Regina (Cth) v Macarthur [2005] NSWCCA 65 | Case summary

the appellant was convicted. 2 The trial extended between 19 and 28 August 2002, the guilty verdict being found by the jury on the lastmentioned date. On 17 December 2002 his Honour sentenced the appellant to two years imprisonment dating from that day and ordered that he be released immediately upon entering a recognizance without security to be of good behaviour for two years, to appear for sentence if called upon during that period, and to notify any change of address during it. That recognizance is now expired and the appellant stands in no further jeopardy in respect of the charge. Mention was made at the hearing about confiscation of the proceeds of crime but no issue concerning such a matter is before this Court. 3 The appellant promptly gave notice of intention to appeal but a notice of appeal specifying grounds was not filed until 17 December 2003, on which date written submissions in support were also filed. It is not necessary to trace interlocutory directions by the registrar but a date for hearing of 21 February 2005 was fixed. In the meantime some further grounds of appeal were filed by the appellant on 20 November 2004. In response to what had been filed, written submissions from the respondent Crown were received on 14 February 2005. 4 However, on 17 February 2005 amended grounds of appeal with amended submissions were received in the registry from the legal representatives of the appellant. A Mr Crowther, solicitor of Southport, Queensland, appeared for the appellant in the appeal. 5 The Crown had received notification of the amended grounds and submissions of 17 February and prepared an outline of response, being content for the hearing of the appeal to proceed and be argued on the basis of the latest amendments. 6 An appreciation of the grounds can be better obtained if a background sketch is given. 7 Crude oil is a naturally occurring mix of chemical compounds. The refining process creates products of different utility and they range in nature from viscous substances, such as bitumen and lubricating oil, to light products such as petroleum gas. Between the extremes are some products which can be put to a variety of uses. In particular, there is a product which can be used as a solvent or for heating purposes or for fuelling diesel engines. Refined oil of this quality can be used interchangeably for any of these purposes. 8 The Commonwealth levies excise duties on the manufacture of oil products. The amount of impost varies in accordance with the use to which the product is to be put. Relevant to this appeal are rates of excise payable on a product suitable for multiple uses and these were, 0 cents per litre when used as a cleaning solvent, 7 cents per litre when used as burner fuel, and 43 cents per litre when used as fuel to power on-road diesel powered vehicles. The precise figures are not germane to any issue in the appeal and rates fluctuated at times but the figures cited give a broad guide to the applicable distinctions. 9 It can thus be readily understood why the Commonwealth, deriving revenue from the collection of excise, would be interested in ensuring that fuel upon which lower (or non existent) excise had been paid, was not used for a purpose which should attract higher rate. 10 To inhibit evasions of appropriate levy, there was legislated the Fuel Prices (Penalties Surcharges) Administration Act 1997. That Act took effect from 1 February 1998 with congruent statutes including the Fuel Misuse (Penalty Surcharge) Act, the Fuel Sale (Penalty Surcharge) Act and the Fuel Blending (Penalty Surcharge) Act. The firstnamed statute created offences, imposed record keeping and like obligations and stipulated available punishments for various transgressions. 11 In practical terms, there was created a structure whereby fuel destined for other than on-road use was required to be "marked". This was done by the introduction of a chemical additive or "tracer" known as mortrace MP. This introduction did not affect performance or characteristics of what became "marked fuel" and it could still be used, for example, either as solvent, heating oil or to drive diesel engines but testing could detect whether marked fuel was being supplied when it was destined for use in a diesel engine. 12 The penalty surcharge was equivalent to double the correct rate of excise payable. If the correct rate was 43 cents per litre, the surcharge rate would be 86 cents per litre. If marked fuel was supplied for on-road use the statutory construct imposed a requirement for payment by the vendor before the marked fuel was sold for on-road use and a requirement was also imposed on the user of the fuel before it was so used. 13 It is obvious that payment of penalty surcharge at any distribution or user point would be uneconomic and the principal legislative aim was deterrence. The foregoing would seem to be uncontroversial. 14 The corporation named in the indictment which I will refer to simply as "Concourse" was incorporated as such in about September 1997, but at all material times the appellant was the sole director, secretary and shareholder thereof. Its registered office was at his home at Kenthurst. There was no issue at trial about the identification of the appellant with Concourse. 