Be that as it may, this direction is not far removed from the kind of direction that Dawson, J. described in Shepherd v. The Queen[35] as a "customary direction" in relation to circumstantial evidence.

198. In the circumstances, I am not persuaded that her Honour's failure to tell the jury that the Crown had to exclude every reasonable hypothesis consistent with innocence amounted to a material error. I note that such a direction was not sought by the applicant's trial counsel by way of exception to the charge or otherwise, and one can reasonably conclude from this that counsel did not see the absence of such a direction as working an injustice to his client.

201. In the circumstances, I consider that there is no substance in this complaint.

Grounds 1 and 5: Inconsistencies between verdicts on Counts 1 and 2; and between Count 1 and Counts 2 to 24

205. In Mr Croucher's written submissions grounds 1 and 5 were argued together. They were based essentially on the alleged inconsistency between the verdict of acquittal on count 1 and verdicts of guilty on counts 2 to 24, having regard to the fact that the Crown case on those 24 counts was based on the allegation that the client account balance statements sent to the subscribers stated falsely that interest had been earned on their capital. At the hearing of the appeal, Mr Croucher told the Court, in effect, that he would not pursue ground 1. Consequently, I turn to consider his contention that the verdicts on counts 1 and 2 are inconsistent and, therefore, the conviction on count 2 cannot stand.

208. In support of this ground counsel argued that the client account balance statement relied on in proof of count 2 was comprised in part of the same information that was relied on in proof of count 1 and the latter count, said counsel, was used by the Crown as a "template" for its case on all the relevant counts that were concerned with false accounting, namely, counts 1 to 24. Thus, said Mr Croucher, there can be no rational basis for the jury's inconsistent verdicts on counts 1 and 2 and thus, the verdict on count 2 must be regarded as unsafe.

211. But the short answer to this complaint is that the verdicts reflect the jury's recognition of the fact that the fictitious interest that was shown on the statement that was the subject of count 1 (as at 30 June 1993) was again included in the statement that pertained to count 2 (as at 3 December 1996). Each statement purported to show that the particular subscriber earned interest on his capital at the stated date. As I have explained earlier, in fact no such interest was earned and, on the Crown case, these statements were but examples of the applicant defrauding the subscribers. That such "double counting" occurred in the second statement to which I have referred, is made plain by pages J125 and J127 of Volume 1 of the Jury Book 1 that was used at the trial, and which was marked Appeal Book 6 for the purposes of the appeal. In the circumstances, I think it is plain that reasonable jurors who applied their minds properly to the facts pertaining to the two counts could have arrived at the verdicts that are the subject of complaint and, consequently, I consider that the two verdicts stand together. Thus, I think that this ground should also fail.

Ground 6: Directions regarding the evidence of Dr Francken

215. Under cover of the next ground that was pressed by Mr Croucher, ground 6, it was submitted that her Honour made a number of errors in her directions relating to Dr Francken's evidence, particularly his evidence concerning his letter of confirmation as to the existence of the loan agreement between ECCCL and Menota, which I have described earlier. Counsel alleged three errors to which I will turn shortly, but before doing so, I shall summarise the relevant aspects of Dr Francken's evidence.

218. The witness told the jury that Menota was a company that operated out of New Zealand. It specialised, he said, during the relevant period in providing loans, principally to those who invested in a film project. Thus, Dr Francken said, Menota had had a significant portfolio of receivables, the value of which, including interest payable, was estimated by him to be approximately $20m. in mid-2002. According to the witness, Menota had no bank account and the only persons working in its office at the relevant time were himself and his secretary. He said in his evidence that between 1995 and 1997 he was Menota's non-registered "director" who administered its "loan book", which comprised loans that had been made by Menota before he began working there. He said that in August 1995 he was introduced to the applicant by Mr Wantrup, a solicitor who was retained by the applicant's companies. The applicant told Dr Francken that the Euro Capital Group engaged in large investment merchant banking, specialising in structuring financial projects, including the film project in respect of which Menota had lent money. Thereafter, said the witness, they maintained "good contact".

