R v Young [2021] QCA 131

SUPREME COURT OF QUEENSLAND

CITATION: R v Young [2021] QCA 131

PARTIES: R / v / YOUNG, Andrew Eric / (appellant/applicant)

FILE NO/S: CA No 26 of 2020 / CA No 42 of 2020 / DC No 1503 of 2014

DIVISION: Court of Appeal

PROCEEDING: Appeal against Conviction & Sentence

ORIGINATING COURT: District Court at Brisbane – Date of Conviction: 10 January 2020; Date of Sentence: 7 February 2020 (Devereaux SC DCJ)

DELIVERED ON: 15 June 2021

DELIVERED AT: Brisbane

HEARING DATE: 20-21 August 2020

JUDGES: Fraser and Mullins JJA and North J

ORDERS: Appeal against conviction is allowed.Convictions on all counts are set aside.A new trial is ordered.

CATCHWORDS: CRIMINAL LAW – APPEAL AND NEW TRIAL – VERDICT UNREASONABLE OR INSUPPORTABLE HAVING REGARD TO EVIDENCE – where the appellant was convicted of fraud with a circumstance of aggravation – where a corporate restructure split multiple new and existing companies into two groups: Orchard Group and Corporate Group – where before the restructure a company EDIS in the Corporate Group operated the spare parts business for the appliances sold by the Orchard Group – where as part of the restructure the business of importing and sale of appliances under the Kleenmaid brand was transferred to EDIS – where the appellant was at all relevant times a director of each of the companies in the Orchard Group, but was not a director or the secretary of any of the companies of the Corporate Group at the time of the restructure – where EDIS by its director Mr Armstrong made a loan application to its bank to assist in the takeover of the appliance business without disclosing the financial information of the Orchard Group – where the appellant had no contact with the bank in respect of the loan application – where the appellant refused to disclose financial statements of the Orchard Group to the bank and instructed Mr Armstrong to advise the bank that they would not be disclosed – where that was conveyed by Mr Armstrong to the bank – where EDIS did not disclose during the loan application that the deposits paid by customers for the goods sold by EDIS would be paid to Order House, which was a company in the Orchard Group, and held by Order House until delivery of the appliances was required – where that arrangement with Order House made the financial statements of the Orchard Group relevant to EDIS’ loan application – where the appellant knew and approved of the course taken by Mr Armstrong in respect of EDIS’ loan application – whether the appellant counselled or procured Mr Armstrong to commit the offence of fraud – whether the verdict of guilty was unreasonable or unsupported by the evidence / CRIMINAL LAW – APPEAL AND NEW TRIAL – VERDICT UNREASONABLE OR INSUPPORTABLE HAVING REGARD TO EVIDENCE – where the appellant was convicted of 17 counts of insolvent trading concerning debts incurred by EDIS between 3 July 2008 and 8 April 2009 (the relevant period) – where EDIS was insolvent during the relevant period – where the appellant ceased to be a director of EDIS more than a year prior to the relevant period – where the appellant was engaged by EDIS as a contractor – where there was evidence the appellant supervised, directed and instructed employees of EDIS, managed the cash flow, prioritised payments to creditors and negotiated with suppliers during the relevant period – whether the appellant was a de facto director of EDIS – where proof that the appellant was a de facto director excluded that he was acting as an “officer” (other than as a de facto director) as defined in s 9 of the Corporations Act 2001 (Cth) as an alternative hypothesis / CRIMINAL LAW – APPEAL AND NEW TRIAL – VERDICT UNREASONABLE OR INSUPPORTABLE HAVING REGARD TO EVIDENCE – where the appellant was convicted of 17 counts of insolvent trading concerning debts incurred by EDIS during the relevant period – where EDIS was insolvent during the relevant period – where many EDIS creditors were paid by Orchard KM which was in the Orchard Group – where the Kleenmaid business was “cash starved” during the relevant period and the appellant was closely involved in managing the cash flow – whether the failure of the appellant to stop EDIS incurring debts when he suspected EDIS was insolvent was dishonest / CRIMINAL LAW – APPEAL AND NEW TRIAL – VERDICT UNREASONABLE OR INSUPPORTABLE HAVING REGARD TO EVIDENCE – where the appellant was convicted of fraud with a circumstance of aggravation concerning the transfer of funds from the company Orchard KM to England & Young Holdings, a company associated with the appellant and his family and a former business partner and his family – where the funds were transferred two days prior to Orchard KM being placed in voluntary administration – where the transfer was done on the appellant’s instruction – where the appellant was the sole shareholder of England & Young Holdings – whether the prosecution could exclude as an alternative hypothesis to dishonesty that the appellant had an honest belief that England & Young Holdings as a secured creditor was legally entitled to the funds transferred on the basis of Orchard KM’s liability under a facility agreement in favour of England & Young Holdings – whether it was open to the jury to be satisfied that the funds transfer was dishonest / CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISDIRECTION AND NON-DIRECTION – where the appellant was convicted after trial before a jury of one count of fraud with a circumstance of aggravation – where the self-represented appellant cross-examined Mr Armstrong who was a prosecution witness and asked whether the appellant had procured or counselled Mr Armstrong not to disclose the full nature of the relationship between EDIS and the Orchard Group to the bank – whether the trial judge erred in directing the jury that the questions were “of limited use” – whether the direction was procedurally unfair / CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISDIRECTION AND NON-DIRECTION – OTHER CASES – where the appellant was convicted after trial before a jury of one count of fraud with a circumstance of aggravation – where there was evidence of conduct of the appellant occurring in Queensland relating to the acts and omissions constituting the offence – where the trial judge ruled that no jurisdictional question arose and declined to direct the jury that the offence had to have been committed in Queensland – whether the trial judge erred in refusing to direct the jury to consider the question of jurisdiction / CRIMINAL LAW – EVIDENCE – OPINION EVIDENCE – EXPERT OPINION – where the appellant was convicted of 17 counts of insolvent trading – where expert witnesses testified that EDIS was insolvent in March 2008 and March 2009 – where this evidence was inadmissible – whether the error in admitting inadmissible expert opinion amounted to a miscarriage of justice – whether the proviso should be applied on the basis there was no substantial miscarriage of justice / CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISDIRECTION AND NON-DIRECTION – OTHER CASES – where the appellant was convicted after trial before a jury of 17 counts of insolvent trading – where the trial judge gave directions in relation to a list of circumstances that if satisfied would help the jury conclude that the appellant suspected EDIS was insolvent – where the trial judge in summing up dealt with evidence relating to the incurring of each debt that was subject of an insolvent trading count – whether the trial judge erred in directing that any one circumstance would, if satisfied, help the jury conclude that the appellant had a suspicion of insolvency / CRIMINAL LAW – PROCEDURE – FITNESS TO PLEAD OR BE TRIED – DETERMINATION OF ISSUES – where the appellant was convicted after trial before a jury of two counts of fraud with a circumstance of aggravation and 17 counts of insolvent trading – where the appellant became self-represented mid-trial when he withdrew instructions to his solicitors and those solicitors and the counsel they briefed were given leave to withdraw – where the appellant suffered episodes of transient global amnesia and experienced a deficit in auditory verbal memory – where a psychiatrist and a psychologist expressed their opinion that the appellant was unfit to be tried, but another psychiatrist considered that the appellant was fit to be tried – where the Mental Health Court determined that the appellant was fit to be tried in relation to State charges – where the appellant made an application to invoke the process under s 645 of the Criminal Code (Qld) where the jury would be required to consider whether the appellant was of sound mind – where the trial judge declined to put the issue to the jury – whether there was a real issue about the fitness of the appellant to be tried – whether the trial judge should have required the jury to consider and determine whether the appellant was fit to be tried / Corporations Act 2001 (Cth), s 9, s 95A, s 588G / Crimes Act 1914 (Cth), s 20B / Criminal Code (Qld), s 613, s 645, s 668E / Mental Health Act 2016 (Qld), s 159, s 616 / Eastman v The Queen (2000) 203 CLR 1; [2000] HCA 29, cited / Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6, cited / Kalbasi v Western Australia (2018) 264 CLR 62; [2018] HCA 7, cited / Kesavarajah v The Queen (1994) 181 CLR 230; [1994] HCA 41, considered / Libke v The Queen (2007) 230 CLR 559; [2007] HCA 30, cited / M v The Queen (1994) 181 CLR 487; [1994] HCA 63, cited / Peters v The Queen (1998) 192 CLR 493; [1998] HCA 7, cited / R v Dillon; Ex parte Attorney-General [2016] 1 Qd R 56; [2015] QCA 155, cited / R v Khallouf [1981] VR 360; [1981] VicRp 38, cited / R v Ogawa [2011] 2 Qd R 350; [2009] QCA 307, considered / R v Presser [1958] VR 45; [1958] VicRp 9, considered / R v Tier (2001) 121 A Crim R 509; [2001] NSWCCA 53, cited / Sandell v Porter (1966) 115 CLR 666; [1966] HCA 28, cited / Young v Director of Public Prosecutions (Qld) [2019] QCA 247, considered

COUNSEL: S C Holt QC for the appellant/applicant / L K Crowley QC, with P Kinchina, for the respondent

SOLICITORS: Anderson Legal for the appellant/applicant / Director of Public Prosecutions (Commonwealth) for the respondent

1. FRASER JA: I agree with Mullins JA’s reasons and the orders proposed by her Honour.

2. MULLINS JA: The appellant was convicted after trial in the District Court before a jury of two counts of fraud with a circumstance of aggravation (counts 1 and 20) and 17 counts of insolvent trading (counts 2-17 and 19). On count 1, he was sentenced to imprisonment for a period of eight years. On count 20, he was sentenced to imprisonment for one year to be served cumulatively with the sentence for count 1. The parole eligibility date was fixed at 9 January 2024 and a declaration was made in respect of 28 days of pre-sentence custody served between 10 January and 6 February 2020.

3. Counts 2-17 and 19 are Commonwealth offences under s 588G(3) of the Corporations Act 2001 (Cth). The imprisonment for the Commonwealth offences was ordered to commence on 9 January 2024. The appellant was sentenced to imprisonment for a period of two years for each of counts 2 and 3, imprisonment for a period of 12 months for each of counts 4-11, 16, 17 and 19 and imprisonment for a period of three months for each of counts 12-15. It was ordered that the sentences of 12 months’ imprisonment be served concurrently with each other and the sentences on counts 12-15, but cumulatively on the sentence for each of counts 2 and 3, and the sentences of three months’ imprisonment be served concurrently with each other and with the sentences on counts 4-11, 16, 17 and 19, but cumulatively on the sentence for each of counts 2 and 3. A recognisance release order was made in respect of the period of imprisonment for the Commonwealth offences in terms that the appellant was to be released after serving one year of the three year period, upon giving security by recognisance in the sum of $500, conditioned on his being of good behaviour for a period of two years.

