Criminal Law - Particular offices - Offences against the government - Other offences - Conspiracy to defraud Commonwealth or public authority under Commonwealth - Deflection of public officers from public duty - Whether deflection impossible.

R v Sew Hoy [1994] 1 NZLR 257, followed.

Director of Public Prosecutions v Nock [1978] AC 979, distinguished.

Crown: M Rozenes QC, K E Read, J Read & I M Arendt

Crown: Commonwealth Director of Public Prosecutions

First Accused: Jennings Elliott as agents for: Iles Selley

Third Accused: Jennings Elliott as agents for: John Lister

Fourth Accused: Jennings Elliott as agents for: Coates PL

Fifth Accused: Jennings Elliott as agents for: Lynch & Meyer

Judgment Number: [2001] TASSC 86

1 The five accused have been charged with a single count of conspiracy to defraud the Commonwealth and the Australian Fisheries Management Authority ("AFMA"), an authority under the Commonwealth, contrary to the Crimes Act 1914 (Cth), s86A. The Crown alleges that they conspired to cause and permit false returns to be submitted to AFMA as to orange roughy catches in 1992 and 1993, and that the submission of such false returns was likely to deflect public officers from the performance of public duties that they had pursuant to legislation relating to fisheries. The accused have all pleaded not guilty, but a jury has not yet been empanelled.

2 It is apparent that evidence is available to suggest that, during the period of the alleged conspiracy (1 December 1991 - 31 December 1993), AFMA officers began to receive more and more information as to the understatement of orange roughy catches, perhaps to such an extent as to make them think that the returns they were receiving from fishermen and fish processors were so unreliable that there came a time when they ceased to pay any regard to them. It has been submitted that a defence might be available to any of the accused who joined in the alleged conspiratorial agreement thereafter, on the basis that by the time of his joining there had ceased to be any likelihood of any public officer being deflected from any public duty by the submission of false returns, and that any defrauding of the Commonwealth or AFMA had become impossible. I heard argument as to this point and on 1 August 2001, reserving my reasons, I made a determination pursuant to the Criminal Code, s361A(d), as follows:

(a) the conspiracy alleged in the indictment was entered into, and

(b) false returns understating orange roughy catches were submitted AFMA, and

(c) AFMA officers learned that false statements as to orange roughy catches were being made and ceased to place any reliance on such returns, and

(d) as a result there ceased to be any likelihood that any public officer would be deflected from performing his or her public duty by the submission of such false returns, and

then that accused could still be found guilty of the charge."

4 Impossibility can sometimes be a defence to a conspiracy charge. If two or more people conspire to do something which they falsely believe to amount to an offence, they are not guilty of the crime of conspiring to commit an offence: R v Eid [1999] NSWCCA 59; (1999) 46 NSWLR 116. When three men conspired to purchase certain cigarettes, falsely believing that they were stolen, they were not guilty of the common law crime of conspiring to commit the offence of receiving stolen property, since it was impossible for them to commit that offence. The New South Wales Court of Criminal Appeal so held in R v Barbouttis (1995) 82 A Crim R 432.

5 There is an unresolved debate as to when impossibility will amount to a defence to a conspiracy charge, centring on the correctness or otherwise of the decision of the House of Lords in Director of Public Prosecutions v Nock [1978] AC 979. That case concerned a conspiratorial agreement to extract cocaine from some powder. Unknown to the conspirators, the powder neither contained cocaine nor anything from which cocaine could be derived. They had conspired to do something that was physically impossible. There was no evidence that their agreement extended to the obtaining of cocaine, or the possible obtaining of cocaine, otherwise from the specific quantity of powder. The House of Lords held that they had not committed the crime of conspiracy. However, their reasoning was based on a proposition that is no longer good law, namely that impossibility is a defence to a charge of attempting to commit a crime. The House of Lords had held that in R v Smith [1975] AC 476, also reported as Haughton v Smith (1973) 58 Cr App R 198. In Nock, their Lordships reasoned that it should follow that no crime was committed when conspirators agreed upon a course of conduct which could not in any circumstances result in the commission of the offence referred to in the indictment.

6 The House of Lords reversed its earlier decisions as to attempting the impossible in R v Shivpuri [1986] UKHL 2; [1987] 1 AC 1. As a result, the correctness of Nock has been widely questioned. The relevant authorities were thoroughly reviewed in the dissenting judgment of Gleeson CJ in Barbouttis (supra) at 434 - 439. In my view I do not need to reach a conclusion as to the correctness of Nock because it is distinguishable. It was a case where, if the conspirators' agreement had been fully performed, no crime would have been committed. Such a situation must be distinguished from one where performance would have resulted in an a crime or fraud being committed, but performance is made impossible by the taking of defensive measures.

