Regina v I R Hall

Supreme Court of NSW|2005-03-02|Before: Kirby J, Davidson AJ, Barr J

CITATION : Regina v I R Hall [2005] NSWSC 889

15/12/04 17/12/04 HEARING DATE(S) : 21/2/05 22/2/05 23/2/05 24/2/05

Common Law Division Criminal List JURISDICTION :

DECISION : (1) Mr Hall given leave to withdraw his plea of guilty in respect of count 1 in the indictment presented on 7 July 2004; (2) The matter to be placed in the Arraignment List before Justice Barr on Friday 1 April 2005.

CATCHWORDS : Criminal Practice & Procedure - application to withdraw plea of guilty to charge under s1307 Corporations Act 2001 (falsifying company books) - whether a real question to be tried.

Corporations Act 2001 LEGISLATION CITED : Crimes Act 1914

Griffiths v The Queen (1977) 137 CLR 293 Liberti (1991) 55 A Crim R 120 Maxwell v The Queen (1995) 184 CLR 501 R v Sagiv (1986) 22 A Crim R 73 R v Boskovitz (unreported, NSW CCA, 19.8.96) R v Murphy (1965) VR 187 R v Davies (unreported, NSW CCA, 16.12.93) Boag (1994) 73 A Crim R 35 CASES CITED : R v Frawley (NSWSC, 9.9.04, unreported) R v Frawley [2005] NSWCCA 66 Dietrich v The Queen (1992) 177 CLR 292 R v Favero [1999] NSWCCA 320 R v Vergara [1999] NSWCCA 352 R v Hall (NSWSC, unreported, 29.6.04) R v Hannes 43 ACSR 508 R v Rivkin [2003] NSWSC 447; [2004] NSWCCA 7 R v Damien Parkes [2004] NSWCCA 377

P W Neil SC (Crown) COUNSEL : I R Hall (In Person)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION CRIMINAL LIST

JUDGMENT - On application to withdraw plea of Guilty. 1 KIRBY J: On 7 July 2004, Ian Robert Hall appeared before Davidson AJ charged with the following offences: Count 1: For that he between 30 June 1998 and 9 July 1998 at Sydney in the State of New South Wales did commit an offence against section 1307(1) of the Corporations Act 2001, in that he being an officer of Clifford Corporation Limited, did falsify books of Clifford Corporation Limited, which related to the affairs of that corporation, in that he created letters addressed to Mr Sid Myer dated 10 April 1998 and 21 June 1998 concerning the sale of Signature Group Australia Limited, a wholly owned subsidiary of Clifford Corporation Limited, which falsely stated that the dates for completion of the sale of Signature Group Australia Limited had been extended. Count 2: Further, for that he between about 28 October 1998 and 13 November 1998 at Sydney in the State of New South Wales did commit an offence against section 1311(1)(a) of the Corporations Act 2001, in that contrary to section 1002G(2)(b) of the Act he did procure Leisuremark Pty Limited to sell securities, being shares in Clifford Corporation Limited whilst in possession of information concerning Clifford Corporation Limited that was not generally available, being information which a reasonable person would expect to have a material effect on the price of the securities if it were generally available and being information which Ian Robert Hall knew, or ought reasonably to have known. 2 Mr Hall pleaded guilty to each count. He was not represented. The matter was stood over for sentence. Davidson AJ, however, was not able to complete the matter (and a companion matter involving John Barrie Loiterton). In these circumstances, submissions on sentence by Mr Hall and Mr Loiterton were fixed for hearing before me on 15 December 2004. 3 By 15 December 2004, Mr Craig Evans of Counsel had been retained to appear for Mr Hall. At the hearing on that day, Mr Evans announced that he had just received instructions from Mr Hall to withdraw his pleas in respect of both counts. Mr Evans was given time to clarify his instructions and consider his position. Ultimately Mr Evans sought and was given leave to withdraw as Counsel for Mr Hall. 4 Mr Hall thereafter appeared for himself. In the course of the hearing he altered his position. He confirmed his earlier plea in respect of count 2 (the "insider trading" charge). A conviction was then entered. He said, however, that he wished to seek leave to withdraw his plea in respect of count 1 (the "falsification of books" charge). The matter was stood over to deal with that application. A timetable was fixed for the filing of affidavits and submissions. 5 The application was ultimately heard over a number of days, commencing on 21 February 2005.

Setting aside a Plea. 6 A plea of guilty is an admission by the accused of the essential elements of the offence. It may, with leave, be withdrawn at any time before sentence (Griffiths v The Queen (1977) 137 CLR 293 at 334-335). In determining whether leave should be given, the Court has a discretion. The discretion must be exercised judicially. Such an application is approached "with caution, bordering on circumspection", recognising "the high public interest in the finality of legal proceedings" (Liberti (1991) 55 A Crim R 120 at 122). The onus is upon the person seeking leave to demonstrate that the plea should be set aside. The circumstances in which the Court will give leave were identified in Maxwell v The Queen (1995) 184 CLR 501, by Dawson and McHugh in these words: (at 511 ) "The plea of guilty must however be unequivocal and not made in circumstances suggesting that it is not a true admission of guilt. Those circumstances include ignorance, fear, duress, mistake or even the desire to gain a technical advantage. The plea may be accompanied by a qualification indicating that the accused is unaware of its significance." 7 The central issue is the integrity of the plea (R v Sagiv (1986) 22 A Crim R 73 at 80). Was the accused, in entering the plea, making a free and voluntary admission of the essential elements of the offence? (R v Boskovitz (unreported, NSW CCA, 19.8.96, per McInerney J at 33). The accused must be in possession of all relevant facts relied upon by the Crown to support the essential elements of the charge (Liberti (supra) at 122; Boskovitz at 33). Expressed in another way, the accused must show that the plea was entered without a genuine consciousness of guilt (R v Murphy (1965) VR 187 at 191; R v Davies (unreported, NSW CCA,16.12.93, per Badgery-Parker J at 8/9), or that there was no evidence upon which the accused could have been convicted (Boag (1994) 73 A Crim R 35, per Hunt CJ at CL at 37). 8 In discharging the onus, it is enough to secure leave that the applicant demonstrates "an issuable question of guilt" (R v Murphy, per Scholl J at 190-191), or a real question to be tried (R v Davies, per Badgery-Parker J at 8/9).