4. The appellant appeals his convictions and applies for leave to appeal against his sentence. For the purpose of ground 6 of his appeal against conviction, the appellant applies for leave to adduce evidence in the form of his affidavit affirmed on 25 June 2020 and the affidavit of his brother Mr Bradley Young affirmed on 25 June 2020.

5. The appellant’s trial was conducted as an etrial. Most of the documents that were tendered had a document identification (ID) number that was an alphanumeric combination. A sequential exhibit list was also maintained, but the trial judge, the parties and even witnesses usually referred to the documents by the alphanumeric ID. For consistency with the trial record, I will therefore use the document ID rather than the sequential exhibit number in referring to exhibits with a document ID.

Grounds of appeal

6. There are eight grounds of appeal:

Ground 1: The verdicts on each count are unreasonable or cannot be supported by the evidence.

Ground 2: The learned trial judge erred in directing the jury as to count 1.

Ground 3: The learned trial judge erred in failing to direct the jury as to the need for the offence in count 1 to have been committed at Maroochydore in the State of Queensland.

Ground 4: The learned trial judge erred in directing the jury as to counts 2 – 17 and 19.

Ground 5: The learned trial judge erred in not leaving s 645 of the Criminal Code (Qld) for the jury to consider.

Ground 6: The appellant suffered a miscarriage of justice by the continuation of the trial following the appellant becoming self-represented.

Ground 7: The appellant was denied a fair trial as a result of the learned trial judge refusing to allow prosecution witnesses to be recalled for further cross-examination by the appellant.

Ground 8: The appellant suffered a miscarriage of justice as a result of rulings made by the learned trial judge in relation to the appellant's closing address to the jury.

7. Whilst the decision on the appeal was reserved and before the court had reached a conclusion in respect of the unreasonable verdicts ground, the court concluded that the appellant must succeed on ground 5 which meant that the appeal had to be allowed. As a result of this being indicated to the parties, the appellant was released on bail on 10 December 2020. In view of the outcome of the appeal, it is unnecessary to deal with grounds 6, 7 and 8 of the appeal against conviction and therefore the applications for leave to adduce evidence. It is also unnecessary to deal with the sentence application.

8. The conclusion that I have reached on ground 1 which is set out below is that the appellant would not have succeeded on the appeal on that ground in respect of any of the counts. That has the consequence that there should be a new trial of counts 1-17, 19 and 20. I have considered grounds 2, 3 and 4 in case the issues raised by those grounds arise on any new trial.

Background

9. Apart from count 20 which was a charge on the indictment against the appellant alone, the appellant had been charged jointly with his brother Mr Bradley Young and Mr Gary Armstrong. Mr Armstrong pleaded guilty to counts 1, 2 and 3 and was a witness in the trial against the appellant. Mr Bradley Young’s trial preceded the appellant’s trial and he was found guilty of counts 1-17 and 19.

10. The charges arose out of the corporate restructure of the Kleenmaid business. The following summary is taken generally from the admissions made by the appellant pursuant to s 644 of the Criminal Code (Qld) (the Code).

11. The appellant founded the Kleenmaid business in 1980. Initially it involved distribution of spare parts for appliances (spare parts business) and traded through Orchard KM Pty Ltd (Orchard KM). The business gradually expanded. In 1985, the business commenced importing appliances for sale to general retailers (appliance business). In 1996, the business began operating company owned stores under the Kleenmaid brand. In 2001, the business began opening franchised stores under the Kleenmaid brand. The spare parts business was sold by Orchard KM to EDIS Service Logistics Pty Ltd (EDIS) in 2001. Prior to 2007, the appellant suffered a heart condition requiring a triple bypass and, by 2007, he wanted to reduce his involvement in the business.

12. Prior to 2007, the main trading entity of the Kleenmaid business was the Orchard Unit Trust. Kleenmaid Holdings Pty Ltd (Kleenmaid Holdings) held 100 per cent of the 20 units in the Orchard Unit Trust. Orchard KM was the trustee of the Orchard Unit Trust and in that capacity operated the appliances business, provided warranty to customers and provided exclusive rights to EDIS to supply Kleenmaid spare parts. From 2005 Kleenmaid Retail Pty Ltd (Kleenmaid Retail) had operational control of Kleenmaid non-franchised stores and Orchard KM (as trustee for the Orchard Unit Trust) was 100 per cent shareholder in Kleenmaid Retail. Kleenmaid Customer Solutions Pty Ltd (KCS) was established in 2005 as an after sales service for in-warranty products and out-of-warranty products. Initially, Orchard KM owned 100 per cent of the shares in KCS, but in May 2006 Orchard KM sold its shares in KCS to EDIS.

13. The restructure of the Kleenmaid business was undertaken gradually in 2007.

14. The restructure involved nine new companies with an additional company, My Kleenmaid Rewards Pty Ltd (Rewards) being incorporated later in 2009. The restructure involved a split of the existing and new companies into two groups: a group with Kleenmaid Holdings as the head company (Orchard Group) and a group with a new company Kleenmaid Corporate Pty Ltd (Kleenmaid Corporate) as the head company (Corporate Group). The core operations of the Kleenmaid business were transferred from the Orchard Group to the Corporate Group, including the operation of the appliance business from the Orchard Unit Trust to EDIS. EDIS commenced operating the appliance business on 1 December 2007.

Particulars of the counts

22. At the outset of the trial, the jury were provided with the prosecution’s particulars for each of the charges. In respect of count 1, the prosecution put its case against the appellant on the basis that he was either a principal offender under s 7(1)(a) of the Code or a party to the offence under s 7(1)(b), (c) or (d). (There was no case based on s 8 of the Code.) The basis of the appellant’s criminal responsibility was then particularised as follows:

“2. At all material times, the [appellant] and the other directors within the Kleenmaid Group, Bradley Young and Gary Armstrong, each knew:

a. of the precarious financial position of the Orchard Group;

b. the only way the business could continue operating was to obtain a cash injection from a financial institution; and

c. the only way the business could obtain such finance was by applying for funding through an applicant entity that was not encumbered by the substantial debts of the Orchard Group, so that such debts would not need to be disclosed.

Consequently, the [appellant] knew, approved of, and agreed with the other directors Bradley Young and Gary Armstrong that:

a. Gary Armstrong would make a finance application to Westpac to obtain funds;

b. the purported purpose of the funding would be represented as being to enable EDIS Service Logistics Pty Ltd (EDIS) (which was part of the Corporate Group) to acquire the Kleenmaid appliances business from the Orchard KM Pty Ltd (Orchard KM) (which was part of the Orchard Group);

c. the full relationship and nature of the arrangements between the Corporate Group and the Orchard Group would not be disclosed, and instead Corporate Group would be represented as:

i. being independent of the Orchard Group; and

ii. dealing with Orchard Group on a commercial, arms-length basis.

Knowing these matters and that the finance would be/was sought in the dishonest circumstances set out below, the [appellant] refrained or refused to disclose to Westpac, either himself or through Gary Armstrong, the true state of affairs.”

23. During the trial, the respondent provided further explanation of the particulars in paragraph 3 as another way of expressing paragraph 3 to which the trial judge referred in the summing up:

“… that before Gary Armstrong applied for the finance, the [appellant] was present at meetings with Bradley Young and Gary Armstrong where Bradley Young proposed that (a) EDIS be used to apply for finance and (b) the Orchard financials should not be handed over and the [appellant] agreed or approved or supported that plan… .”

24. The benefit gained as a result of the application made to Westpac by EDIS which was approved by the bank was particularised as the Westpac Business Finance Facilities totalling $13m for EDIS for specific approved purposes, including the purchase of display stock and working capital requirements for stock ($3m), working capital ($1.5m), to fund the EDIS appliance division ($7m) and to assist with importing of appliances ($1.5m).

25. There were admissions as follows. In October and November 2007 Westpac approved finance to EDIS in the sum of $7m by way of a commercial bill facility, $3m by way of overdraft, a further $1.5m by way of overdraft, invoice finance of $1.5m and a temporary overdraft of $1.5m. The commercial bill of $7m was made available on 13 November 2007 and EDIS received into its Westpac account the amount of $6,947,647. A further $2,888,553 was advanced to EDIS’ Westpac account on 13 November 2017 from the overdraft amount of $3m. A further $1.5m from the temporary overdraft facility was also made available to EDIS through its Westpac account on 30 November 2007. A total amount of $11,336,200 was received by EDIS from Westpac in November 2007 of which $10,310,000 was transferred to Orchard KM between 13 November and 14 December 2007. Between 13 and 22 November 2007 the sum of $7.7m was paid out of the Orchard KM account to which the EDIS funds had been transferred and all the payments related to debts that had been incurred by Orchard and some payments were made in relation to invoices dating back to June 2006.

26. The circumstances of dishonesty were particularised in paragraph 7 as:

“The benefit was dishonestly gained because the finance was sought and obtained in the following circumstances:

a.the true nature of the relationship between the Corporate Group and the Orchard Group companies was not disclosed, and Westpac was led to believe that:

i.the Corporate Group and the Orchard Group, and in particular EDIS and Orchard KM, were separate and distinct businesses; and

ii.all transactions between the two were conducted on a commercial arms-length basis, when in fact it was one operation;

b.the serious debt position of the Orchard Group, and in particular Orchard KM, was not disclosed to Westpac;

c.the Orchard Group financials were not provided to Westpac despite being requested;

d.the circumstances of the sale of the shares in EDIS was not disclosed to Westpac, and in particular that:

i.Gary and Carol Armstrong transferred their shares in EDIS to Kleenmaid Holdings Pty Ltd (an Orchard Group company) for no, or nominal, consideration;

ii.Kleenmaid Holdings Pty Ltd then transferred the shares in EDIS to Kleenmaid Corporate Pty Ltd (the holding company for the Corporate Group) for $9.88M;

iii.and the method by which the above transfer was to be accounted for in company accounts was by recording a $9.88M loan from Kleenmaid Holdings Pty Ltd to Kleenmaid Corporate Pty Ltd;

e.the financials/figures provided to Westpac represented that the Corporate Group companies had retained earnings of $12M, but failed to disclose a loan of approximately $9.88M owed by the Corporate Group to Orchard Group (arising out of the sale of shares from Kleenmaid Holdings Pty Ltd to Kleenmaid Corporate Pty Ltd), which reduced retained earnings to $2M;

f.Westpac were led to believe that title and possession of the existing purchased inventory would be transferred to EDIS upon acquisition of the Kleenmaid appliances business, and it was not disclosed that:

i.the Orchard Group would instead retain the inventory, and there would be no such transfer of these assets to EDIS; and

ii.EDIS would only receive inventory gradually on a transitional basis, as and when delivery of orders was required;

g.the following ‘Order House’ arrangements were not disclosed to Westpac:

i.customer deposits for sales made by EDIS would be received by Kleenmaid Pty Ltd (Order House);

ii.the funds received by Order House would be used for other purposes, including for payment of Orchard Group debts, rather than being retained and held in trust; and

iii.EDIS was only able to receive payment of the customer deposits held by Order House after issuing an invoice to Order House at the time when the order was to be delivered, and the invoice was on terms that payment by Order House was required within 30 days from the end of the month.

h.the moneys borrowed from Westpac were not used for the purposes for which they were sought and approved, but rather were used to pay debts of the Orchard Group.”