7 The latter sort of impossibility was distinguished in Nock. At 998, Lord Scarman, with whom the other members of the House fully agreed, said:

"This is a case not of an agreement to commit a crime capable of being committed in the way agreed upon, but frustrated by a supervening event making its completion impossible ... but of an agreement upon a course of conduct which could not in any circumstances result in the statutory offence alleged ...".

8 In Bennett v R (1978) 68 Cr App R 168, the appellants had been convicted of conspiring to contravene the provisions of a drug statute by being concerned in the possession of cannabis. There had been evidence that they agreed to buy cannabis either from a particular man or from someone to whom he was going to introduce them. They contended that the Crown had not established beyond reasonable doubt that it was possible to carry out their agreement, ie that it was possible for the man in question or anyone whom he could introduce to provide the appellants with cannabis. The English Court of Appeal regarded Nock as good law, but distinguished it. At 178, Browne LJ, reading the judgment of the court, said the following:

"In our opinion, there is a fundamental distinction between an agreement which, when made, could never, if carried out, result in the commission of the criminal offence alleged, because that result is physically or legally impossible ... and an agreement which would, if carried out in accordance with the intention of the parties, result in the commission of the criminal offence alleged, but which cannot be carried out because some person not a party to the agreement is unwilling or unable to do something necessary for its performance - or because of the incompetence of the conspirators or the impregnable defences of the intended victim. It seems to us that to hold that the latter type of agreement cannot amount to a criminal conspiracy would be to ignore the basis of this crime ... ."

9 As to the basis of the crime of conspiracy, his Lordship referred to Mulcahy v R (1868) LR 3 HL 306, and to the judgment of Brett JA in R v Aspinall (1876) 2 QBD 48 at 58 - 59. Nock was similarly distinguished by the English Court of Appeal in Harris v R (1979) 69 Cr App R 122 at 124. That case involved a conspiracy to make a prohibited drug which failed because the parties, who had the correct formula, had a wrong ingredient and did not know the proper production process.

10 In my view this case is on all fours with R v Sew Hoy [1994] 1 NZLR 257, a decision of the New Zealand Court of Appeal. In that case the respondents' company imported a shipment of men's clothing. Customs duties were payable on men's clothing at higher rates than for ladies' clothing. Documents accompanying the shipment falsely described it as ladies' clothing, but a customs officer inspected the shipment and saw that it comprised men's clothing. The Customs Department classified it accordingly. Further information was requested from the company. There is nothing in the report of the case to suggest that the respondents were in any way responsible for the shipment being described as ladies' clothing in the documents which accompanied it. However, there was evidence that the respondents decided to produce five documents for the purpose of satisfying customs officers that the clothing was ladies' clothing, not realising that those documents could never have deceived the Department because the clothing had been inspected and the department had learned that it was men's clothing. The trial judge directed the jury to return a verdict of not guilty, but reserved for the opinion of the Court of Appeal the following question:

"When two of more persons agree on a course of conduct with the object of committing a criminal offence but unknown to them it is not possible to achieve their object by the course of conduct agreed upon do they commit the crime of conspiracy contrary to s257 of the Crimes Act 1961?"

11 The Court of Appeal answered that question in the affirmative and ordered a new trial. In delivering the judgment of the court, Hardie Boys J discussed the proposition that, despite the awareness of customs officers that the shipment comprised men's clothing, it was not impossible for duty to be assessed on the basis that it comprised ladies' clothing, because human error and oversight still remained possibilities. There are reported cases of attempts to obtain money by false pretences by falsely claiming lottery prizes where impossibility defences have been rejected on the basis that, through human error, reliable precautions taken against the making of payments in such situations could possibly fail: R v Gulyas (1985) 2 NSWLR 260; Kristo v R (1989) 39 A Crim R 86. However, the Court of Appeal's decision was not based on the proposition that there remained a slim possibility of the conspiracy succeeding, but on the proposition that conspiracy is an act inherently culpable. The ratio of the decision appears in the following paragraphs at 267:

We have indicated a view that even if, in accordance with Nock, conspiracy is to be regarded as similar to attempt in that it is auxiliary to the main offence, the appellants here would be guilty of the crime. However, there is much force in the view that conspiracy is properly to be seen as an act inherently culpable. The essence of conspiracy is an intention to agree coupled with a common design to commit an offence, that is, to put the design into effect. The mens rea is the intention to achieve the common design, the actus reus is the fact of agreement, the translation of that intention into agreement: R v Gemmell [1985] 2 NZLR 740, 743-744. The offence is therefore complete when the agreement is made. It is the making of the agreement itself that is seen as inimical to the public good, whether it proceeds further or not. It should therefore be irrelevant that it may not be possible in fact to carry out the agreement. This does not mean that the parties are punished on the basis of guilty intention alone. They will have gone further, and have acted upon their intention by making their agreement.