The Crown Case on Count 1. 9 Mr Hall was a Director of Clifford Corporation Limited ("Clifford Corporation"), a publicly listed company. He was also a substantial shareholder through a company, Leisuremark Pty Limited ("Leisuremark"). The Signature Group Australia Limited ("the Signature Group") was a wholly owned subsidiary of Clifford Corporation. It conducted a business renting office space, which was sublet to tenants who were provided with facilities to enable them to conduct their businesses from such premises. 10 In 1997 the Clifford Corporation was the largest manufacturer of coaches and buses in Australia. However, in 1998 its trading performance declined, halving the share price during the period March to October that year. 11 In March 1998, a firm of accountants, Grant Thornton, was appointed as the external Auditor for the group. Messrs Chapman and Archer from that firm were given the task of carrying out the audit. 12 In 1997 or thereabouts, Clifford Corporation entered into negotiations with I B Your Office International Limited ("IBYO International") to sell the Signature Group. IBYO International conducted a similar business to the Signature Group worldwide. The parties met and signed various documents, as set out in the Statement of Facts prepared by the Crown for the purposes of the sentencing hearing. The Statement of Facts, in its final form was, as I will describe, prepared in consultation with Mr Hall and Mr Evans of Counsel after the pleas of guilty had been entered. It included the following paragraphs, describing the course of negotiations in respect of the proposed sale: (Affidavit Kay Marinos 15/2/05 - EX PP) "7. In 1997 Clifford commenced negotiations with IB Your Office International Limited ('IBYO International') for the sale of Signature. Meetings between Loiterton and Uwe Brettmann ('Brettmann'), Chairman and Chief Executive of IBYO International, culminated in the signing in October 1997 of a Preliminary Agreement. In that agreement the parties agreed to the merger of Signature and IBYO International into a single entity, with the business of Signature to be acquired for the sum of USD19.68 million. 8. On 14 February 1998 IBYO International (by Brettman) and Clifford (by Loiterton) executed a variation to the Preliminary Agreement in Paris ('the Paris agreement'). The Paris agreement provided, among other things, that a final agreement would be entered into by 15 April 1998. It also provided that certain expenses of Clifford would become payable at specified dates, and in addition, that compensation payments would be paid to Signature on specified dates. 9. On 4 March 1998 Clifford announced to the Australian Stock Exchange ('ASX') its Preliminary Consolidated Results for Six Months ended 31 December 1997. The announced profit figure of $4.0 million was based on the inclusion of the above payments. 10. In about early April 1998 IBYO International instructed its US attorneys to act for it in relation to the Signature transaction, including the preparation of a Stock Purchase Agreement ('SPA') between IBYO International and Clifford in a format customary for US underwriters, regulators and investors. During May and June 1998, several drafts of the SPA were prepared and submitted by IBYO International's attorneys to Clifford's Sydney lawyer, Phillip Biber. 12. In May 1998, representatives of IBYO International co-ordinated due diligence investigations in relation to Signature. 13. On 2 June 1998 Clifford announced to the ASX that net profits for the group would ' approximate $10.0m in the current year rising to more that $40.0m in 2001. ' The $10 million profit forecast was based on amounts said to be derived from the sale of Signature. 14. On 13 June 1998 the offender and Loiterton travelled to San Diego to meet with IBYO International representatives to finalise the negotiations. However at a meeting of the IBYO International executives on 13 June, (not attended by the offender and Loiterton), it was agreed that the purchase of Signature would not proceed at that time, mainly because of the results of the due diligence investigation carried out on Signature. This decision was communicated to the offender and Loiterton at a further IBYO International board meeting on 14 June 1998 and is recorded in the unsigned minutes of the meeting. 15. It appears to have been agreed, however, that the parties would remain in negotiation with each other if Clifford could produce satisfactory accounting material." 13 On 18 June 1998, Mr Archer, the auditor, made a request in writing to Mr Sapier (a Director and a member of the Audit Committee) for further information about the progress of the Signature sale. The auditors had not been provided with an account of what had occurred in San Diego. Specifically, nothing had been said concerning the refusal by IBYO International to proceed with the agreement to purchase the Signature Group as it was structured. 14 The Crown asserts that, in this context, Mr Hall manufactured certain letters which were false in order to satisfy the auditors. The letters were on the letterhead of Clifford Corporation. In each case they were signed by Mr Hall. The first bears a date 10 April 1998. It was addressed to Mr Sid Meyer (sic) of Melbourne, being the IBYO International representative in Australia. The letter was in these terms: (Exhibit 2) "Re: Sale of Signature Group Australia Limited

Just a short note to confirm our discussions and agreement to extend the completion time factors of the sale of Signature Agreement to 30th June 1998. As you know we contemplate being in San Diego for this purpose in the last half of June." 15 The second letter, also addressed to Mr Meyer (sic), bears a date 21 June 1998. It was in these terms: (Exhibit 2) "Re: Signature Group Australia Limited Sale Agreement