27. In relation to counts 2-17 and 19, the basis of the appellant’s criminal responsibility was particularised as a principal offender on the basis that he was a de facto director, as at all times relevant to those counts, he acted in the position of a director by performing functions for the Kleenmaid Group including EDIS that included supervising, directing and instructing staff and employees, controlling the finances of the business and dealing and negotiating with suppliers and creditors. (The respondent referred to the aggregation of the Orchard Group and the Corporate Group as the Kleenmaid Group and I will use the description “Kleenmaid Group” for the same purpose.) Lengthy particulars were then provided of the circumstances on which the prosecution relied to prove the appellant suspected that EDIS was insolvent at the dates of each of the transactions. The creditor whose debts were the subject of counts 2 and 3 was Westpac. CEO Global Logistics Pty Ltd was the creditor whose debts were the subject of counts 4-15. Mitchell & Partners (Qld) Pty Limited was the creditor whose debts were the subject of counts 16, 17 and 19.

28. In respect of each of the insolvent trading offences, the prosecution had to prove that the appellant failed to prevent EDIS incurring the debt and that failure was dishonest. It was particularised that it was dishonest, because he was aware of the Kleenmaid Group’s parlous financial state and he could not have had any realistic expectation that the Kleenmaid Group would be able to repay any further debts incurred by the Group, but failed to direct staff not to incur debts and failed to cease incurring debts on behalf of the Kleenmaid Group.

29. The prosecution’s case against the appellant for the count 20 fraud was based on his being a principal offender. The benefit gained was particularised as the appellant directing Kleenmaid employees to transfer $330,000 from the bank account of Orchard KM to England & Young Holdings Pty Ltd which was effected on 7 April 2009. The particulars of why the benefit was gained dishonestly were the circumstances that the appellant knew the parlous financial state of the Kleenmaid Group and there was no more ability for it to keep trading, the appellant was contemplating the appointment of administrators, the appellant knew there were limited funds remaining in all bank accounts associated with the Kleenmaid Group and the only funds left in EDIS were earmarked to pay the staff wages, the transfer advantaged England & Young Holdings over other secured creditors, and the appellant and his wife and the appellant’s former business partner, Mr England, all stood to benefit financially from the transfer.

Ground 1: Unreasonable verdict – count 1

30. The approach the court must take where the ground of appeal is that the verdict was unreasonable or cannot be supported by the evidence is to ask the question whether the court thinks that upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt that the appellant was guilty: M v The Queen (1994) 181 CLR 487, 493. It is also relevant to have regard to the observations in R v Young [2020] QCA 3 (Young) at [69] that “a challenge to a conviction upon this ground requires more than the identification of evidence which was exculpatory” and, consistent with what was said by Hayne J in Libke v The Queen (2007) 230 CLR 559 at [113], that the question for the appellate court is whether it was open to the jury to be satisfied of guilt beyond reasonable doubt which is whether the jury must, as distinct from might, have entertained a doubt about the appellant’s guilt.

31. It was common ground at the trial in relation to count 1 that the appellant had no contact at all with Westpac in respect of the application for the $13m loan that was made to EDIS. Although the prosecution case for count 1 was left to the jury on the basis the appellant either did the relevant acts as principal or was liable pursuant to any of paragraphs (b), (c) or (d) of s 7(1) of the Code, there were two aspects of the particulars which the prosecution focused on in the trial as to the conduct of the appellant to prove him guilty of count 1 pursuant to s 7(1)(d) of the Code. These were, first, that the appellant knew, approved of and agreed with Mr Bradley Young and Mr Armstrong for EDIS to apply to Westpac for the loan for a purpose known not to be its true purpose and to withhold deliberately information about the full relationship and nature of the arrangements between the Corporate Group and the Orchard Group and, second, the appellant “refrained or refused” to disclose to Westpac “the true state of affairs”. On the basis that it was Mr Armstrong who conveyed to Westpac that the Orchard Group financials would not be provided, the prosecution case was that the appellant’s conduct amounted to counselling or procuring the commission of the offence by Mr Armstrong.

32. In order to deal with the issue of whether the verdict in respect of count 1 was unreasonable or unsupported by the evidence, it is necessary to set out in some detail aspects of the relevant evidence.

33. Mr Drake is a tax agent and accountant who did some contract work for Kleenmaid in 1999, took over the role of the financial controller in about 2001 for about six months and then was a finance consultant to Kleenmaid leading up to the restructure. His evidence-in-chief was as follows. Mr Drake prepared for Mr Armstrong on 13 April 2007 a preliminary restructure proposal diagram version 1 (document B00394503A). Mr Drake then prepared an extensive briefing document in May 2007 (document B00394512) that was a proposal to update and rename Kleenmaid Group entities. The initial proposal was that a customer of a company or franchised store would pay a deposit for goods that was received by Order House. Order House would hold onto the deposit and use the funds as it needed to before delivery of the product, such as paying commissions to franchisees. When the goods were due for delivery, the order would be forwarded to EDIS which was the company that made the sale and delivered the product and EDIS would raise an invoice to Order House that would then make payment of the deposit to EDIS.

“Each month Orchard will invoice EDIS for stock used in this manner and this will result in a decreasing value of stock in the books of Orchard. The main warehouse stock should be sold within six months.”

The briefing documents proposed that product importation and wholesaling would become part of EDIS. In dealing with the impact of the restructure on EDIS in relation to stock in the same briefing document, it proposed that EDIS would set up new accounts with suppliers and import product directly and build its stock level up over time, but until that occurred EDIS would source its stock from Orchard’s existing stock holdings. It proposed that the value of the Orchard stock would not be recognised in the financial accounts of EDIS, but would be tracked in EDIS’ accounts for management purposes.

35. Mr Drake explained that it was his view when preparing the briefing document, if the stock were transferred from Orchard to EDIS, it would attract a significant amount of stamp duty.

36. Before the restructure Mr Armstrong was in charge of finance, Mr Bradley Young who had previously been the sales manager and had control of franchising had taken on the role of managing director and “was, more or less, running the show” and the appellant was trying to retire, so he had a lesser role. The appellant had the relationship with the suppliers, because that was a personal relationship he had built up over many years and he still went and visited the overseas suppliers. Those roles continued after the restructure. After the restructure, the appellant was still heavily involved with cash flow to the overseas suppliers, because of his relationship with them.

37. On 9 June 2007 Mr Drake forwarded to Mr Armstrong a spreadsheet he had prepared that showed Kleenmaid’s funds’ position in the future as between the existing Orchard Group and the new group based around EDIS (document B00394514). The funds’ position for the existing group showed a total shortfall of $68m. It included an estimate of the cost of the warranty on products sold prior to the restructure that was likely to be incurred over the next five years. The documents showed that $68m would need to be achieved on a sale for the goodwill of the business to cover the existing group’s liabilities.

38. Mr Drake did modelling for the new business in around July 2007. The information for the Orchard Group was not going to be supplied to the bank, because that was the appellant’s side of the business. It was Mr Armstrong and Mr Bradley Young who were looking after the new Corporate Group and it was their side of the business that was going to the bank. It was Mr Armstrong who told Mr Drake that they would not be showing the Orchard balance sheet to the bank.

39. Prior to the restructure being implemented, each of Mr Armstrong and his wife held six shares in EDIS. Mr Drake understood that they held those shares in trust “for the unit holder of the Orchard Unit Trust” which was Kleenmaid Holdings. On 30 November 2007 Mr Drake had prepared for Mr Armstrong suggested minutes of meeting (document B00394517) for the transfer of the shares held by Mr and Mrs Armstrong in EDIS to Kleenmaid Corporate, subject to the approval of Westpac as the mortgagee with the shares, with an effective date of the transfers of 1 November 2007.

40. Mr Drake gave the following further evidence in cross-examination. One of the things that EDIS was to do differently was to recognise revenue from orders when the goods were delivered. This was an in anticipation of a public float. Mr Stable was the project manager looking after the switch over. He prepared an overview of the changes to the accounting systems that he sent to Mr Drake on 13 August 2007 (document B00188174). This overview emphasised that EDIS would be the main operating entity, but that Order House would hold the deposit until the goods were delivered and installed and the deposit would then be transferred to EDIS. The overview noted that use would be made of inter entity loan accounts and settling up on a regular basis, as “[d]ue to the very large number of transactions between the different entities it is not practical to make payments via bank transactions all the time”.

“With this arrangement comes an obligation to provide inventory for the operation of the business. This inventory falls into two categories:

Display stock for all non-franchised Kleenmaid retail stores. At present, this stock is provided by Bizco PL in all NSW stores, and by Kleenmaid in its retail stores located in all other states. The value of stock currently provided by Kleenmaid is approximately $3M.

Warehouse inventory, current value approximately $7M.

The licence agreement with Kleenmaid provides for a fee to be paid to Kleenmaid if it continues to provide this inventory. In the alternative, EDIS has the option of purchasing the stock. In order to eliminate the fee to Kleenmaid, EDIS intends to proceed with purchase of the stock, and requires funding to assist in that process.

I would be guided by you in selecting the appropriate facility or facilities for this purpose. The options for these facilities might include trade finance funding.”

49. The application letter attached a chart (document B00620173) that was described in the application letter as showing the new structure of the EDIS Group following the changes proposed by the restructure. (It should be noted that the chart was limited to the Corporate Group other than Kleenmaid Appliances and did not include or refer in any way to the Orchard Group.)

50. Mr Armstrong and Mr Bradley Young met with Mr Dickson on 18 September 2007. During the process of applying for the finance from Westpac, Mr Armstrong was asked on one occasion for the “financials of Orchard”. He relayed the request to both Mr Bradley Young and the appellant and both of them said “no”. Mr Armstrong conveyed to the bank that the appellant, as the director of Kleenmaid “felt that it was a private business and he didn’t need to disclose the financials of Orchard”.

51. Mr Armstrong had referred in his evidence to a number of years previously when EDIS was seeking funding from the bank and that the appellant “had clearly indicated that he wasn’t interested in giving financials for … anything other than Orchard’s borrowing”. When the proposal was being discussed in the appellant’s presence by Mr Bradley Young presenting to Mr Armstrong and the appellant, Mr Armstrong thought “it was repeated that [the appellant] said he wasn’t willing to provide financials for EDIS’ borrowing”. Mr Armstrong stated that “at least in my mind it was very clear that Orchard wasn’t a suitable borrower”, because of cash flow issues, and even though “the financial statements were passable”, he considered the cash flow issues could have been a source of concern for a lender.