15 The Crown case was founded upon Concourse, which possessed only one prime mover and tanker trailer, acquiring marked fuel from businesses known as Chemsol and, reversing the syllables, Solchem. Chemsol's premises were at Smithfield, Solchem had premises at Chipping Norton. It suffices for present purposes to refer to only one of these businesses which were conducted by Messrs Denys and John Seymour. 16 The nature of Chemsol's business was that it stocked only marked fuel. Concourse loaded marked fuel into its tanker and either, on the same day or the day following, delivered it to various transport companies for intended use in on-road diesel powered vehicles. 17 On 5 May 1999 Commonwealth officers charged with overseeing compliance with the excise payments requirements, visited the Chemsol premises and observed the Concourse tanker being loaded with fuel. Its capacity was about 36,000 litres if filled. At that time the driver was an employee of Concourse, Mr Hood. After discussion with the officers, he rang the appellant who instructed him to deliver the load to a customer which operated a fleet of diesel powered vehicles. Mr Hood declined to do this and eventually took the loaded tanker to the appellant's premises at Kenthurst. Later the appellant delivered the fuel to a company associated with the customer to which Mr Hood had been directed to take the load. 18 On 6 May 1999 the appellant himself acquired a load of fuel at Chemsol and delivered it to a different transport company. This company was visited by the Commonwealth officers and thereafter the appellant was telephoned by a company employee in response to which call he attended and removed the fuel from that company's storage tanks. This activity was, of course, outside of the dates specified in the indictment. No ground of appeal was said to be dependent upon this evidence having been admitted. 19 In the course of investigation a search warrant was executed at the Kenthurst premises. Consequently some customers of Concourse became identified. In ensuing days samples were taken from fuel delivered by Concourse to some of these customers, and samples were sent for testing. Tracer elements were found as a result of each test and the presence of marked fuel thereby established. 20 Over the period of indictment, the Crown case was that Concourse had purchased large quantities of fuel from Chemsol which, as abovementioned, marketed only marked fuel. Concourse had no storage facility other than the mobile tanker, the content of which was on-sold to customers who were mainly transport businesses operating fleets of diesel powered trucks. 21 The offence charged arose out of the conduct described, although it technically alleged failure to pay the penalty surcharge. It was not suggested that such a payment had ever in fact been made, although of course, dishonesty was an issue to be proved. 22 Ground 1 contends that the verdict was unreasonable and cannot be supported on the evidence, and it will be convenient to deal with it after other specific grounds. 23 Ground 2 contends "The learned trial judge erred in law in failing to allow the evidence of Professor Barry Batts". 24 After the close of the Crown case, the defence sought to call a Professor Batts of the Department of Chemistry, Macquarie University. A voir dire hearing was held and two reports, exhibiting his intended evidence, were examined. The Crown objected to this evidence. 25 On 23 August 2002 his Honour gave detailed reasons for his ruling that the proposed evidence would be rejected. 26 The Crown case had included evidence from a chemist, Mr Flynn, who tested fuel samples obtained in the course of investigation and he had given evidence of the detection of various quantities of the tracer (mortrace MP) within the samples. 27 Professor Batts did not test any fuel and he did not postulate results different from those advanced by Mr Flynn. What he sought to do was to advance an opinion commencing from a premise that the tracer had a stability life of some two years (a fact to which Mr Flynn had testified), and to develop therefrom a theory that the tested fuel samples may represent contamination by residual tracer from deliveries other than from Concourse. He noted that Mr Flynn's tests determined differing concentrations of tracer presence. Whilst there was evidence that Concourse had obtained fuel from sources which dealt only in marked fuel, it was entirely speculative that any customer whose fuel was sampled and tested had obtained marked fuel from anywhere else. 28 The opinions of Professor Batts were largely directed to criticisms of the methods of Mr Flynn but were based on assumptions which frequently were not sustained by evidence. For example, he assumed an absence of evidence from Mr Flynn about pre-calibration of instruments but this was a construct of his own which ignored Mr Flynn's evidence about the laboratory process which included descriptions of calibration. Significantly this aspect of his evidence had not been challenged in cross examination. Professor Batts also premised part of his hypothesis upon an assumption of the use of a particular instrument, of which there was no evidence of use by Mr Flynn. 