Our arrangements extended the settlement of the sale agreement to 30th June 1998. As a result of the discussions in San Diego, I believe it would be prudent to further extend these to the date you suggested being 16th August 1998. Looking at the calendar that date falls on a Sunday, which effectively means that 17th August, would apply." 16 On 6 July 1998, Mr Sapier wrote to Mr Loiterton, the Chairman of Clifford Corporation. He reminded him that a written undertaking had been given to the auditors that a report would be furnished on the status of the Signature sale. Mr Hall was the Chairman of the Audit Committee. On 8 July 1988, he provided a memorandum to Mr Loiterton, which was then used by Mr Loiterton to answer the auditors. The Statement of Facts, prepared by the Commonwealth DPP, described these events in the following terms, which are important. It was this paragraph, according to Mr Hall, which prompted him to make the present application, seeking to withdraw his plea to Count 1: "18. On 8 July 1998, the offender provided Loiterton with a memorandum that at the San Diego meetings the IBYO International executives requested that the sale be delayed. He further indicated that the IBYO International executives had informed him and Loiterton that there were 'goodwill and taxation difficulties'. Attached to that memorandum were signed copies of two letters purportedly dated 10 April and 21 June 1998 which are the subject of count 1. The letters were never received by Myer and were not created on the dates shown on them. The content of the letters was also false. " (emphasis added) 17 The Statement of Facts, in its final form, continued as follows: "19. Between 16 and 20 July 1998 Sapier wrote to Grant Thornton accountants and provided them with a number of documents including an internal memorandum from Loiterton dated 9 July 1998. Attached to the internal memorandum were the two fabricated letters which are the subject of count 1 on the indictment."

Mr Hall's Case. 18 Count 1 was based upon s1307 of the Corporations Act 2001. That section, relevantly, is in these terms: " 1307 Falsification of books (1) An officer ... of a company who engages in conduct that results in the concealment, destruction, mutilation or falsification of any securities of or belonging to the company or any books affecting or relating to affairs of the company is guilty of an offence. .... (3) It is a defence to a charge arising under subsection (1) ... if the defendant proves that he, she or it acted honestly and that in all the circumstances the act or omission constituting the offence should be excused." 19 Mr Hall does not dispute many of the elements of the charge brought under that section, although he did question how the Corporations Act 2001 could relate back to an offence supposedly committed in 1998. On that issue the Crown relied upon the transitional provisions, recently considered by Grove J in R v Frawley (NSWSC, 9 September 2004, unreported), affirmed on Appeal on 23 February 2005 ([2005] NSWCCA 66). 20 Mr Hall acknowledged that, as a Director, he was an officer of Clifford Corporation. He agreed that he composed the letters dated 10 April 1998 and 21 June 1998 which he signed once they were typed. He further acknowledged that the letters came within the extended definition of "books" in the Act, the requirement being that the Crown prove the falsification of any "books affecting or relating to the affairs of the company" (s1307). Mr Hall said he had no recollection of when he had written either letter, except that in each case it was some time after the date appearing on the letter. He said it was his expectation that the letters, once signed, would have been sent to Mr Myer. He was, however, not involved in their despatch. He therefore could not say why neither letter had been received by Mr Myer. 21 Mr Hall, however, insisted that at all times (including at the time he entered his plea), he believed that the letters were not false, save that the date was false. He acknowledged that he had backdated the letters. Mr Hall said, in his evidence, that he spoke to Mr Myer on a number of occasions on the subject of the final agreement for the sale of the Signature Group. The date originally agreed in the Paris Agreement (15 April 1998) was adjusted as a result of these discussions. It was agreed that the time would be extended to 30 June 1998. Mr Hall also said that after the San Diego meeting, when it became clear that the 30 June deadline would not be met, he again discussed with Mr Myer a further extension. The new date, agreed some time before 8 July 2001 (when he wrote to Mr Loiterton), was 16 August 1998. 22 In submissions, Mr Hall said that Mr Myer's testimony during the committal and other material served by the Crown (including letters sent by IBYO International), corroborated his account that there were discussions and there was agreement. Correspondence, originating from IBYO International, referred to the 30 June 1998 deadline. 23 Mr Hall also emphasised another matter, relevant to the alleged falsity of each letter. The indictment specified the falsity of each letter in these terms: " Count 1: ... which falsely stated that the dates for completion of the sale of Signature Group Australia Limited had been extended." 24 Mr Hall contrasted these words with the terms of each letter. The letter of 10 April 1998 used the following phrase: "... extend the completion time factors of the sale of Signature Agreement to 30th June 1998." 25 The letter dated 21 June 1998 had the heading "Signature Group Australia Limited Sale Agreement". The text incorporated the following expression: "Our arrangements extended the settlement of the sale agreement to 30th June 1998. ..." 26 No-one, according to Mr Hall, could reasonably read either letter as referring to "the completion of the sale" of the Signature Group, as alleged in the indictment. The letters take up the words in the Paris Agreement, which refer to a "final agreement" (then due on 15 April 1998). It was that time which, by agreement, was extended in each case. It was, according to his submission, well understood by all concerned with the negotiations that the sale of the Signature Group would proceed in three stages. The first stage ("the Preliminary Agreement" of October 1997 and the Paris Agreement (supra para 12)), were statements of intent, or agreements to agree. The second stage was the Final Agreement, defining all terms. This was to be the binding contract. It would make provision for the third stage, where each party would fulfil its obligations under the Final Agreement ("the Completion"). Title would pass upon completion. 27 The indictment, according to Mr Hall, speaks of the third stage, completion. The letters, in contrast, were plainly speaking of the second stage, the Final Agreement. Since they were not addressing the issue of completion of the sale of the Signature Group, it followed, in Mr Hall's submission, that they did not falsely assert anything in relation to the completion date. 28 Mr Hall denied the motive attributed to him by the Crown, that is that he manufactured the letters in order to satisfy the auditors. He said: (Exhibit 4, p4) "There is no evidence that I was aware of his (referring to Mr Loiterton) intended use of the memorandum as an attachment to a further memorandum to others. Loiterton was more aware of events than I was, as is evident by his own memorandum."