221. By approximately March 1997, the Australian Securities and Investments Commission was involved in investigating the affairs of the Euro Capital Group (as were the auditors), including its dealings with the certificates of deposit and the proceeds of those investments. It would seem that in that context, on 22 April 1997, the applicant telephoned Dr Francken and requested him, as a matter of urgency, to sign a letter backdated to 22 November 1995 that he had drafted, confirming the agreement between ECCCL and Menota, to which I have referred earlier. Dr Francken said that the applicant also requested him to sign another letter, dated 22 April 1997, that the applicant had drafted and which stated that Menota had issued promissory notes to ECCCL and that it owned certain mortgages referrable to such promissory notes. Dr Francken said that the applicant then faxed to him, on 22 April 1997, the two draft letters, which included a schedule of mortgages. He claimed that he signed the two letters as requested and immediately faxed them back to the applicant. He did this, he said, notwithstanding that he knew nothing of the alleged agreement, because he trusted the applicant to keep his promise to provide him with documentation evidencing the agreement and the transaction.

224. The witness further said that on 26 May 1997 the applicant faxed to him a letter dated 25 April 1997, which was from ECCCL to Menota, purportedly "confirming" the supposed request by the applicant to Menota to liquidate all the promissory notes issued by it and pay the proceeds to ECCCL. Dr Francken said in his evidence that he knew nothing of the alleged earlier request for the liquidation of the promissory notes and therefore refused to comply with the request in the letter to liquidate the promissory notes. He said that on 28 May 1997 he faxed the applicant a letter stating essentially that he would not comply with his request as he did "not want to be put in a position where I appear to be taking part in creating a situation which does not exist." He also requested in that letter that the applicant provide him with the documentation that he had promised and said that if it was not provided Menota would cancel the promissory notes. Since the applicant did not provide the confirmation sought by Dr Francken, he caused Menota to cancel the promissory notes on 13 May 1997. Thus, ECCCL had no recourse to any assets in substitution for the certified deposits that the applicant caused to be redeemed and the proceeds of which he dissipated.

227. The creation by the applicant of the letter dated 22 November 1995 and of the facsimile dated 25 April 1997 is the subject of counts 53 and 54 respectively. It was alleged in those counts that these fraudulent documents were created by the applicant for accounting purposes, more particularly, to mislead the auditors into accepting his false claim that the subscribers' funds, namely, the proceeds of the certified deposits, had been reinvested by him in promissory notes issued by Menota. The investment was made, according to the applicant, by ECCCL transferring the right to the proceeds to Menota on the security of mortgage backed promissory notes. Menota then gave ECCCL and the applicant the right to use the funds as loan moneys. Although the Crown called Dr Francken as a witness of truth, his evidence was attacked by the applicant's counsel who, as her Honour noted in her charge, subjected that evidence to "trenchant criticism" in his final address.

230. Her Honour told the jury that if they did not accept Dr Francken's evidence that "he was told or believed the transaction had actually taken placed on 22 November 1995" (and thus did not accept that he believed there was such a transaction) then Dr Francken would be capable of being regarded by them as the applicant's aider and abetter, or his accomplice, in relation to the offence which is the subject of count 53 and that it would be dangerous to convict the applicant on that count on Dr Francken's uncorroborated evidence.[36] Her Honour told the jury that the evidence of Mr Wantrup and of Vicki Kouris and Mr Lowe was capable of being corroborative of the evidence of Dr Francken. The judge reminded the jury that Mr Wantrup said that he knew nothing of the supposed arrangements between Menota and ECCCL until the Australian Securities and Investments Commission became involved in investigating the affairs of the companies in March and April 1997. Like evidence was given by Ms Kouris and Mr Lowe who, said the Crown, would have known of such an arrangement with Menota had it existed given their senior positions in the Euro Capital Group.

233. I now turn to consider each of the three complaints from the applicant under this ground.

(a) Her Honour should have directed that if the evidence of Francken was rejected, the applicant should be acquitted of counts 53 and 54

237. Mr Croucher submitted that the accomplice warning given by her Honour in respect of Dr Francken's evidence resulted in a trial that was unfair. Counsel said that the direction made no sense - if the jury did not accept Dr Francken's evidence on the question whether he believed there was an agreement between Menota and ECCCL as the applicant claimed, (and rejected Dr Francken's claim that he knew nothing of the earlier request by ECCCL for Menota to liquidate the promissory notes as claimed by the applicant in his fax of 25 April 1997) the applicant should have been acquitted of counts 53 and 54 and her Honour should have so directed the jury.