52. Mr Armstrong forwarded the email which he received from Mr Dickson dated 11 October 2007 attaching the conditional letter of offer in relation to EDIS’ purchase of the appliance division of Kleenmaid to Mr Bradley Young and copied to Mr Andrew Young on 15 October 2007 (document B00733950). The appellant sent an email to Mr Armstrong on 9 November 2007 (document B00195553) that congratulated Mr Armstrong “getting the deal over the line” and inquiring “When will GB be able to begin dispersing funds?”. The reference to “GB” was to Graham Baker with whom the appellant worked “to ensure that the suppliers were paid in order of what [the appellant] thought was the priority, and so he was just looking forward to being able to sit with Graham Baker and … allocate those funds [being the proceeds of the funding from Westpac to EDIS] to the correct suppliers”.

53. After the restructure, Order House was set up to receive the orders and the money paid by customers. That was done at the direction of Mr Bradley Young. A lot of orders (and deposits) were received long before delivery of the goods was required. It was not necessary to hold inventory to cover all orders that were on hand, but enough inventory in the warehouse to cover those deliveries for the period that it was determined needed to be covered. EDIS knew nothing about the order until delivery was required. The funds held by Order House were made available for the operation of the business, so that Order House did not always have cash equal to the value of customer deposits. When an order was received in the Orchard Group, it was recognised as revenue immediately and, at the same time, the cost of providing the product to a customer was recognised as an expense. The customer deposits were at times around $30m. Because of the cash flow challenges that the Orchard Group had, the business relied on new orders coming into fund deliveries of products for old orders. It was a situation that was “not secure”. That issue was raised by Mr Armstrong with both Mr Bradley Young and the appellant before the restructure.

Ground 1: Unreasonable verdicts – counts 2-17 and 19

87. The insolvent trading counts concern debts incurred by EDIS at various dates between 3 July 2008 and 8 April 2009 (the relevant period), when s 588G(3) of the Corporations Act provided:

“A person commits an offence if:

(a)a company incurs a debt at a particular time; and

(aa) at that time, a person is a director of the company; and

(b)the company is insolvent at that time, or becomes insolvent by incurring that debt, or by incurring at that time debts including that debt; and

(c)the person suspected at the time when the company incurred the debt that the company was insolvent or would become insolvent as a result of incurring that debt or other debts (as in paragraph (1)(b)); and

(d)the person’s failure to prevent the company incurring the debt was dishonest.”

88. The trial judge therefore directed the jury that there were six elements that the prosecution had to prove beyond reasonable doubt for each of the insolvent trading counts:

“The prosecution must prove beyond reasonable doubt:

[EDIS] incurred a debt;

[The appellant] was a director of the company at that time;

The company was insolvent at that time or becomes insolvent by incurring the debt, or by incurring at that time debts including that debt;

[The appellant] suspected the company was insolvent or would become insolvent as a result of incurring the debt or other debts;

[The appellant] failed to prevent the company incurring the debt;

The failure to prevent the company incurring the debt was dishonest.”

89. In respect of the element of the offence that EDIS was insolvent at the time the debt was incurred, there is no issue on this appeal that it was open to the jury to find that EDIS was insolvent during the relevant period.

90. The appellant submits there were two fundamental defects in the prosecution case against the appellant for counts 2-17 and 19 that result in the verdicts being unreasonable. The first aspect is that the evidence did not permit a conclusion beyond reasonable doubt the appellant was a de facto director of EDIS. (There is no dispute as to the legal principles that apply in determining whether a person is a de facto director: Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at [63]-[75].) In relation to the first aspect, the argument advanced on the appeal depends on drawing a distinction between a director and an officer of a corporation. The second aspect is that the evidence did not permit a conclusion of dishonesty for each count.

91. As the appellant had ceased to be a formally appointed director of EDIS on 1 June 2007, the prosecution case against the appellant for insolvent trading was based on the appellant being a de facto director within the meaning of paragraph (b)(i) of the definition of “director” in s 9 of the Corporations Act that includes a person who acts in the position of a director. The particulars the prosecution relied on to allege that the appellant was a de facto director of EDIS during the relevant period were that he acted in the position of a director by performing the following functions for the Kleenmaid Group, including EDIS:

“a. supervising, directing and instructing staff and employees;

b. controlling the finances of the business, including managing cashflow and determining and directing what payments were to be made to creditors of the business and when and how such payments would be made; and

c. dealing and negotiating with suppliers and creditors.”

92. The appellant relies on Mr Armstrong’s agreement in cross-examination that the appellant was engaged by EDIS as a contractor under contract for a period of three years to provide the “Kleenmaid product range specified with manufacturer” as set out in the business plan for EDIS dated October 2007 prepared by Mr Bradley Young (document B00165743) and that he was not included in the management chart for EDIS set out in that business plan. Mr Armstrong observed that the appellant was not shown in the chart, because his functions were “in Orchard”. In addition, Mr Armstrong gave evidence that he and Mr Bradley Young, as the other director of EDIS, were not accustomed to act in accordance with the instructions or wishes of the appellant.

93. The appellant submits that the functions for EDIS that the prosecution particularised as being performed by the appellant were not functions that showed the appellant was acting in the position of a director and were consistent with his role falling within the definition of “officer” in respect of a corporation set out in s 9 of the Corporations Act. The appellant therefore argues that the jury could not have been satisfied beyond reasonable doubt that the appellant was a de facto director of EDIS, unless the prosecution excluded beyond reasonable doubt that he was otherwise an officer of EDIS falling short of performing the role of a director.

94. The purpose of that definition of “officer” in the Corporations Act (in the terms in which it stood during the relevant period) is to provide a general term for persons who are directors or secretaries of a corporation or involved in the decision-making of the corporation that affects substantially the corporation’s business or a person who has the capacity to affect significantly the corporation’s financial standing or in accordance with whose instructions or wishes the directors of the corporation are accustomed to act and extends to insolvency practitioners appointed to the property of, or to administer or liquidate, the corporation or a person administering a compromise or arrangement made between the corporation and someone else. The general term “officer” is then used in the Corporations Act for the purpose of imposing duties and obligations or otherwise regulating the conduct of persons within that designation of officer.

95. If it was proved beyond reasonable doubt to the satisfaction of the jury that the appellant was a de facto director, it followed that the prosecution excluded beyond reasonable doubt that he was otherwise acting in a role that fell short of performing the role of a director.

96. The respondent relied on the evidence of numerous witnesses at the trial to support its case that the appellant was a de facto director of EDIS during the relevant period. That included the evidence of Mr Pearce, Ms Sheather, Ms Britt, Ms King, Ms Dimmock, Mr Proos, Mr Neville, Mr Cole and parts of the evidence of Mr Drake and Mr Armstrong. (Some of the evidence of Mr Pearce, Mr Neville, Mr Cole, Ms Sheather, Ms King, Ms Dimmock, Ms Britt, and Mr Proos is summarised below, as it is also relevant to the second aspect.) After the change of roles in December 2005, the appellant was designated on emails or letters as “Chairman Kleenmaid Pty Ltd”. After the transition of the appliance business to EDIS, the appellant still showed his position as “Chairman Kleenmaid Pty Ltd” when corresponding with creditors of EDIS until mid-March 2009, when he no longer included the designation “Chairman”.

“The [appellant’s] failure to prevent EDIS from trading while insolvent was dishonest because:

a. he was aware of the Kleenmaid Group’s parlous financial state; and therefore

b. he could not have had any realistic expectation that the Kleenmaid Group would be able to repay any further debts incurred by the Group; but nevertheless

c. failed to direct staff not to incur further debts on behalf of the Kleenmaid Group;

and

d. failed to cease to incurring debts on behalf of the Kleenmaid Group of companies himself.”

102. During the course of the trial when the appellant made a no case to answer submission, the prosecution clarified (as is the case) that the particulars of dishonesty had to be read in the context of the opening words of the particulars that EDIS was trading whilst insolvent. The particulars refer otherwise to the Kleenmaid Group (rather than EDIS) as it was the prosecution’s contention that the Kleenmaid Group (comprising the Orchard Group and the Corporate Group) was being conducted as a single operating entity during the relevant period. The prosecution case was that it was not to the point that EDIS may have still been paying some debts, but that it was trading whilst insolvent and, in those circumstances, the appellant could not have had any realistic expectation that the Kleenmaid Group would be able to pay any further debts incurred by the Kleenmaid Group, because it could not pay all the debts as they fell due.

103. On this appeal, the respondent argues that it was sufficient if the jury were satisfied beyond reasonable doubt as to either particular a or b together with either particular c or d. The appellant asserts that analysing the particulars that way alters the case that was pursued during the trial. The reality of the structure of the particulars is that particulars a and b are cumulative and each needed to be proved beyond reasonable doubt, but it was sufficient if the jury were satisfied that either particular c or d was proved beyond reasonable doubt. That is because particulars c and d are cumulative in one sense, but also alternative means by which it was alleged the appellant failed to stop the Kleenmaid Group incurring debts. The failure was either in the appellant not directing staff to stop incurring debts or in the appellant not stopping incurring debts on behalf of the Kleenmaid Group. Such failure would be established only if it were otherwise proved beyond reasonable doubt that the appellant was acting as a director of EDIS and therefore was capable of exercising the power to stop further debts being incurred by EDIS.

104. The trial judge directed the jury on the element of dishonesty in both the written directions (MFI NNN) and in the summing up in these terms:

“And, as to element 6, dishonesty has its ordinary meaning. It means dishonest by the standards of ordinary, honest and decent people. Assessing whether an act or a failure to act, failing to prevent a debt being incurred is dishonest, it is useful to identify the knowledge, belief or intent which is said to render the conduct dishonest. Here, it would be… the intent to induce the other party to supply goods or services or finances while suspecting insolvency. As particularised, the failure to prevent EDIS trading while insolvent was dishonest, because he was aware of the Group’s parlous financial state and could not have held a realistic expectation that the Group would be unable (sic) to pay any further debt. It is for you to decide whether the defendant had that knowledge or belief or intent, and, if so, it is for you to determine whether on that account the failure to prevent the company incurring the debt was dishonest.”