The entry of the Plea. 29 Mr Hall, in support of his application, pointed to a number of other matters. First, he was unrepresented. He believed he understood the charge. It was his understanding that the Crown would provide him with a Statement of Facts with a view to securing his agreement. If he did not agree, he understood that the Crown would then be obliged to prove beyond reasonable doubt any fact which was adverse. He would have the opportunity of contesting that evidence and presenting his own evidence. 30 Secondly, Mr Hall said he believed that by his plea he was acknowledging that the letters were false, in that they were backdated. He believed, according to his evidence, that he would not be precluded from asserting that the letters otherwise accurately reflected the facts, that is, that there were discussions with Mr Myer on two occasions, and that there was agreement on each occasion to extend the time for the making of a final agreement. The letters, in any event, related to the second stage (the making of the Final Agreement), not the third stage (completion). The plea was therefore not entered with a consciousness of guilt, that is, an appreciation that the letters were false in either of these respects. 31 Thirdly, the pleas were entered a week after Davidson AJ handed down a reserved judgment dismissing Mr Hall's application for a stay, based upon Dietrich v The Queen (1992) 177 CLR 292. Mr Hall said he was exhausted. He was bankrupt. He had been refused legal aid. He faced the prospect of a trial, unrepresented. In his words, he had "had enough". He was anxious to bring the matter to an end, putting matters which he disputed to the Court in his submissions on sentence. 32 Fourthly, he drew attention to the fact that, having pleaded guilty, his Honour did not enter a conviction (cf Maxwell v The Queen (supra); R v Favero [1999] NSWCCA 320; R v Vergara [1999] NSWCCA 352).

The evidence of Mr Evans. 33 After pleading guilty, Mr Hall approached the Bar Association seeking representation under the Association's Pro Bono Scheme. Mr Evans of Counsel was nominated, and accepted the brief. Mr Evans had recently come to the Bar. He worked closely with his pupil master, Mr Graham Turnbull, an experienced criminal advocate. Mr Evans kept notes of the conferences that he conducted with Mr Hall. Mr Hall waived any privilege he may have had in respect of such discussions and notes. 34 Mr Evans first received instructions towards the end of September 2004. Mr Hall provided him with several folders from a large brief served by the Crown. Mr Evans met Mr Hall on 1 October 2004, when the matter was mentioned before Davidson AJ. They spoke briefly. Mr Evans' notes of that conference included the following entry: (Exhibit 3, p35) " * Look at count 1 - offence?" 35 Referring to Mr Hall's instructions, Mr Evans added these words in his notes: (Exhibit 3, p35) "letters were post dated do (you) agree that they were backdated could have." 36 The notes Mr Evans made in his conference with Mr Hall on 20 October 2004 included the following words, recording the instructions of Mr Hall: (Exhibit 3, p25) " - Letters are not false in context." 37 Soon after Mr Evans had been retained, Mr Hall provided him with certain type written notes. The notes had been prepared before 26 August 2004. They outlined submissions Mr Hall intended making at a time when he believed he would be representing himself on sentence. The document referred to the terms of the indictment ("completion of the sale") in contrast to the terms of the letters (Exhibit 2). Mr Hall's notes said this: (Exhibit 4, p2) "The letter dated 10 April 1998 refers to '... agreement to extend the completion time factors of the sale of Signature Agreement to 30th June 1998.' The only Agreement extant at or during the relevant period was the 'Preliminary Agreement' dated 8 October 1997 ... and it's 'Variation to Preliminary Agreement' dated 14 February 1998 ... . Paragraph (h) of the variation reads, 'The final agreement shall be entered into within 60 days of the date of this amendment.' It is the extension of this date that the letter refers to, not the 'settlement of the sale' as referred to in the indictment. The letter dated 21 June refers to the 10 April letter as 'Our arrangements extended the settlement of the sale agreement to 30th June 1998.' Once again referring to the settlement of a document, not the settlement of the 'sale'. ..." 38 Mr Hall added: (Exhibit 4, p3) " ... letter(s) purporting to extend that time frame or date, would not prima facie be false as to content." (emphasis in original) 39 Under the heading, "Mitigating Circumstances", the document composed by Mr Hall said this: (Exhibit 4, p5) "It should be seen from the preceding comments that as according to section 1307 there existed a defence to the charge in that the content of the letters was not materially different from the actual circumstances that prevailed at the relevant time. In other words the content was an honest understanding of the situation and thus not a falsification of the books but an honest attempt to place on record my understanding. However the facts remain that the method that resulted in recording that understanding is open for rebuke. Therefore in the circumstances of the 'guilty' plea this position must be presented in the form of a mitigating circumstance, and an exceptionally strong reason for mitigating any sentence." (emphasis in original) 40 According to Mr Evans, Mr Hall asserted that the falsity which, by his plea of guilty he acknowledged, was the backdating of the letters. The indictment implicitly made reference to the backdating. There was an obvious contrast between the letters said to be false, which were dated 10 April 1998 and 21 June 1998, and the opening words of the indictment which were as follows: " Count 1: For that he between 30 June 1998 and 9 July 1998 ... did falsify books of Clifford Corporation Limited ... in that he created letters addressed to Mr Sid Myer dated 10 April 1998 and 21 June 1998 ..." 41 Mr Evans, in these circumstances, considered that he should explain to Mr Hall the implications of his plea of guilty. There was a need to consider whether Mr Hall wished to "reverse his plea" (Exhibit 3, p13). On 20 October 2004 (Exhibit 3, p15), that issue was explored, but not resolved. Mr Evans advised that the concluding words of the indictment made it plain that Mr Hall admitted that the contents of each letter were false. The concluding words were: " Count 1: ... which falsely stated that the dates for completion of the sale of Signature Group Australia Limited had been extended." 42 A further conference was arranged for 4 November 2004, this time in the presence of Mr Turnbull of Counsel. Mr Turnbull took notes (Exhibit 7). The withdrawal of the plea to count 1 was again discussed. The notes of Mr Evans identified the problems arising from Mr Hall's assertion that the contents of each letter were true. His notes included these words: (Exhibit 3, p55) " * Problems are: 1. letters not sent 2. attached to memo (& supplied to auditors) 3. back dated 4. use of the term 'settlement'. Crown case: used to mislead auditor (appointed 11 March 98) > ASX > sh'holders (created impression)" 43 Mr Turnbull's notes, made at the same conference, included these words: (Exhibit 7, p3) " - Why complete letters out of date - don't know. Why do them at all - can't remember. Advised - no prospects on that evidence." 44 According to Mr Evans, the conference ended with instructions to proceed with negotiations with the DPP as to the facts to be placed before the sentencing Judge. He understood, at that time, that Mr Hall would not be pursuing an application to set aside his pleas. Even though Mr Hall never said that he agreed that the letters were false, or that they related to the completion rather than the Final Agreement for sale, nonetheless Mr Evans believed he understood that his plea to count 1 precluded a denial of those matters. Mr Evans thereafter spoke to the Crown. He agreed, subject to certain amendments which are not material, with the draft paragraph 18 (supra para 13), which included the following words: "The letters were never received by Myer and were not created on the dates shown on them. The content of the letters was also false ." (emphasis added) 45 Agreement having been reached as to the facts, a document was provided to me, as the sentencing Judge, a short time before the hearing on 15 December 2004. 46 On 14 December 2004, Mr Hall again conferred with Mr Evans. He again raised the issue of whether he should apply to withdraw his pleas, referring to both counts 1 and 2. He undertook to consider the matter overnight. Mr Evans wisely said he would require written instructions. The next day, being the day of the sentence hearing, Mr Hall provided Mr Evans with written instructions that he wished to seek leave to withdraw his pleas in respect of both counts.