240. I do not accept these contentions. If, contrary to his evidence, Dr Francken did not believe that the alleged transaction with Menota of 22 November 1995 had occurred, it would have been plain to him that the backdated document that he signed was false and would, no doubt, be used to mislead others into believing that such a transaction had taken place. If that were the jury's conclusion, that could not be a basis for acquitting the applicant on counts 53 and 54 as Mr Croucher contended. On the contrary, such a conclusion would support the Crown case that the applicant acted fraudulently in providing the letters and that Dr Francken assisted him in that fraudulent conduct. In the circumstances, I consider that the accomplice warning was justified; it probably had the effect of causing the jury to scrutinise Dr Francken's evidence with greater care than they might otherwise have done and that was to the applicant's advantage. Moreover, I consider that there is much force in Mr Lincoln's submission that there were a number of other factors about Dr Francken's evidence that justified the view that he might be the applicant's accomplice, thereby justifying the accomplice warning given to the jury. These factors include the following:

(a) Dr Francken signing the backdated letter when he had no objective basis for believing that the transaction alleged in it had taken place.

(b) Dr Francken sending, some time before he was interviewed by the representatives of the Australian Securities and Investments Commission, all of Menota's records relating to its dealings with ECCCL to Prague, in the Czech Republic, because they were, according to him, "too hot to handle".

(c) Dr Francken's effective refusal to provide the Australian Securities and Investments Commission and the auditors of ECCCL with any information.

246. Consequently, as I have said, I would reject this aspect of ground 6.

(b) Error as to what was capable of being corroborative evidence

250. Mr Croucher contended that her Honour erred in telling the jury that the evidence of Mr Wantrup, Ms Kouris and Mr Lowe was capable of being corroborative of Dr Francken's evidence because it was "simply neutral". But plainly, corroborative evidence need not be direct evidence that confirms the narrative of the witness whose evidence is sought to be corroborated - it is sufficient if it is independent evidence that tends to be confirmatory of what the witness has said.[37]

253. And, in my view, the evidence of the other witnesses to whom I have referred briefly, was confirmatory of what Dr Francken was saying as to the existence of the alleged transaction with Menota in 1995. It will be recalled that the three witnesses held positions in the applicant's corporate structure such that it was likely that they would have known of the existence of the Menota agreement when it took place, but their evidence was that they knew nothing of it until approximately May 1997 when they were told of it by the applicant at a time when the company was under investigation by the Australian Securities and Investments Commission and the auditors. This evidence, I think, tended to confirm that the applicant's claim as to the existence of the above agreement between ECCCL and Menota was untrue and this was confirmatory of Dr Francken's evidence that the applicant rang him and persuaded him to sign the backdated letter, promising to later provide him with proof of the agreement.

260. Mr Croucher submitted that a Faure warning may have been more appropriate in this case given that Dr Francken had a motive to lie because he took part in creating a false document. If one assumes that Francken had cause to lie about his belief that the letter of 22 November 1995 was genuine, in other words, if he knew or believed that the claim in the letter was false, it would be open to treat him as the applicant's accomplice in the perpetration of a fraud by the use of the false letter. In those circumstances, her Honour's accomplice warning was appropriate. In any event, even if it is arguable that a Faure warning would have been more appropriate, the warning that her Honour gave in respect of Francken's evidence was of no less advantage to the applicant than a Faure warning would have been. It was not suggested in Director of Public Prosecutions v. Faure[38] that a warning, stronger than an accomplice warning, would be appropriate in respect of a witness who is not an accomplice, but who has an interest in seeing the accused convicted. On the contrary, it was apparent that Hampel, J. considered[39] that ordinarily, in such a situation, a warning similar to an accomplice warning would be sufficient. In the circumstances, I am of the view that no miscarriage of justice occurred even if it could be said that a Faure warning should have been given by her Honour instead of the accomplice warning. Ultimately, of course, what should be the terms of a warning or direction will depend on the circumstances of the case; putting aside accepted categories of evidence that would attract a warning in terms which have been settled by the courts, a warning is usually only necessary in order to avoid a perceptible risk of miscarriage of justice that might otherwise arise and should be tailored to avoid such risk.[40]