105. Where the trial judge said “unable” during the summing up (as set out in the above quote), it was clearly meant to be “able” and that was the word that was used in the same direction in the written directions provided to the jury (MFI NNN) and no confusion would have resulted from the slip. The particulars were based on the prosecution contention that the Kleenmaid Group operated as one entity, but the trial judge directed the jury appropriately that ultimately they had to be satisfied that the appellant was a de facto director of EDIS and acting dishonestly in failing to prevent EDIS incurring debts. The direction that “dishonesty” has its ordinary meaning and means dishonest by the standards of ordinary, honest and decent people accords with the direction approved by the court in R v Dillon; Ex parte Attorney-General [2016] 1 Qd R 56 at [48] (per Margaret McMurdo P with whom Morrison JA and Dalton J agreed). That direction followed the direction on the ordinary meaning given to “dishonesty” referred to by Toohey and Gaudron JJ in Peters v The Queen (1998) 192 CLR 493 at [18] where they also considered that the trial judge should identify the knowledge, belief or intent that renders the act dishonest:

“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. Necessarily, the test to be applied in deciding whether the act done is properly characterised as dishonest will differ depending on whether the question is whether it was dishonest according to ordinary notions or dishonest in some special sense. 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.”

106. The trial judge’s directions on dishonesty articulated the prosecution case in the context of the applicable law set out above and clarified for the jury of what they had to be satisfied in order to find dishonesty proved beyond reasonable doubt in a way that mere reference to the prosecution particulars without that explanation of dishonesty did not. It was obvious from the evidence adduced by the prosecution in relation to EDIS’ obtaining the further advances from Westpac that are the subject of counts 2 and 3 that the purpose was to enable EDIS to keep trading, even though EDIS was insolvent, and the purpose of paying the debts to CEO Global Logistics Pty Ltd and Mitchell & Partners (Qld) Pty Limited was to ensure continuity of services to enable EDIS to keep trading, even though EDIS was insolvent. The trial judge therefore set out expressly what was implicit in the prosecution case that the appellant’s intent in obtaining that finance or paying for those services was to induce the other party to supply the funds or services so that EDIS could continue to trade, at the same time that the appellant suspected insolvency.

107. During the hearing of the appeal the appellant focused on that part of the direction on dishonesty that suggested to the jury it was “useful” in assessing dishonesty to identify the knowledge, belief or intent which is said to render the conduct dishonest and submits that was wrongly framed. The appellant concedes, however, that the balance of the direction correctly stated the law in directing the jury “to decide whether the [appellant] had that knowledge or belief or intent” and whether on that account the failure to prevent EDIS incurring the debt was dishonest. Taking the direction as a whole, any infelicity in the direction of the use of the word “useful” was corrected by the latter part of the direction.

108. The appellant relies on the evidence of numerous witnesses about payment of EDIS’ debts during the relevant period. This included Mr Armstrong’s evidence given by reference to EDIS’ profit and loss statement for quarters ended between September 2006 and March 2009 and the broken period between 1 and 9 April 2009 (document Q00000049B) that was prepared by Mr Hughes from the management accounts. Mr Armstrong also had regard to the balance sheet as at the date of the end of each quarter between September 2006 and March 2009 and the broken period between 1 and 9 April 2009 (document Q00000050). On the basis of these documents, Mr Armstrong estimated that the value of actual payments made to EDIS’ creditors in the period 1 January 2009 to 9 April 2009 was $15.6m. Mr Armstrong in the same exercise for the quarter ended 30 September 2008 concluded that $15m was paid to EDIS’ creditors and for the quarter ended 31 December 2008 that $17.8m was paid to EDIS’ creditors. Witnesses such as Mr Pearce confirmed that over the relevant period EDIS’ creditors were paid from the Orchard KM NAB No 2 account.

109. The appellant submits that on the basis of this evidence, the jury must rationally have entertained a doubt as to the claim that the appellant, at the date of each count, had no realistic expectation that any further debts incurred by the Kleenmaid Group would be paid.

“Continuing losses; Liquidity ratios below 1; Overdue Commonwealth and State taxes; Poor relationship with present Bank, including inability to borrow further funds; No access to alternative finance; Inability to raise further equity capital; Suppliers placing the company on COD, or otherwise demanding special payments before resuming supply; Creditors unpaid outside trading terms; Issuing of post-dated cheques; Dishonoured cheques; Special arrangements with selected creditors; Solicitors' letters of demand, summonses, judgments or warrants issued against the company; Payments to creditors of rounded sums which are not reconcilable to specific invoices; Inability to produce timely and accurate financial information to display the company's trading performance and financial position, and make reliable forecasts.”

125. The appellant’s focus on the fact some creditors were paid during the relevant period does not address the question of whether during the relevant period EDIS had the resources to pay all its debts, as and when they became due and payable. If it did not, it was trading whilst insolvent. Even before the commencement of the relevant period, there was a significant amount of evidence that indicated that EDIS was unable to pay its suppliers and other creditors within the usual terms, was entering into payment plans and then renegotiating payment plans, when EDIS failed to make the promised payments. By the commencement of the relevant period, the evidence was overwhelming that EDIS was trading whilst insolvent and the appellant must therefore have suspected that EDIS was insolvent. The question of whether it was dishonest for the appellant not to stop EDIS incurring further debts, when the appellant suspected that EDIS was insolvent, was a classic question for the jury to apply the standards of ordinary, decent people. In the circumstances, it was open to the jury to convict in respect of each of the insolvent trading charges.

126. The appellant does not succeed in showing that any of the verdicts of guilty on counts 2-17 and 19 was unreasonable or unsupported by the evidence.

Ground 1: Unreasonable verdict – count 20

127. The fraud that is the subject of count 20 concerned the transfer that was an admitted fact on 7 April 2009 of $330,000 from Orchard KM to England & Young Holdings which was a company associated with the appellant and his family and his former partner Mr England and his family. It was not disputed the transfer was done on the appellant’s instruction. The issue for the jury in relation to this count was the element of dishonesty.

128. Mr Armstrong gave evidence that he had been asked by the appellant in the morning or in the middle of 7 April 2009 to authorise the transfer of $330,000 to England & Young Holdings and “that the funds would be split between the three of us – Andrew, Brad and I”. Mr Armstrong said that he told the appellant that he was not interested.

129. It was admitted that at the time of transfer the appellant was the only shareholder of England & Young Holdings, he and his wife were authorised to make withdrawals from the England & Young Holdings’ account and that in April 2009 some $330,000 was withdrawn from that account of which $196,350 was paid to the appellant’s wife and some $79,000 was paid to Mr England.

130. It was not disputed at the trial that the appellant sent an email to employees on 7 April 2009 at 3.27 pm (document B00442787) which directed the employees (including Mr Janif, Ms Sheather and Ms Dimmock) to make the transfer. The appellant’s brother and Mr Armstrong were also copied into the email. Ms Sheather gave evidence that on 7 April 2009 there was only approximately $330,000 available in the account and that she had been reassured by the appellant earlier on that same day that that money was to be used for employees’ wages that were overdue and nothing else. Ms Sheather confirmed in evidence that, after consulting Mr Janif and Ms Dimmock, she arranged for the transfer, as instructed by the appellant. Mr Janif confirmed he authorised the transfer as a signatory to the Orchard KM account after Ms Sheather uploaded the payment. Ms Sheather left the office after doing the transfer and the appellant telephoned her to confirm that the transaction had been done.

131. The evidence of Mr Pearce was that he was doing the cashflow on 7 April 2019, when he received a telephone call from the appellant about the transfer of the sum of $300,000 to the England & Young Property Trust. Mr Pearce queried the appellant about the instructions and the appellant advised him it was for “compliance reasons”. Mr Pearce stated that, at that point in time, there were staff wages that were overdue and payments to a number of suppliers that were overdue, but “the most pressing matter being staff wages on that particular day”.

132. Mr Morgan and Mr White on behalf of Westpac had declined EDIS’ further funding request for $2.37m on 13 March 2009 and Mr Young notified them on 16 March 2009 (document B00580789) that he had taken steps to introduce additional capital by way of private equity, including through private equity funds. The email of 16 March 2009 made a request for an additional $2.35m that was rejected by Mr White on behalf of Westpac on 17 March 2009 (document B00580788).

Ground 2: Did the trial judge err in directing the jury as to count 1?

141. During the appellant’s cross-examination of Mr Armstrong, the appellant attempted to put propositions to Mr Armstrong to the effect that he (meaning the appellant) did not procure, aid, counsel or enable Mr Armstrong to conceal the true nature of the matters that the prosecution alleged had been concealed from Westpac. The prosecution objected. The trial judge in the absence of the jury made some suggestions to the appellant as to how he could reformulate the questions to avoid objection, and the appellant then read out his reformulated questions. After an adjournment, the prosecution indicated that it would not press the objection to the questions in the form in which they had been read out, apart from one specific question which the appellant then endeavoured to address. The appellant put the questions to Mr Armstrong in the form that had been foreshadowed. The answers favoured the appellant. On this appeal those answers are referred to by the appellant’s counsel as the exculpatory evidence. During the appellant’s address to the jury, he made the point that Mr Armstrong was a prosecution witness and the prosecution had the opportunity to ask him the questions along the lines of those that the appellant had asked in cross-examination and the prosecution had failed to do so.

142. This ground is directed at the direction the trial judge gave in the course of the summing up about the form of the questions and that, as a consequence of that form, the answers were of limited use. The trial judge directed the jury in these terms:

“And on this point you will also remember that Mr Young himself asked Armstrong questions along those lines, ‘And did I procure your counselling?’ Those questions, and there was argument about those questions. My direction about this is that the form of question that it was suggested the Crown should ask would probably not be allowed for several reasons, but the most fundamental is that whether Mr Young counselled or procured or aided Armstrong is the very question you have to decide. It is whether on all of the evidence that the Crown has proven to you beyond reasonable doubt that Mr Young procured or counselled. Another way to put it is – sorry – as I said to you a minute ago, Mr Young referred to his own cross-examination of Armstrong in similar terms. Ultimately, the form of the questioning was not objected to, but such questions ask the witness’ opinion about a conclusion, which is the very matter you have to decide.

So, in that form, the question is of limited use. I say all of that because there was some issue about – or a submission that the Crown failed to argue – ask certain questions and there are some reasons why the Crown would not ask certain questions in a certain form. That is my legal direction to you. But getting back to Mr Young’s arguments: Mr Young conceded, I suppose, that he was clearly aware that Gary Armstrong was applying for funds. But Mr Young submitted to you that the questions he was asking Armstrong was whether he did anything to enable or aid, procure etcetera. And the submission is, you would conclude, that Gary Armstrong did all that he did without the approval or agreement of Mr Young and Mr Young was not a party to the loan. And so in answer to some of the questions, Gary Armstrong said that Mr Young did not procure or counsel him to conceal the circumstances of the share sale or the order house agreement. My same direction applies to those sorts of questions.”

143. The direction was given in the summing up as a response to a criticism that the appellant had made of the prosecution in not asking similar questions to those the appellant asked, but the appellant now argues that the effect of the direction was to direct the jury that the form of questioning was “of limited use”, because it was an opinion.