The Crown submissions. 47 The plea of guilty to count 1, according to the Crown, was an acknowledgement by Mr Hall of the following: · First, that he had falsified the books of Clifford Corporation, being the letters dated 10 April 1998 and 21 June 1998; · Second, that he had done so between 30 June 1998 and 9 July 1998; · Third, that such letters falsely stated that the dates for completion of the sale of the Signature Group Australia Limited had been extended. 48 It was Mr Hall's position that, in pleading guilty, he was acknowledging no more than he had falsified the letters, in the sense that he had back-dated them. He did not appreciate, according to his testimony, that it was not open to him to question, in his submissions on sentence, the span of time during which the letters were created, or the falsity of their contents. 49 The Crown submitted that such evidence should be regarded as disingenuous. First, Mr Hall, although not represented, was a man of intelligence, experience and maturity, as observed by Davidson AJ in his judgment rejecting the Dietrich Application (R v Hall (unreported, 29.6.04) paras 104 and 105). 50 Secondly, the terms of the indictment were clear. The dates during which Mr Hall was alleged to have falsified the letters ("did falsify books ... in that he created letters ... ") were specified ("For that he between 30 June 1998 and 9 July 1998 ... did falsify ... "). The falsity in each letter was likewise stated ("which falsely stated that the dates for completion of the sale of the Signature Group Australia Limited had been extended"). Mr Hall acknowledged that he had read the indictment. He believed he understood it. How then, the Crown asks, could he have entertained the belief that the issues of falsity, which he said that he believed he could raise on sentence, were still open? 51 Thirdly, the Crown submitted that the position taken by Mr Hall was so irrational as to be unbelievable. If all he was acknowledging by his plea of guilty was back-dating two letters which were accurate, where was the criminal offence? The Court would not be persuaded, according to the Crown, that Mr Hall believed that it was a criminal offence to back-date letters, even where the contents were true. 52 Fourthly, in answer to Mr Hall's suggestion that the letters were speaking of the Final Agreement and not the completion of the sale, the Crown submitted that, on their proper construction, the letters were dealing with the issue stated in the indictment, namely, "the dates for completion of the sale of the Signature Group Australia Limited", asserting that such dates had been extended. 53 Fifthly, the Crown pointed to the circumstances in which Mr Hall pleaded guilty. He sent a letter to the Commonwealth DPP on 29 June 2004, being the date that Davidson AJ gave judgment refusing the stay application. The letter was headed, "Without Prejudice". Mr Hall was facing the prospect of a long trial (in which the estimate was 14 weeks) without representation. The letter began with these words: (Affidavit Ms Marinos 15.2.05, p94, annexure "M") "I am the applicant/defendant relevant to matters contained in this communication. I am deeply concerned that I have acted in a manner that has resulted in criminal charges being raised against me. Whilst in one case I believe that charge has been wrongly levelled against me, I recognize the actions of mine that caused the other charges were wrong, regardless of any contributing factors at the time. In the interests of limiting both time and costs to be spent, of achieving a prompt and certain dispatch of the cases, in taking into account the prosecution case in all matters, the lack of any criminal antecedents and with the unlikelihood that I will commit or even be in the position to commit further offences I ask the prosecution to favourably consider the following." 54 Mr Hall, at that time, was facing three sets of charges, namely: · Count 3, a charge based on s999 of the Corporations Act, relating to a stock exchange announcement; · Counts 4 and 5, the charges based on s1307 of the Act, alleging the falsification of the books of Clifford Corporation (then framed as two separate charges to avoid possible duplicity); · The charges relating to allegations of insider trading. 55 In addressing count 3 (the s999 charge), Mr Hall composed elaborate submissions. He painstakingly analysed the facts. He submitted that there was no case to answer. 56 He then dealt with the s1307 charges, which ultimately became count 1 in the present indictment (the subject of this application). In respect of those charges he said this: (Affidavit Ms Marinos, p96/97, annexure "M") "(b) - COUNTS 4 and 5 I have always considered these to be one matter, the events relating to the charges occurring at the same time, and should be rolled into one. In the event that the Crown withdraws the charge related to count 3 the defendant proposes the Crown reduces the counts 4 and 5 to one count being that of count 4 to which the defendant will revise his plea to 'guilty' with a defence submission to the court at sentencing . This will allow the Crown to dispatch this case without lengthy proceedings, which would involve the costs of bringing International and interstate witnesses to New South Wales or long and expensive telecommunications. In the alternative to reducing the charge to one count, I plead guilty to count 4, with count 5 to be taken into account as a form, all other factors applying." (emphasis added) 57 The Crown pointed out that nothing was said by Mr Hall limiting the falsity which he was prepared to acknowledge. On the Crown's submission, there is simply no explanation other than a consciousness of guilt. 58 Mr Hall said that he chose not to advert to the factual issues relating to falsity at that stage. His letter to the Director, however, foreshadowed that he intended to make his response in his submissions on sentence. 59 Mr Hall went on to deal with the charges relating to insider trading. He made suggestions as to the way in which the indictment might be framed, in which case he would plead guilty. 60 On 2 July 2004, the Director responded favourably. He accepted Mr Hall's offer. His letter was in these terms: (Affidavit Ms Marinos, p101, annexure "O") "The Director has carefully considered your representations and has acceded to your request that the Crown discontinue the section 999/1311 Corporations Act 2001 count and you enter pleas of guilty to the following: 1. a 'rolled up' offence incorporating the 2 counts under section 1307 Corporations Act 2001 offences; and 2. a 'rolled up' offence incorporating the 6 counts under sections 1002G(2)(b)/1311(1)(a) Corporations Act 2001 . I will have a new indictment reflecting this prepared and available to be presented to the Court on Wednesday. I will facsimile you a copy of this early next week." 61 The matter came before Davidson AJ on 7 July 2004. Mr Hall was arraigned. He pleaded guilty to the counts framed in the way in which he had suggested. 62 Sixthly, the Crown submitted that Mr Hall only retracted his plea once he had received the submissions on sentence from the Crown. The submissions were sent by fax on 25 August 2004. Under the heading, "Comparative sentences" the Crown referred to R v Hannes 43 ACSR 508 and R v Rivkin [2003] NSWSC 447; [2004] NSWCCA 7. Both were cases dealing with offenders convicted of insider trading. The sentence in Hannes was two years and two months with a fine of $100,000. The sentence in Rivkin was a fixed term of nine months imprisonment to be served by way of periodic detention with a fine of $30,000. The Crown submissions concluded with these words: (Affidavit Ms Marinos, p180, annexure "CC") "35) In all the circumstances the offence also warrants the imposition of an appropriate full time custodial sentence." 63 According to the Crown on this application, Mr Hall then panicked, even though he had been told before the plea by Mr Buscombe, junior Counsel for the Crown, that a custodial sentence would be sought (Affidavit Ms Marinos, para 34). He suddenly realised that the accumulation of convictions for insider trading and an additional offence would inevitably lead to a custodial sentence. 64 The difficulty with this aspect of the Crown submission is that Mr Hall signified his disagreement with the Crown's proposed Statement of Facts, including the allegation of falsity, before the sentence submissions had been sent. The Crown sent Mr Hall a Draft Statement of Facts on 4 August 2004. Mr Hall responded on 20 August 2004, stating that he had been in hospital and unable to respond earlier (Affidavit Ms Marinos, p160, annexure "Y"). On 24 August 2004, he forwarded a brief response headed, "Accused's Position". In respect of paragraph 18 (supra para 16), which alleged "the content of the letters was also false", Mr Hall said this: (Affidavit Ms Marinos, p166, annexure "BB") "Para 18. I disagree with parts of this paragraph on the basis that they are wrongly based conclusions." 65 Seventh, the Crown drew attention to Mr Hall's conduct once Mr Evans of Counsel had been retained. Certainly Mr Hall raised with Mr Evans the same issues concerning falsity that he now wishes to canvass. However, by 4 November 2004, he had received advice. Those issues had been explored. Yet he then instructed Mr Evans to negotiate with the Crown on the Statement of Facts and Mr Evans did so. Mr Neil SC, for the Crown, submitted that, if there had been a genuine mistake, a misapprehension as to the nature of the plea, then you would have expected Mr Hall to have made an immediate application. He would surely have sought leave to withdraw his plea upon being told that it was not open to him to question the issues of falsity, which he had planned to canvass. 66 Mr Hall responded by saying that, at the time of the plea and afterwards, he was exhausted. He was grateful to have the assistance of Counsel. Mr Evans had made it plain that he had been retained in respect of the sentencing proceedings. Should Mr Hall reverse his plea, then he could no longer appear (Exhibit A, para 28). In these circumstances, Mr Hall gave instructions to negotiate with the Crown concerning the facts. He remained hopeful that some acceptable form of wording could be agreed. However, in his dealings with Mr Evans, he never accepted that the contents of the letters were false, nor that they related to completion, as opposed to the Final Agreement, as Mr Evans acknowledged in his evidence. 67 The following exchange during the course of submissions bears upon these issues: (T148) "HALL: What I am putting is that in order for this to proceed along [with] some deal breaker in the middle of it, all this, this particular sentence, I am putting to Mr Evans that I was in a [state] of mind to allow him to proceed, to allow this deal breaker to be left in to the last possible moment and I am putting to him that that was my position in respect of the statement of facts. HIS HONOUR: What you are really saying, and I will get you to affirm this as evidence, you are really saying that you were content for your barrister to explore what sort of a deal could be fashioned by negotiation as to the facts and than at the end of that process you would determine in your own mind whether you would proceed with the deal in its final form and you ultimately came to the view on the morning of the hearing before me on 15 December that you would not? MR HALL: That's probably my position. ..." 68 Mr Hall said that, by December 2004, when he made his application, he had, to some degree, recovered his strength. He felt he could not agree with a formulation of the facts which included that the content of each letter was false. To do so would involve him not being "true to himself". 69 Finally, the Crown drew attention to the fact that the application, when made on the morning of 15 December 2004, was an application to withdraw the pleas in respect of both counts. In the course of the morning Mr Hall again altered his position, adhering to his plea in respect of count 2 (the insider trading charge). According to the Crown, the fact that he was prepared to make an application in respect of count 2 reflects upon the genuineness of his application in respect of count 1. Conclusion. 70 An unusual feature of this application is that Mr Hall was unrepresented. Most of the authorities concern accused who were represented and received advice before pleading guilty. Usually the issue is the quality of the advice and the comprehension of the accused. 71 Mr Hall is unquestionably intelligent and shrewd. The matter, however, was complex. The Crown brief was voluminous. The events said to give rise to the offences occurred in 1997 and 1998. Mr Hall was plainly at a disadvantage in not having objective advice from a lawyer. I accept that, by 7 July 2004, when he pleaded guilty, he was, to a degree, exhausted. I also accept that he found the prospect of a 14 week trial, without representation, daunting. 72 When Mr Hall wrote to the Director of Public Prosecutions (Commonwealth) on 29 June 2004, he plainly was of a mind to "strike a deal" (cf R v Damien Parkes [2004] NSWCCA 377). Can it be inferred, as the Crown has suggested, that Mr Hall clearly recognised in his letter that he was guilty of certain matters (where he offered to plead guilty), but not others, skilfully arguing his case on the charge which he believed was without substance? 73 Mr Hall answered the Crown by saying that, in respect of count 1, he did recognise a degree of guilt. He therefore offered to plead, believing it was his right to lay before the sentencing Judge the full circumstances, as he knew them. He did not, however, according to his testimony, understand the full implications of his plea, such that it was not open to him to traverse the essential elements of the offence, as set out in the indictment. 74 Determining the essential elements of an indictment, and matters that may or may not be put on sentence, is a reasonably sophisticated process for someone without legal training, even if they are intelligent. As to what Mr Hall did or did not understand, I believe some aspects are clearer than others. It is convenient to address three issues: · First, Mr Hall's belief that he could, on sentence, draw the Court's attention to the text of the letters which, in his submission, were clearly speaking of the final agreement, not the completion of the sale, as alleged in the indictment. · Secondly, whether Mr Hall, by his plea, was conceding not only that the letters were back-dated but (as alleged in the indictment) that the documents were created between 29 June 1998 and 9 July 1998? · Thirdly, whether Mr Hall, by his plea, was acknowledging that the contents of the letters were false?