263. In my view, the present complaint is without substance and should be rejected.

Ground 7: Browne v. Dunn direction erroneous; failure to give Edwards direction

267. The circumstances giving rise to these complaints were as follows. As I have mentioned earlier, it was part of the applicant's case that the transaction with Menota, to which reference has been made (as well as an arrangement in October 1995 for ECCCL to sell bonds and thus "cash up" the company) were evidenced by an exchange of correspondence. This had not been put by the applicant's counsel to relevant Crown witnesses, who could have denied this version of events or otherwise given evidence in contradiction of it. In the course of summarising in her charge the addresses of counsel, and in particular that of the prosecutor, her Honour gave the jury a standard Browne v. Dunn direction in respect of the failure by the applicant's counsel to put these matters to relevant Crown witnesses. In that context, her Honour said that one explanation for such a failure may have been that the matters may not have been thought of, or invented, as part of the applicant's case until after the Crown witnesses had given their evidence. Essentially, her Honour canvassed with the jury the many reasons why there might have been a failure by the applicant's counsel to comply with the "`rule of conduct' which requires counsel who proposes to lead evidence of a material fact, to put that fact in cross-examination to any witness who might be expected to [deal with it]." As I have mentioned, this direction was given in the context of her Honour's summary of the prosecutor's address in which he submitted to the jury that they should be satisfied that the applicant had lied about a significant number of matters, including the supposed bond transaction and the alleged agreement between ECCCL and Menota in November 1995. The prosecutor also claimed that the applicant had lied about the alleged exchange of correspondence. That aspect of the prosecutor's address was not the subject of complaint by the applicant's counsel.

270. I now turn to consider the three complaints by the applicant in relation to this aspect of her Honour's charge.

274. Mr Croucher submitted that the latter part of her Honour's Browne v. Dunn direction, namely, that a reason why the above material was not to put to the Crown witnesses in cross-examination by the applicant was because it may have been invented after they have given their evidence, went "too far" and gave legitimacy to the prosecutor's argument to that effect. In my view, however, her Honour's impugned direction was unexceptional and the fact that it was made in the context of the judge's summary of the prosecutor's address, in the course of which he effectively invited the jury to consider the applicant to be a liar, was not inappropriate and did not lead to a miscarriage of justice. I note for completeness that this aspect of her Honour's charge was not the subject of an exception by the applicant's experienced trial counsel.

277. In the circumstances, I consider that this complaint is unfounded.

281. Mr Croucher argued that, in any event, her Honour should have given a direction in accordance with Edwards v. The Queen[41] in relation to the prosecutor's claim that the applicant lied about the existence of the above-mentioned correspondence (and other matters). This claim, I think, is wholly without merit. An Edwards direction is given in order to prevent a miscarriage of justice, ordinarily in a context where it is claimed that the lie manifests a consciousness of guilt, or perhaps where there is a risk that the jury might use the lie in an impermissible way.[42] In my view, it is obvious that an Edwards direction was not required to prevent a miscarriage of justice, given, in particular, the manner in which the Crown sought to rely on the applicant's lies, namely, as going to the rejection of the explanation of the allegation that he dealt with the money dishonestly and not as evidence of his consciousness of guilt.

285. It was put by the applicant's counsel that if none of the above grounds individually amount to a miscarriage of justice, taken in combination, they do. Given my above conclusions, however, it is apparent that I consider that this ground must also fail.

289. I now turn to consider the applicant's arguments in support of his claim that her Honour relevantly erred in the imposition of the sentences that I have described at the outset of my reasons. Mr Croucher was content to rely on his written submissions in support of the three grounds on which this application is based. I will deal with them in the order in which they appear in counsel's submissions.