144. The direction is impugned for two reasons, first, the direction was procedurally unfair, as the appellant had indicated he would need to seek legal advice, if he could not ask questions in the form he was proposing, and then when he reformulated the questions, the trial judge did not inform the appellant at that point in the trial, that he remained of the view that the questions were of limited use. If the trial judge had done so, the appellant could have reformulated the questions further to avoid the defect that was the subject of the direction in the summing up. In any event, it is also argued that the trial judge was not correct in depreciating the value of the answers given by Mr Armstrong merely because he was responding to a question that was directed at the ultimate issue.

145. The purpose for which the appellant in his address to the jury used the failure of the prosecution to ask questions of Mr Armstrong as to the ultimate issue required a direction to be given by the trial judge. This arose at the time of the appellant’s address and therefore did not raise the issue of unfairness (that is now pursued on the appeal) at the time the questions were asked. The reality was that the answers given by Mr Armstrong to those questions were expressions of opinion about the ultimate issue for the jury. Because they were not directed to the facts underlying the opinion, the answers were, in the circumstances, of limited use. They could not dispense with the consideration by the jury of whether they accepted other evidence from Mr Armstrong and any evidence from other witnesses relevant to the ultimate issue.

Ground 3: Did the trial judge err in failing to direct the jury that the offence in count 1 had to have been committed at Maroochydore in the State of Queensland?

146. Mr Bradley Young’s appeal against conviction in respect of the same indictment was heard and the decision reserved, when the appellant’s trial took place. One of the grounds of appeal by Mr Bradley Young in respect of count 1 was identical to ground 3 in this appeal: see Young at [121]-[135]. In the trial of Mr Bradley Young, however, the question was not raised before the trial judge whether a direction should be given as to the locality of the offence in count 1. As a result of the issue being a ground of appeal by Mr Bradley Young, the respondent raised the issue before the trial judge in respect of the appellant’s trial. Written submissions were made by the appellant and the respondent on this issue. The appellant sought the direction on the basis it was an issue that was raised on the evidence.

147. On the basis the trial judge found that the acts alleged to have occurred by the appellant occurred in Queensland and therefore no jurisdictional question arose, the trial judge declined to direct the jury that it had to be satisfied that count 1 was committed in Queensland. As it was raised, the appellant submits it should have been left to the jury and it was for the prosecution to prove jurisdiction on the balance of probabilities.

148. The respondent submits that the evidence was unchallenged as to the connection between the conduct attributed to the appellant and Queensland and, as such, there was no relevant factual dispute as to whether the offence in count 1 was committed in Queensland for the jury to decide. The relevant evidence included that the Kleenmaid business was operated principally from Maroochydore and the appellant was mainly working from the head office in Maroochydore. Mr Armstrong gave evidence that the initial meeting where the restructure was proposed took place in the office at Maroochydore.

149. There was evidence of conduct involving the appellant relating to the acts and omissions constituting the offence that occurred in Queensland to make the question of jurisdiction a non-issue in the appellant’s trial. There was no error in the judge’s refusal to direct the jury to consider the question of jurisdiction in respect of count 1.

Ground 4: Did the trial judge err in directing the jury on the insolvent trading charges?

150. There were four ways in which the appellant submits the trial judge erred in directing the jury on the insolvent trading charges:(a)by failing to adequately direct the jury as to an alternative innocent hypothesis advanced by the appellant;(b)the directions as to the use that could be made of expert evidence of “insolvency” were erroneous;(c)the directions on the element of “suspicion of insolvency” were erroneous; and(d)the directions on the element of “dishonesty” were erroneous and put the case to the jury on a different basis to that particularised by the prosecution.

151. The appellant’s submission in respect of (a) raises the same alternative innocent hypothesis that has been rejected above in dealing with the unreasonable verdict ground for the insolvent trading charges. Similarly, the appellant’s submission in respect of (d) that the trial judge’s directions on the element of “dishonesty” were erroneous has been rejected above in dealing with the unreasonable verdict ground for the insolvent trading charges.

152. In relation to (b), the appellant relies on the classic statement of Barwick CJ (with whom McTiernan and Windeyer JJ agreed) in Sandell v Porter (1966) 115 CLR 666, 670-671 as to the meaning of insolvency and that whether insolvency is proved is a question for the court and not a question for expert opinion:

“Insolvency is expressed in s. 95 as an inability to pay debts as they fall due out of the debtor's own money. But the debtor's own moneys are not limited to his cash resources immediately available. They extend to moneys which he can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time-relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor's financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor's inability, utilizing such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency. Whether that state of his affairs has arrived is a question for the Court and not one as to which expert evidence may be given in terms though no doubt experts may speak as to the likelihood of any of the debtor's assets or capacities yielding ready cash in sufficient time to meet the debts as they fall due.”

153. On the basis that whether EDIS was insolvent at the date each debt was incurred that was the subject of an insolvent trading count was an issue of fact for the jury to decide, the appellant submits that the admission of the respective opinions of Mr Hughes and Mr White as to the point of insolvency of EDIS was in error and that the direction of the trial judge that the jury could take those opinions into account in considering that issue was wrong in law. The appellant relies on the approach of Court of Appeal in Young at [204] in respect of a similar ground of appeal:

“We would accept for present purposes that, consistently with the observations of Barwick CJ in Sandell, the evidence given by Mr Hughes that EDIS was insolvent since March 2008 was inadmissible. Those observations would, however, confine the expert evidence that is inadmissible to evidence in terms that EDIS was insolvent from that time. They would leave admissible the evidence that Mr Hughes otherwise gave, including the evidence concerning the irrecoverability by EDIS of intercompany receivables owed to it by Orchard KM and Order House due to the insolvency of those companies and the impact that had in placing the value of its net assets in substantial deficit at 31 March 2008.” (footnote omitted)

154. This aspect of ground 4 is framed in terms of being an error in directing the jury, but the direction was given in respect of the expression of an opinion by an expert which was inadmissible on the authority of Sandell.

155. The appellant was represented by counsel and solicitors at trial when Mr Hughes and Mr White gave the relevant evidence and no objection was taken to the expression of the opinion that is now challenged.

156. The trial judge gave the jury the usual direction in relation to expert witnesses, giving Mr Hughes’ opinion that EDIS was insolvent by 31 March 2008 as an example of an opinion of an expert witness. The trial judge reminded the jury that they were the sole judges of the facts and that they were entitled to assess and accept or reject any opinion evidence from an expert as they saw fit.

157. Mr White’s evidence as to when he said he thought EDIS was insolvent on 13 March 2009 in the course of a telephone discussion between Mr Morgan and Mr White on behalf of Westpac with Mr Armstrong, Mr Bradley Young and the appellant was referred to by the trial judge in the summing up when dealing with count 12 that concerned a debt incurred by EDIS on 31 March 2009. The trial judge referred in the summing up to that evidence from Mr White in terms of being “his perception of the condition of EDIS at that stage in March”. The trial judge then observed:

“It is a matter for you … how much weight you give Mr White’s opinion, of course, taking into account his position and his knowledge of matters.”

158. The respondent concedes on the basis of the proscription in Sandell, that was accepted for the purpose of dealing with the ground of appeal in Young at [204], that the evidence given by Mr Hughes in terms that EDIS was insolvent as at 31 March 2008 was inadmissible, but submits that there was an overwhelming amount of other admissible evidence from which the jury could have concluded that EDIS was insolvent by 31 March 2008 or, at the very latest, 3 July 2008 (being the date of count 2) and as such there was no miscarriage of justice.

159. The fact that the expert evidence of Mr Hughes was given in terms of the ultimate issue of whether EDIS was insolvent at the date the debt was incurred that was the subject of each of the insolvent trading counts was not a wrong decision by the trial judge on a question of law, but falls to be dealt with as a miscarriage of justice arising from the admission of evidence in the nature of an inadmissible opinion of an expert expressed on an issue for the jury. On the basis that it was a miscarriage of justice to admit that evidence and then direct the jury on it, the issue is whether the respondent has discharged the onus of showing that the proviso should apply to that miscarriage of justice, pursuant to s 668E(1A) of the Code: Kalbasi v Western Australia (2018) 264 CLR 62 at [12].

160. The directions that were given in respect of the opinion evidence of each of Mr Hughes and Mr White left the jury in no doubt that the issues of fact were for them to decide, even where an opinion was expressed on those issues by the expert. The weight of the evidence was overwhelming in support of the opinion that Mr Hughes did express about the insolvency of EDIS (and the other Kleenmaid companies) from 31 March 2008 onwards and the opinion Mr White expressed on 13 March 2009. The respondent has shown that, notwithstanding the error in the admissibility of the impugned expert opinion, there has been no substantial miscarriage of justice.

161. In respect of (c), the appellant’s submission focuses on the directions given by the trial judge on the 17 circumstances listed in paragraph 12 of the prosecution’s particulars as the basis for alleging the appellant suspected EDIS was insolvent at the respective dates of each of the insolvent trading accounts.

162. After the trial judge had given directions on the law by reference to the elements of each insolvent trading count (as set out in MFI NNN) the trial judge then took the jury through the particulars relied on by the prosecution. In relation to the suspicion of insolvency, the trial judge stated “there is … quite a list of circumstances which are asserted and … the position being that, if you are satisfied of them or any of them, they would help you to conclude that [the appellant] had the suspicion”.

163. Some of the circumstances were expressed in broad terms and had also been the subject of extensive directions by reference to the evidence, when the trial judge summarised the evidence relating to insolvency. These included the first three circumstances:

“a. the financial position of the various companies of the Kleenmaid Group, which were inextricably linked;

losses were being sustained by the Kleenmaid Group;

there were significant difficulties with cashflow, and consequent inability to pay creditors and suppliers;”

164. The trial judge then went through evidence that was relevant to each of the other circumstances relied on by the prosecution as relevant to whether the appellant suspected EDIS was insolvent or would become insolvent as a result of incurring the debt which was the subject of the particular count.

165. The essence of the appellant’s complaint about the direction that if the jury were satisfied as to any one of the circumstances, it would help them to conclude the appellant had the requisite suspicion is it could not be said in respect of some of the circumstances particularised that that circumstance was sufficient to prove beyond reasonable doubt that the appellant had a suspicion of insolvency at the time EDIS incurred a particular debt. In addition, the appellant complains that some of the circumstances listed in paragraph 12 of the particulars occurred after the time debts were incurred for particular counts on the indictment and that may have confused the jury as to the relevance of circumstances that post-dated counts on the indictment.

166. The trial judge then proceeded in the summing up to deal with the evidence relating to the incurring of each debt that was the subject of an insolvent trading count. This focused the jury’s attention on the date that the subject debt was incurred. It had been emphasised earlier in the summing up that the appellant had to hold the relevant suspicion of insolvency at the time the debts were incurred. A fair reading of the summing up as a whole, does not result in a conclusion that the appellant’s complaints about the directions on the suspicion of insolvency have any substance.