Final Agreement or Completion? 75 I accept the Crown's assertion that, by his plea of guilty, Mr Hall acknowledged that the two letters (in the words of the indictment): "... falsely stated that the dates for completion of the sale of Signature Group Australia Limited had been extended." 76 It was therefore not open to Mr Hall, on sentence, to suggest that the letters were dealing with something other than the completion of the sale of Signature Group Australia Limited. 77 I am persuaded, however, that Mr Hall, at the time he entered his plea to count 1, did not appreciate that implication. I have formed that view for a number of reasons. First, the construction put on the letters of 10 April 1998 and 21 June 1998 by Mr Hall is certainly arguable. Indeed, I prefer his construction to that advanced by the Crown. I have not examined the terms of the Preliminary Agreement of October 1997, or the variation to that Agreement of 14 February 1998 (the Paris Agreement). The Agreements were not tendered. Their essential terms were, nonetheless, described by the Crown in the Statement of Facts (supra para 12). They were, as Mr Hall asserted, essentially agreements to agree, fixing a time frame within which the parties were to formulate the final agreement. They were, perhaps, a little more complicated than that, in that they also made provision for the payment of certain expenses, according to a timetable, where the dates were specified. 78 The Paris Agreement provided that the Final Agreement should be entered within 60 days (by 15 April 1998). The first letter carried a date shortly before that deadline (10 April 1998). It referred to "discussions and agreement to extend the completion time factors of the sale of Signature Agreement to 30 June 1998". It referred to the planned excursion to San Diego (which later took place in mid June 1998) in which Messrs Loiterton and Hall hoped to finalise and sign the Final Agreement. It is therefore not unreasonable to construe this letter as extending the date set by the Paris Agreement, rather than the completion of the sale of Signature Group Australia Limited. 79 The second letter, dated 21 June 1998, is even more clear. The heading was "Signature Group Australia Limited Sale Agreement". Again the text spoke of a Sale Agreement, such as that contemplated by the Paris Agreement. The words in the letter were: "Our arrangements extended the settlement of the sale agreement to 30 June 1998 ... " 80 The memo of Mr Hall to Mr Loiterton on 8 July 1998, to which he attached the two letters, contained a jumble of words, sometimes referring to "settlement" (which may suggest completion) and on other occasions using words consistent with the execution of a binding contract (the Final Agreement). The memorandum, however, ended with the following words which referred to the execution of a "final" binding contract: (Exhibit 8) "7. We are: (i) Ensuring the completion of due diligence signoff. (ii) Liasing with USA with the purpose of clearing all matters required to reach a final settlement document and sign off during this month. This may mean a visit by one or both of us, and also by PAB." 81 Whether the construction put forward by Mr Hall is right or wrong, there is, in my view, a triable issue as to the construction of the letters. If the construction suggested by the Crown is wrong, then the accused could not have been convicted of falsely stating that the "dates for completion of the sale of the Signature Group Australia Limited had been extended" because he said no such thing. 82 Secondly, I do not doubt that Mr Hall was alive to this issue at the time he pleaded guilty and that he intended to make a submission drawing attention to the issue before the sentencing Judge. The speech he prepared some time before 26 August 2004 (which he later handed to Mr Evans of Counsel) (Exhibit 4) (supra para 37), developed the point at some length. 83 It follows that Mr Hall should be given leave to withdraw his plea. I will therefore deal only briefly with the remaining issues.