293. It was submitted under cover of this ground that the cumulative effect of the sentences is such that each of the head sentence and the minimum sentence is manifestly excessive. Counsel pointed out, in particular, that the cumulation orders in respect of counts 2 to 24 and 53 and 54 was excessive, given that nearly all of them occurred after the thefts, when the applicant was trying to keep the companies afloat. It was also highlighted for the applicant that, although the offending involved theft of over $5m., her Honour found that "only" $1.2m. was expended for the applicant's purposes. Moreover, it was said, before the applicant was charged, he repaid $800,000 of the proceeds of the sale of the home for the benefit of the companies' creditors. Interestingly, Mr Croucher claimed that a mitigating factor was constituted by the fact that the subscribers, who were blatantly defrauded by the applicant, were able to recover their capital from their former solicitors. It seems to me, however, that this did not amount to a mitigating factor. The subscribers' ability to recover their capital loss merely shifted the capital loss, which was of considerable magnitude, even by today's standards, from those who were defrauded directly by the applicant to their former solicitors or the solicitors' insurer. It would be surprising if this loss by the insurer were not passed on by way of increased premiums. There were other circumstances going to mitigation that were listed by Mr Croucher in his comprehensive submission, but they were all put to, and were considered by, her Honour. Counsel ultimately submitted that a 7 year head sentence overstates the criminality and fails to give sufficient weight to the above matters and is thus, manifestly excessive.

Head sentence manifestly excessive and overstates criminality

297. On one view of the applicant's conduct there is room for argument that the aggregate sentence understates the criminality of his fraudulent behaviour. Be that as it may, I consider that, for the reasons given below, the head sentence does not overstate the nature and extent of the criminality of the applicant's fraudulent conduct. The principal question under this ground is whether the sentence is outside the relevant range of sentences, particularly having regard to the operation of the principle of totality. This question does not admit of much argument. In sentencing the applicant the judge was required to fix a sentence that properly reflects the seriousness of the offence and of the offending conduct, taking into account the matters personal to the applicant and other mitigating circumstances, as well as the applicable sentencing principles. The principal offences here were obviously treated by Parliament as being very serious, attracting a maximum term of imprisonment of 10 years in the case of theft, and (then) 7 years and 6 months' (now 10 years) in respect of the false accounting charges. I consider that the applicant's offending conduct was very grave and demonstrated a complete disregard by him, over a significant period of time, of the fact that he held a position of trust and responsibility in respect of a significant number of people who entrusted a large amount of money to his care. He progressively disregarded their interests in preference to his own. Moreover, he went to considerable lengths to "invent" transactions and to manufacture evidence as to their alleged existence in order to hide his fraud and he continued to believe that he could talk his way out of his criminal behaviour until the jury delivered their verdicts. Even when the "writing was on the wall", when his empire was collapsing and with it, the securities that were in place in respect of the investments of the many subscribers, the applicant continued his brazen conduct of fraudulently using their funds for his own purposes, including his selfish material comforts, and those of his family, when he must have known that this constituted a serious breach of trust and amounted to criminal conduct.

300. I consider that the principle of general deterrence is of considerable importance in this case. The applicant, no doubt through hard effort, achieved a position of success in the financial industry, but he also acquired a position of privilege and was thus able to attract significant funds from members of the community on the basis that he would invest them on their behalf and have those investments properly secured. It is important that courts express their denunciation of this type of fraudulent conduct and make it plain that those who are found to have defrauded members of the public in the way the applicant did here, and then falsify company documents in order to disguise their criminal behaviour, must expect to be severely punished. In many respects, such criminal conduct by those who apply their otherwise capable minds to defrauding the public is no less serious or detrimental to the community than criminal conduct by those with lesser mental capacity, either due to drugs or other reasons, who engage in criminal conduct against persons.

303. It is apparent from what I have said that I consider that the criminality of the applicant's fraudulent conduct is extensive and serious and, in all the circumstances, it was well open to her Honour to cumulate the sentences as she did and conclude that the aggregate sentence is just and appropriate.[43] It also follows that, in my view, the head sentence imposed by her Honour is within relevant range.