167. The appellant does not succeed in establishing a miscarriage of justice in respect of any of the directions raised by ground 4.

Ground 5: Did the trial judge err in not leaving s 645 of the Code for the jury to consider?

168. The context for the decision made by the trial judge which is the subject of ground 5 is that the trial before the trial judge was the third trial that had commenced for these offences against the appellant. The first trial was a joint trial with his brother that commenced on 4 April 2016. By day 9 of that trial, counsel who had been appearing for the appellant was no longer appearing, the solicitors applied for an adjournment and then, on day 11 of that trial, the jury were discharged from returning a verdict in relation to the trial of the appellant. The first trial continued to verdict against his brother. The second trial commenced before the trial judge on 28 August 2017 and the appellant was self-represented. After day 6 of the trial, the appellant was unwell and there was an adjournment for almost two weeks. The trial resumed and on day 22 the jury was discharged from giving a verdict in the trial. The weight of the evidence was overwhelming in support of the opinion that Mr Hughes did express about the insolvency of EDIS (and the other Kleenmaid companies) as at 31 March 2008.

169. The third trial commenced on 16 September 2019. The appellant became self-represented on 14 October 2019 (which was day 15 of the trial), when he withdrew the instructions to his solicitors and those solicitors and the counsel they briefed were given leave to withdraw. The appellant applied for a mistrial on the basis he could not defend himself properly, based on unfitness for trial. The appellant provided the trial judge with a transcript of the proceeding in the Mental Health Court on 1 April 2019 and references to the passages where the psychiatrists and neuropsychologist who gave evidence expressed their opinion that Mr Young was not fit for a self-represented trial. The appellant referred to Dalton J’s finding that he was fit for trial, but asserted that finding was only if he had proper representation and assistance. The appellant also informed the trial judge that he was awaiting the outcome of his appeal from Dalton J’s decision. Towards the conclusion of the evidence-in-chief of Mr Hughes, when the appellant was still represented, the appellant’s counsel had requested a full day’s break between the conclusion of Mr Hughes’ evidence-in-chief and the commencement of his cross-examination on the basis that was consistent with suggestions in the Mental Health Court judgment that would give the appellant an opportunity to reflect upon the material. It was apparent from the exchange with the trial judge in respect of that request that the trial judge had a copy of Dalton J’s reasons given on 3 April 2019. On 14 October 2019, the trial judge was of the view that those reasons did not qualify the appellant’s fitness for trial as the appellant asserted. That application made by the appellant on 14 October 2019 was refused and the trial continued with the appellant representing himself.

170. The appellant made further applications for a mistrial on the basis that he was unfit for trial as a self-represented defendant on 15, 16 and 17 October 2019 and each of these applications was also refused. The written submission the appellant prepared for the purpose of the application on 15 October 2019 set out specific references to Dalton J’s reasons and the evidence of Professor Byrne and raised with the trial judge that he should send the appellant back to the Mental Health Court, because he was now self-represented. Further oral submissions were made late on 15 October 2019 on what was the proper course, including whether s 645 of the was invoked. The trial judge reserved his decision and gave reasons on 16 October 2019 for refusing the application. After that ruling, the appellant provided a further written submission on that day seeking a mistrial which was immediately refused. It became apparent at the conclusion of the evidence on 16 October 2019 that the appellant had not been accessing the documents on the etrial website and the trial judge indicated that arrangements would be made for the appellant to have that access. On 17 October 2019 the appellant provided another written submission to support an application for a mistrial. The trial judge considered the submission was an attempt to reopen the decision that the trial judge had previously made and refused to do so. On 30 October 2019 the trial judge gave additional reasons for rejecting the series of mistrial applications made by the appellant on 14, 15, 16 and 17 October 2019. In the course of those reasons, the trial judge noted that he had dealt directly with the appellant “on and off since early 2017”, the trial “had commenced and travelled a substantial distance” and some prosecution witnesses had given evidence for a third time.

“He needs, I think, to be able to understand what it is that he is charged with. He needs to be able to plead to the charge and to exercise his right of challenge. He needs to understand generally the nature of the proceeding, namely, that it is an inquiry as to whether he did what he is charged with. He needs to be able to follow the course of the proceedings so as to understand what is going on in court in a general sense, though he need not, of course, understand the purpose of all the various court formalities. He needs to be able to understand, I think, the substantial effect of any evidence that may be given against him; and he needs to be able to make his defence or answer to the charge.”

178. Dr Lonie had concluded in her first report that in relation to auditory verbal memory, the appellant “falls within the borderline range for a man of his age” and that he had “a severe impairment in his ability to recall or retrieve newly rehearsed verbal information”. Dr Lonie had also concluded that the appellant’s “ability to learn and retain new verbal material of an unstructured nature … is extremely poor”.

179. For the purpose of his first report, Dr Kovacevic was provided with the report from psychiatrist Dr Reutens dated 25 March 2019, the report from Professor Byrne dated 3 March 2019, Dr Lonie’s report dated 4 April 2018, the appellant’s submissions to the court dated 14, 15 and 16 October 2019 and the transcript of the evidence of Dr De Looze given on 19 October 2017 in the appellant’s first trial. Dr Kovacevic assessed the appellant for two hours on 18 October 2019. His report of 20 October 2019 included the following. The appellant suffered his first episode of Transient Global Amnesia (TGA) in 2012 and then suffered a similar episode of TGA for about four hours at the end of a day in court for the first trial. Dr Kovacevic referred to the deficit in the appellant’s auditory verbal memory noted by Dr Lonie and her conclusion about his extremely poor ability to learn and retain new verbal material of an unstructured nature, but that otherwise his full scale IQ was in the high average range and there were not significant deficits in any of the other cognitive measures administered by Dr Lonie. Dr Kovacevic noted Professor Byrne’s conclusion that the appellant’s general intelligence was intact, but that he had “impaired new learning ability”.

180. Dr Kovacevic also noted the conclusions reached by each of Dr Lonie, Professor Byrne and Dr Reutens on the appellant’s fitness for trial. Dr Lonie considered that the appellant’s attempts to represent himself at trial would be “grossly compromised”, because the appellant does not “retain the necessary verbal memory and the new learning ability to allow him to retain, integrate and later recall [evidentiary] material”. Professor Byrne considered the appellant “could be disadvantaged by continuing to conduct his own defence” and considered his auditory verbal memory deficits could be adequately addressed through the assistance of experienced legal advisors and the provision of daily transcripts. Dr Reutens diagnosed the appellant with mild neurocognitive disorder and adjustment disorder with anxiety and that it was “unlikely that he would be able to understand the substantial effect of the quantum of the evidence or the cumulative effect of the evidence over the course of the trial”. Dr Reutens also warned about the possibility of a recurrence of TGA and recommended against the appellant representing himself.

181. The appellant had stated to Dr Kovacevic that no modifications had been made to his criminal trial. Dr Kovacevic considered that due to the appellant’s memory impairment where he is self-represented, the appellant “would have limited capacity to follow extended proceedings characterized by large amount of complex evidence where he would be expected to comprehend, retain, analyse and understand the effects of evidence and respond to the evidence in a timely and appropriate manner”. Dr Kovacevic’s opinion was that the appellant’s acquired cognitive deficit, subsequent to the two episodes of TGA, must be considered in the broader context of a serious cardiovascular and cerebrovascular illness.

“In conclusion, I am of the opinion that Mr Young is presently medically unfit to self-represent in the current criminal trial. This is not to suggest that simply finding him a lawyer would immediately obviate all concerns. The complexity of this trial is such that even participating in his defense and providing ongoing instructions as the trial progresses requires generally preserved cognitive functioning. Mr Young requires a team of competent legal professionals who would conduct the trial with his assistance and reduce the cognitive burden that is currently placed solely on him.”

183. For the purpose of his second report, Dr Kovacevic was provided further information about the manner in which the appellant’s trial had been conducted, including the transcript from day 23 of the appellant’s trial, and requested to respond to specific questions. On the basis that the information that the appellant had previously provided to Dr Kovacevic that no modifications had been made to his criminal trial was not accurate, as it was apparent from the further information some modifications had been made, Dr Kovacevic still remained of the opinion that the appellant was not fit for trial, if self-represented. In the course of the second report, Dr Kovacevic stated:

“This trial would be expected to be difficult for most self-represented defendants to navigate due to its length and complexity. Having cognitive deficits in auditory verbal memory makes the task particularly difficult for Mr Young. Mr Young is in my opinion not fit to represent himself due to his cognitive functioning, specifically his verbal auditory memory deficits. My finding of unfitness does not imply that Mr Young would be unfit if he self-represented in a different and simpler criminal trial. His unfitness is therefore contextual, and my assessment of his fitness relates specifically to his present trial circumstances.”

184. Professor Byrne gave oral evidence before Flanagan J on 13 November 2019 and considered the appellant was fit for trial, even while self-represented. He considered that the transcript from day 23 which commenced with applications being made by the appellant showed “a fairly impressive exchange” with the trial judge. His opinion of the appellant’s cross-examination on day 23 was modified in his examination by Ms Holliday, as a result of being provided with the information that the questioning of the witness Mr Baker followed the script that had been provided to the appellant on the morning of the trial. Professor Byrne accepted that on the basis of the material in Mr McGinness’ affidavit, the day 23 transcript could no longer be relied upon as evidence of fitness for trial of the appellant, if he was self-represented. During the examination by Ms Holliday, Professor Byrne also accepted that he had expressed an earlier opinion that the appellant had “the capacity to meet all of the Presser criteria if assisted by daily transcripts and experienced legal counsel”.

185. Dr Kovacevic also gave oral evidence before Flanagan J and did not resile from his opinion that the appellant, whilst self-represented, was unable to meet criteria 4, 5 and 6 of the Presser criteria. There was quite detailed examination of Dr Kovacevic on what the transcript from day 23 of the trial showed about the appellant’s capacity. Dr Kovacevic conceded that the transcript showed the appellant following up an unexpected answer with questions that were not scripted, but Dr Kovacevic pointed out that what the transcript showed was the appellant relying on his working or short term memory but “without necessarily relying on his memory retrieval from stored memories from earlier that day”. In examination by Ms Holliday, Dr Kovacevic confirmed that, it was in the context of this particular trial and the cognitive demand of that trial, including its length and complexity, he considered that the appellant had “no sufficient memory capacities” to self-represent effectively.