Back-dating the letters. 84 The second issue concerned the back-dating of the letters. My observations are impressions formed, as a matter of probability, on evidence that may be incomplete. Mr Hall's position on this issue was much less plausible. He asserted that, by his plea, he was acknowledging only that he had back-dated the letters. He had no idea when he had written the letters, except that they were back-dated. For all he knew they could have been written at the same time or at separate times. He simply could not remember. However, he did not understand that, when he pleaded guilty, he was acknowledging that he had falsified the letters during the period identified in the opening words of the indictment ("For that he between 30 June 1998 and 9 July 1998 at Sydney ... did falsify books ... in that he created letters addressed to Mr Sid Myer dated 10 April 1998 and 21 June 1998 ..."). Mr Hall thought those words referred to the time at which he sent the memorandum to Mr Loiterton (8 July 1998), attaching the letters. He added that there was no evidence that he knew that Mr Loiterton would pass his memorandum (and the attached letters) to the auditor. 85 There are a number of problems with such an account. First, it is difficult to accept that Mr Hall simply has no recollection of composing or signing the letters. If, as the Crown alleged, he had created both letters at the same time, back-dating one to April and the other to June, attaching them to his memorandum to Mr Loiterton, he would surely have remembered that. Yet, whilst he doubted that that had occurred, he could not rule it out. 86 Secondly, it is likewise difficult to accept that Mr Hall had no appreciation of the fact that Mr Loiterton would or may pass the material to the auditor. Mr Hall was the Chairman of the Audit Committee. The auditor had asked Mr Sapier, another member of the Committee, for information on the status of the Signature sale. Mr Sapier gave an undertaking in writing that a report would be furnished. It would be surprising indeed if Mr Hall, as Chairman, was ignorant of that undertaking at the time he composed his memorandum of 8 July 1998 (Exhibit 8). I believe it likely he knew and understood that his memorandum and its attachments would be passed to the auditors. He knew that an audit was in progress. He knew that an announcement had been made to the Stock Exchange concerning profits, which presupposed the consummation of the IBYO deal. He knew the importance of the deal to the Clifford Corporation. He would have understood the interest which the auditors had in the issue. 87 Thirdly, it is also difficult to accept the suggestion that, when the indictment spoke of "did falsify" the books of the Clifford Corporation (namely the letters), that Mr Hall believed that it was referring to his action in attaching the letters, which were back-dated, to the memorandum he composed to Mr Loiterton on 8 July 1998. The indictment, by its terms, was plainly referring to the falsification of the letters themselves. It identified the span of time during which that was said to have occurred (30 June 1998 to 9 July 1998). I think it likely, on that issue, that Mr Hall understood what was being said against him. 88 Fourthly, it is also difficult, as the Crown has submitted, to accept that Mr Hall believed it would be a criminal offence to back-date accurate letters. It was consistent with his recollection that the letters may have been back-dated a day or a week, or by several months (in the case of the letter of 10 April 1998). How could the back-dating of a letter by a day or a week, where the letter was otherwise accurate, be imagined by Mr Hall to have been a criminal offence? 89 I think it likely that Mr Hall, when he pleaded guilty, was acknowledging much more than the back-dating of the letters. I think he well understood that he was admitting that the letters had themselves been manufactured between 30 June 1998 and 9 July 1998, as his secretary, Ms Norris, in her testimony, had suggested. I think it likely he knew that the letters would be passed by Mr Loiterton to the auditors. The letters, which purported to be a contemporaneous record, were designed to reassure the auditors that the Final Agreement was still within grasp, and was imminent. The letters had been fabricated for that purpose. But that is not to say, necessarily, that the events which the letters purported to record (the discussions and the agreements) were necessarily false.