307. I am of a like mind in relation to the non-parole period. Mr Croucher sought to argue that the sentencing judge misread what this Court said in Director of Public Prosecutions v. Bulfin[44] concerning the appropriate length of the non-parole period in relation to corporate crime and considered herself constrained to fix a significant non-parole period. In my view, there is no substance in such a complaint. Relevantly, the Court in Bulfin pointed out that there is no sentencing principle that in white-collar crime cases there should be a wider than normal gap between the head sentence and non-parole period. Charles, J.A. in that case pointed out[45] that the principle of general deterrence and the requirement for strong denunciation will be of particular significance in sentences relating to significant corporate crimes, both as to head sentence and the non-parole period. This observation, with respect, applies to the circumstances of this case, as her Honour well appreciated. The learned sentencing judge recognised that Bulfin does not say that the non-parole period in white-collar crimes should or must be greater or lesser than would otherwise be appropriate. In my view, there is nothing in the sentencing remarks to suggest that her Honour considered that her discretion in that regard was constrained by what was said in Bulfin or that she had a fixed view that, in sentences relating to corporate crime, the non-parole period should be substantial. It is quite apparent from the sentencing remarks that her Honour well understood the nature and purpose of a head sentence and a non-parole period and I am not persuaded that her Honour relevantly erred in exercising her discretion in selecting the non-parole period.

310. Consequently, I consider that this ground should fail.

Ground 3: Failure to have regard to repayment of $800,000

314. The third ground in support of the application for leave to appeal against sentence was argued next. The essential complaint under this ground was that, although her Honour found that the applicant expended $1.2m. of company funds for his own purposes, including $800,000 to build his own home, which he sold at a profit, her Honour did not recognise, or take into account for sentencing purposes, the fact that, before he was charged, the applicant repaid $800,000 of the proceeds of sale of his own home for the benefit of the creditors. Counsel claimed that no mention of this mitigating factor is made in her Honour's sentencing remarks, demonstrating thereby error on her part. But the fact that the applicant retains from the sale of his property $150,000 for his benefit and has paid $800,000 from that source for the benefit of the creditors, was brought out in evidence as Mr Lincoln has submitted. Importantly, in her sentencing remarks, the learned judge quantifies the benefit to the applicant through the use of the companies' funds at $150,000. I agree with Mr Lincoln that this figure of $150,000 is net of the $800,000 that was part of the profit made by the applicant from the sale of his house. It means, therefore, that the judge recognised that $800,000 of that profit had gone to the creditors. Were it otherwise, as Mr Lincoln submitted, the judge would have quantified the benefit to the applicant at $950,000 rather than $150,000. In the circumstances, I consider that this ground should fail.

Ground 2: Error in the amount provided to ECCCL for trading on international money markets

318. In her sentencing remarks the judge noted that the applicant provided only $127,000 of the subscribers' investments for trading on the international money markets (notwithstanding the promise that all such investments, other than the amounts necessary to purchase deposits, would be placed in such investments). Mr Croucher submitted that her Honour erred in that conclusion because the evidence shows that over $2m. was paid into the ECCCL account in Sydney that was operated by two directors of the company. Further, it was said, $5m. was used as part of the purchase price of the Bangkok Bank of Commerce bearer bonds. But the purchase of the bearer bonds was relevantly unrelated to the investments that should have been made on behalf of the subscribers and, on the Crown's documentary evidence at the trial, all or nearly all of the money deposited in the Sydney account of ECCCL was used to meet the various expenses and outgoings of the Sydney office of that company. Moreover, there was Crown evidence before her Honour that, but for $127,000, no funds that came from the subscribers were invested on the international money markets. I consider that there is no substance in this ground.

322. For these reasons, I would dismiss the application for leave to appeal against conviction and sentence.

327. I agree that, for the reasons advanced by Chernov, J.A., the applications for leave to appeal against conviction and sentence be dismissed.

[1] The applicant was found not guilty of count 1 which also alleged false accounting.

[2] In light of the applicant's conviction on counts 25 and 26 there was no verdict taken on the alternative counts, namely counts 27-51, which charged the applicant with acting dishonestly as an officer of a company in respect of the same transactions that were the subject of counts 25 and 26.

[3] Section 83(1)(a) now carries a maximum penalty of 10 years' imprisonment. The penalty was increased in 1997 pursuant to s.60(1) of the Sentencing and Other Acts (Amendment) Act 1997.