186. On 15 November 2019, the trial judge declined to put the issue to the jury. In the reasons for that decision, the trial judge identified the correct threshold question as “whether a real question as to unfitness is raised”. The trial judge referred to what Keane JA said in relation to s 613(1) of the Code and s 20B(3) of the Crimes Act in R v Ogawa [2011] 2 Qd R 350 at [111]:

“Once the Court becomes aware of ‘any reason’ whereby ‘it appears to be uncertain’ that a defendant ‘is capable of understanding the proceedings at the trial’ (for State offences), or ‘is [fit] to be tried’ (for Commonwealth offences), the trial judge should determine the threshold question as to whether there is a ‘a real question’ as to whether it appears to be uncertain that the defendant is either capable of understanding he proceedings at trial, or fit to be tried, as the case may be.”

187. Section 613 of the Code provides for the procedure, if a question arises about the fitness for trial of an accused person when he or she is called upon to plead to the indictment. Section 645 of the Code provides for the procedure when the issue of an accused person’s fitness to be tried (or, as it is expressed in s 645, soundness of mind) arises during the trial. The same test applies under both provisions, when the question of fitness is referred to a jury empanelled under s 613 to determine or to the jury before which the trial is proceeding under s 645 to determine.

188. The trial judge also referred to Kesavarajah at 245, including referring to the passage to the effect that sometimes the test has been stated in terms of “whether there is a reason to doubt the accused’s fitness to stand trial” and “the judge should leave the issue to be tried by the jury unless no reasonable jury, properly instructed, could find that the accused was not fit to be tried”.

189. The trial judge then referred to the standard directions that are given to a jury called upon to determine the issue of fitness for trial pursuant to either s 613 or s 645 of the Code.

190. The trial judge traversed the evidence in the reports of Dr Lonie and Dr Kovacevic and the evidence of Dr Kovacevic before the Mental Health Court on 13 November 2019 and noted that Dr Kovacevic was very careful about identifying the specific cognitive abnormality affecting the appellant. The trial judge noted that Dr Kovacevic took from Dr Lonie’s report that the appellant appeared to fall “between the bottom five to 10 per cent of population in terms of his auditory verbal memory functioning and … psychologists do standardise that in terms of age”. The trial judge noted that Dr Kovacevic then explained that means that one out of 10 or one out of 20 people would have similar deficits “but in the context of this trial and the cognitive demand of this trial and the length and complexity, and in the circumstances where Mr Young is to self-represent, I think he has no sufficient memory capacities to do that effectively”.

191. The trial judge then recorded his observations about the appellant’s participation in the trial, noting that there were occasions during the trial where the appellant had made cogent arguments and that, although there were many witnesses and documents, they were all on notice, with the prosecution daily sending reminder lists of witnesses and documents to the appellant. In addition, the trial judge noted that it was the third time the appellant was engaged in the trial and, because the case was largely document-based, there was little or no scope for surprise evidence. The trial judge referred to the time given to the appellant to prepare for cross-examination and that he had been given, when he sought it, the opportunity to confer with witnesses before cross-examining them. The trial judge then returned to the question whether the deficit identified by Dr Kovacevic made the appellant unfit in this particular trial and framed it in terms of the preliminary question of whether it was open to the jury to so find. On the basis of the measures that had been adopted to adjust the trial to make allowance for the appellant’s needs, the trial judge concluded that “there’s no basis … upon which a jury properly instructed could be satisfied [the appellant] is not fit for trial”. That conclusion reflected the terms in which the court in at 245 expressed when the trial judge should leave the question for the jury.

“… that alone provides a basis upon which your Honour would be satisfied that there is a real question arising accompanied with the repeated assertions in this trial by the defendant that he isn’t a person who’s capable because he is not fit, … the Crown has, having received the material, formed its own view, which has been articulated to your Honour, that the matter is raised as a real question now about fitness before this trial such that an inquiry through the jury should be conducted.”

195. The making of those concessions before the matter was then argued formally before the trial judge on 14 November 2019 did not preclude the trial judge forming his own view in relation to the material put before the trial judge for answering the threshold question, does not preclude the respondent from now arguing that the trial judge answered the threshold question appropriately, and does not make the task of the appellant any easier in showing that the trial judge was in error in deciding the threshold question against the appellant.

196. The respondent argues that, apart from the material that was put forward on behalf of the appellant for the purpose of the application made on 14 November 2019, the trial judge was entitled to have regard to all relevant matters which included the course of the trial proceedings and the earlier rulings made by the trial judge, the trial judge’s own observations and assessment of the appellant’s capabilities, the evidence that had been given in the Mental Health Court on the hearing of the appellant’s earlier reference, the reasons of Dalton J and the circumstances in which the application was made on 14 November 2019. The respondent points out that the threshold question was not to be answered on the basis of the opinions expressed by the appellant’s experts in isolation without taking into account an understanding of the adjustments that had been made to the trial procedure to make allowance for the appellant’s “minor” cognitive deficit and that he was self-represented. It is also submitted that Dr Kovacevic’s opinions did not take into account the nature or form of the evidence to be adduced in the prosecution case and the numerous and extensive accommodations and modifications that had been made, and would continue to be made by the trial judge. The respondent submits that Dr Kovacevic’s opinions were theoretical and did not have regard to the reality of the trial proceeding.

197. The leading authority relied on by both parties is Kesavarajah. Kesavarajah concerned Commonwealth charges of conspiring to import heroin and the application of the Victorian provision equivalent to s 613 of the Code. Before the trial commenced, the trial judge read a report by one psychiatrist and heard evidence from another concerning Mr Kesavarajah’s mental condition. The first psychiatrist was of the opinion that Mr Kesavarajah showed evidence of an acute psychotic state and was not fit to plead, but the other psychiatrist considered that, despite his psychotic state, he remained capable of logical, rational thinking and it was apparent there had been an improvement in his behaviour in the recent days and he was fit to be tried. That psychiatrist did consider that Mr Kesavarajah’s psychosis could flare up under stress in such a way as to render him unfit to be tried. On the basis of this evidence, the judge ruled that there was not a serious question as to his fitness to be tried. The question of fitness was raised on two later occasions during the trial which lasted over four months and the trial judge did not reconsider his ruling. Mr Kesavarajah was convicted and his application for leave to appeal was unsuccessful. He then appealed to the High Court which held that the determination of whether Mr Kesavarajah was unfit to be tried was to be performed by the jury and not the judge on the basis that s 20B(3) of the picked up the relevant provisions of State law to determine whether the accused was unfit to be tried.

“In the present case the question whether there was a matter to be considered and the question whether the applicant was fit to be tried seem rather to have been run together. Difficult though it may sometimes be, it is important that they be kept separate.”

202. It was also implicit in Khallouf at 365 that the jury were entitled to take into account “the abnormal or eccentric behaviour of [Mr Khallouf] and upon his general demeanour during the trial”, if the question of his fitness to be tried had been referred to the jury.

203. In Ogawa, it was noted (at [112]) that the numerous pre-trial proceedings that were held at least up until shortly before Ms Ogawa’s trial began demonstrated that her fitness to be tried had been thoroughly canvassed in the course of those various pre-trial applications brought by Ms Ogawa. In the course of dealing with those applications the trial judge had made findings to the effect that Ms Ogawa was deliberately seeking to avoid a trial by “feigning mental incapacity”. There had been nothing to suggest that there had been some change in Ms Ogawa’s capacity during the trial where she was representing herself. It was therefore held (at [112]) by Keane JA (with whom Chesterman JA and Jones J agreed) that “the effect of the learned trial judge’s findings, which were not the subject of appeal, was that when the matter came on for trial, he was entitled to proceed on the footing that the appellant was fit to be tried and that any suggestion to the contrary on her part was a feigned attempt to frustrate the course of justice” and (at [113]) “the findings that the learned trial judge made, based on his observations of the appellant and the expert medical evidence, were sufficient to justify his Honour in regarding the appellant’s position raised at the start of the trial as a position which was not raised in good faith and which was devoid of substance”.

204. In Ogawa (at [110]), Keane JA had also treated the remarks of Kirby J in R v Tier (2001) 121 A Crim R 509, 521-2 as applicable to s 613 or s 645 of the Code. Those remarks included:

“It is only where there is patently no real and substantial question that the court may impute an absence of good faith, and decline to conduct an inquiry …”

205. As in Kesavarajah, the trial judge was given conflicting opinions of psychiatrists on whether the deficit the appellant’s auditory verbal memory precluded his fitness for trial, where he was self-represented and where certain accommodations were made in advance notification of the order of witnesses and documents to be tendered and in frequent adjournments.

206. Unlike Ogawa where the trial judge decided the threshold question on the basis of his experience in Ms Ogawa’s feigning incapacity and the benefit of the expert medical evidence given on the pre-trial applications concerning her incapacity, the material before the trial judge diagnosed a specific cognitive abnormality about which there was no dissent that it was not feigned and it had an effect on the appellant’s capacity to function in the trial. The question that was raised by the material before the trial judge where the appellant was self-represented and his specific cognitive abnormality had an effect on his capacity to function in the trial was whether certain accommodations or modifications made in the trial procedure made him fit to be tried.

207. In dealing with the threshold question, the trial judge dealt with the effect of the appellant’s accepted cognitive disability in the circumstances pertaining the trial that were known to the trial judge. The trial judge’s reasons suggest that he discounted the effect of Dr Kovacevic’s opinion by taking into account the trial judge’s familiarity with the accommodations that had been made during the trial to assist the appellant and that would continue to be made during the trial. To the extent the trial judge took into account greater detail of the accommodations made for the appellant than had been put to Dr Kovacevic in the Mental Health Court and the trial judge’s familiarity with the nature of the evidence and that it had been disclosed to the appellant previously, the trial judge, in effect, anticipated how that further information may have affected Dr Kovacevic’s opinion. It is therefore apparent from the analysis of the trial judge’s reasons for rejecting the application that the trial judge engaged in the merits of whether the appellant was fit to be tried and decided the ultimate question, rather than consider whether the material that was before him for the purpose of determining the threshold issue raised a real issue for the jury to consider about the appellant’s fitness to be tried.

208. There was enough in the material placed before the trial judge to raise a real issue about the fitness of the appellant who was self-represented to be tried. In this particular trial, the question of whether accommodations and modifications made to the trial process were sufficient to address the appellant’s cognitive deficit were for the jury to decide under s 645 in light of the evidence that may have been put before them on that aspect and their own observations of the matters relevant to the question they had to decide, as would no doubt be drawn to their attention by the respective submissions on behalf of the appellant and the prosecution. Once a real issue was raised, the threshold question was satisfied and s 645 of the required the jury to consider and determine whether the appellant was fit to be tried. Questions of convenience for the stage the trial had reached were irrelevant to whether the threshold question was satisfied: at 248.

Orders

211. The following orders should be made:

Appeal against conviction is allowed.

Convictions on all counts are set aside.

A new trial is ordered.

212. NORTH J: I agree with Mullins JA’s reasons and the orders proposed by her Honour.