Were the contents accurate? 90 The third issue related to the content of the letters. The indictment, referring to the letters, simply said this: "... which falsely stated that the dates for completion of the sale of Signature Group Australia Limited had been extended." 91 The letters, on the other hand, spoke, in each case, of discussions between Mr Hall and My Meyer (sic), and agreement to extend the time to 30 June 1998 (in the case of the first letter) and 16 August 1998 (in the case of the second). 92 However, the indictment left certain questions unanswered. Was it suggested that the contents of each letter were false because there had been no discussions? Was it suggested that, although there had been discussions, there had not been agreement? Alternatively, was it suggested that such agreement as had been reached was not in the terms suggested by either letter? 93 Mr Hall, in submissions, said there were discussions, there was agreement, and the agreement was in the terms set out in each letter. As mentioned, he said that the evidence of Mr Myer at committal and other documents corroborated that assertion. I was not taken by Mr Hall to the evidence of Mr Myer, nor to those documents. On the other hand, the Crown did not suggest that Mr Hall's claim in respect of corroboration was wrong. 94 Even though the terms of the indictment suggested the falsity extended beyond simply the date, I am inclined to think that Mr Hall believed that he could, on sentence, suggest that discussions had taken place and agreement had been reached, extending the deadline to 30 June 1998 in one case and to 16 August 1998 in the other. Given the ambiguity in the terms of the indictment, it is not altogether clear which, if any, of these issues was foreclosed by the plea.

Orders. 95 I therefore make the following orders:

Mr Hall be given leave to withdraw his plea of guilty in respect of count 1 in the indictment presented on 7 July 2004.

That the matter be placed in the Arraignment List before Justice Barr on Friday 1 April 2005. **********

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