In this case, both essential elements of intention and agreement were present. There was a common intention and an agreement to defraud, in other words an agreement to commit an offence recognised by law. The offence of conspiracy to defraud involves no more than an agreement to practise a fraud on someone: Wai Yu-tsang v R [1991] 4 All ER 664 (PC). The brothers made such an agreement. The fact that circumstances controlled by those they intended to defraud were different from what they understood did not affect the mens rea or the actus reus.

This was not a case of agreement on a course of conduct that was not criminal, nor is it a case of imposing guilt on the basis of mere intention. We are satisfied that it is consistent with principle and good sense and with the law as now accepted in Australia and elsewhere to hold that the elements of conspiracy to defraud are established."

12 This reasoning is consistent with the view expressed by the English Court of Appeal in Bennett to the effect that the inability to carry out an agreement for the commission of a criminal offence amounts to a criminal conspiracy even if it is unable to be carried out because of the impregnable defences of the intended victim.

13 A number of defence counsel sought to distinguish Sew Hoy on the basis that it concerned a conspiracy that commenced prior to customs officers learning that the shipment comprised men's clothing, and had nothing to do with the late joining of an established and continuing conspiracy. However, a careful reading of the report reveals that, although someone had sent misleading documents with the shipment from overseas, there was apparently no allegation that the respondents were parties to any conspiratorial agreement made prior to customs officers learning that the shipment comprised men's clothing and requesting further information. The conspiracy charge related only to an agreement to submit false information in response to that request.

14 If the conspiracy charged and particularised in this case was entered into, and if AFMA officers learned that false returns as to orange roughy catches were being submitted and ceased to place any reliance on any such returns, and one of the accused thereafter joined the conspiracy not knowing that any false returns would be ignored, then in my view there is no reason to distinguish the position of that hypothetical accused from the position of the respondents in Sew Hoy. Both situations involve becoming a party to a conspiratorial agreement to supply false information not knowing that, because of information available to the intended recipient of the false information, that recipient has decided to ignore it. Sew Hoy involved a conspiracy to defraud where the defrauding was the primary objective of the conspiratorial agreement. This case involves allegations that the accused conspired to defraud in ways that involved the likely deflection of public officers from the performance of their public duties in such circumstances that some or all of the alleged likely deflections might not have been objectives of the alleged conspiratorial agreement at all - a situation similar to that in Scott v Metropolitan Police Commissioner [1974] UKHL 4; [1975] AC 819. However, I do not think that distinction is any reason to distinguish Sew Hoy, nor was that submitted to me.

15 It is well established that the crime of conspiracy is complete as soon as two or more conspirators have entered into a prohibited agreement, and that any overt acts performed in pursuance of the agreement are not part of the actus reus. See Gillies, The Law of Criminal Conspiracy, 2ed at 16, and the cases cited there. At common law, the essence of the crime of conspiracy is the making of a prohibited agreement. As Willes J said in Mulcahy v R (supra) at 317:

"A conspiracy consists not merely in the intention of two or more, but in the agreement of two or more to do an unlawful act, or to do a lawful act by unlawful means. So long as such a design rests in intention only, it is not indictable. When two or more agree to carry it into effect, the very plot is an act in itself, and the act of each of the parties, promise against promise, actus contra actum, capable of being enforced, if lawful, punishable if for a criminal object or for the use of criminal means."

16 As there is no definition of "conspiracy" or "conspires" in the Crimes Act 1914 (Cth), it follows that the common law meanings of those words are applicable in relation to s86A, under which the accused have been charged.

17 There are various rationales for conspiracies being prohibited by the criminal law. One is that such a prohibition will make it less likely that criminal or proscribed acts will happen. Another is that the prohibition of conspiracies will enable them to be interrupted before any substantive harm is done. A third is that, although the criminal law does not punish individuals for forming evil intentions, but only punishes individuals for their conduct, the act of entering into an agreement to do something unlawful or contrary to public policy is conduct that is inherently culpable.

18 The New Zealand Court of Appeal's decision in Sew Hoy is of high persuasive authority. To the best of my knowledge, there is no Australian case directly in point, and there are no reported Australian cases which would warrant me not following Sew Hoy. I regard Sew Hoy as consistent with principle. For these reasons, I think I should follow it now. Although I was initially attracted to the arguments in favour of an impossibility defence possibly being available in this case, and on 27 July 2001 ruled on three applications to set aside subpoenas on the basis that such a defence was available, I am now firmly of the view that such a defence cannot be available.