[4] (1982) 7 A.Crim.R. 8 at 17 and 18.

[5] Director of Public Prosecutions v. Merriman [1973] A.C. 584 at 607 per Lord Diplock.

[6] S. v. The Queen (1989) 168 C.L.R. 266 at 285-286 per Gaudron and McHugh, JJ. ; Eades (1991) 57 A. Crim. R. 151; Walsh v. Tattersall (1996) 188 C.L.R. 77.

[7] [2002] VSCA 98 at [40].

[8] It should be noted, however, that in Walsh v. Tattersall, Dawson and Toohey. JJ., albeit in dissent on issues that are not relevant for present purposes, emphasised at 84 that duplicity is a matter of form, not a matter relating to evidence called to support the count .

[14] That her Honour erred in this respect was acknowledged by her in her discussions with counsel at a later point in time after her Honour received the transcript of the first day of her charge.

[15] [1938] 2 K.B. 264 at 270-271.

[16] [2002] HCA 26; (2002) 211 C.L.R. 193.

[19] In accordance with the standard definition of self-defence as stated in Zecevic v. D.P.P. [1987] HCA 26; (1987) 162 C.L.R. 645 at 660-662 per Wilson, Dawson and Toohey, JJ.

[20] (2000) 200 C.L.R. 234 at 256.

[22] [2000] VSCA 32; (2000) 110 A.Crim.R. 102 at 103-4.

[23] [2001] VSCA 14; (2001) 119 A.Crim.R. 106 at 114.

[24] (2000) 75 A.L.J.R. 133 at 136-137 per Gleeson, C.J. and at 162-163 per Hayne, J.A.

[25] R. v. Clarke and Johnstone [1986] VicRp 64; [1986] V.R. 643 at 661-662; Martin v. Henderson Industries Pty. Ltd. [2004] VSCA 19 at [21-22] per Charles, J.A.; R. v. G.A.M [2003] VSCA 185 at [10] per Winneke, P.; R. v. Williamson [2000] VSCA 5; (2000) 1 V.R. 58 at 76 and 77 per Charles, J.A.; R. v. Wright [1999] VSCA 145; [1999] 3 V.R. 355 at 356 per Phillips, C.J. and Charles, J.A. and at 360-361 per Callaway, J.A.; and R. v. Gallagher [1998] 2 V.R. 671 at 681-682 per Brooking, J.A.

[26] Gleeson, C.J., Gummow and Hayne, JJ.

[27] [2003] HCA 24; (2003) 197 A.L.R. 333.

[32] [1992] HCA 56; (1992) 175 C.L.R. 495.

[33] At 503 per the majority, Mason, C.J., Dawson and Toohey, JJ.

[34] [1963] HCA 44; (1963) 110 C.L.R. 234 at 243.

[35] [1990] HCA 56; (1990) 170 C.L.R. 573 at 578.

[36] By necessary inference the same position applied to count 54.

[37] See, for example, R. v. Rayner [1998] 4 V.R. 818 at 851-852 per Brooking, J.A.; R. v. Trong Duy Ngo [2002] VSCA 188 at [19] per Winneke, P. and Doney v. The Queen [1990] HCA 51; (1990) 171 C.L.R. 207 at 211; R v. Taylor [2004] VSCA 98.

[38] [1993] VicRp 87; [1993] 2 V.R. 497.

[40] See, for example, R. v. Miletic [1997] 1 V.R. 593 at 605.

[41] [1993] HCA 63; (1993) 178 C.L.R. 193.

[42] See, for example, R. v. Trong Duy Ngo.

[43] See Mill v. The Queen (1988) 166 C.L.R. 59; Johnson v. The Queen [2004] H.C.A. 15; Director of Public Prosecutions v. Grabovac [1998] 1 V.R. 664 at 676 and 680 per Ormiston, J.A., with whom Winneke, P. and Hedigan, A.J.A. agreed, and D.P.P. v. G.J.L. [2004] VSCA 35 at 30 per O'Bryan, A.J.A.

[44] [1998] 4 V.R. 114 at 132 per Charles, J.A.