29 In somewhat discursive reports there was an attack on Mr Flynn's note keeping quality but this was not linked to any demonstration of unreliability in test results. 30 His Honour ruled that, on analysis, the proposed evidence was directed to Mr Flynn's credibility and should be excluded in accordance with statutory provision in regard to evidence of that nature. Further, he determined that the evidence was irrelevant. As earlier observed, whilst there was evidence that customers of Concourse obtained fuel from other suppliers, it was speculative to propose that the concentrations of tracer were to be sourced to those unidentified suppliers. Professor Batts ignored the evidence that Concourse was obtaining supplies from businesses which dealt only in marked fuel. The hypothetical situations proffered in the reports were not relevant in the sense of potential to contribute to determination of the issues of trial. 31 For reasons which he expressed, the judge ruled that he would, alternatively, exclude the evidence on the basis that it might be misleading or confusing or might cause or result in undue waste of time (judgment transcript page 10). 32 It is apt to observe that the testing of the fuels possessed by Concourse's customers was evidence called by the Crown to rebut possible assertion by the accused that investigators forfeited the opportunity to test. The Crown may have been held to have been able to anticipate such assertion and therefore bound to call evidence in rebuttal in its case in chief: Killick v The Queen 1981 147 CLR 565; The Queen v Chin 1985 157 CLR 671. 33 Insofar as the appellant's submissions challenge the correctness of his Honour's ruling, it was stated that Professor Batt's material did not attack the credibility of Mr Flynn's evidence but the adequacy of his testing methods. Such a proposition was not put to Mr Flynn, in any event, the proposition now advanced cannot be reconciled with other aspects of Professor Batt's opinion where he seeks to use the differentials in concentration of tracer (established by Mr Flynn) to advance his theory about alternative sources. 34 It was put that, if his Honour thought parts of the reports lacked relevance, attacked credibility or might cause undue waste of time, he ought to have severed offending parts and permitted the balance. Identification of what severance of the report should have occurred in this fashion was not undertaken. 35 The appellant has failed to show that his Honour's ruling was wrong, nor has he shown that insofar as discretion was exercised, that it miscarried. 36 Ground 2 is not made out. 37 Ground 3 alleges "The learned trial judge erred in law by rejecting the application made on behalf of the appellant at trial to inform the jury that the evidence of Denys and John Seymour was tainted in that they had received immunity from prosecution in respect of self-incrimination in other proceedings under Section 128 of the Evidence Act". 38 An application was made by trial counsel for his Honour to inform the jury that Denys Seymour and John Seymour had given evidence "under the protection of a s 128 certificate". His Honour declined to do so. (AB 155-160). 39 As mentioned, Denys and John Seymour were the principals of Chemsol. The statutory regime put in place by the legislation required, under pain of possible penalty, certain documentation including the provision of invoices when marked fuel was sold. Each of Messrs Seymour gave evidence. It appeared to his Honour that answers to questions concerning their compliance with the statutory regime may expose them to liability for prosecution. 40 Section 128 of the Evidence Act provides an elaborate procedure in circumstances similar to where, prior to that statute, a witness was cautioned as to entitlement to claim privilege against answering on the ground of possible self incrimination. Under the statutory provision, in short, if a court determines that a witness should answer a question of that quality, a certificate is given which, subject to exception not presently material, prevents that evidence, given under "protection of the certificate," from being used in proceedings against that witness later. 41 The submission that these witnesses were given immunity from prosecution, by the certificate or otherwise, misunderstands what occurred. Both witnesses remained vulnerable to prosecution. No indemnity was received. Either could be prosecuted but the s 128 certificate did no more than prevent what was said on this occasion from being admissible against them in any such prosecution. 42 Ground 4 asserted "The learned trial judge erred in law in failing to warn the jury of the unreliability of the evidence of Denys Seymour or John Seymour". 43 The short statement of the flaw in this ground is that, whilst s 165 defines some types of evidence which may be unreliable, warning is required when it is sought by a party: see s 165(2). No such warning was sought. On the contrary, it was specifically not sought. During his charge to the jury, but in their absence during an adjournment, his Honour asked counsel whether she wished a direction under s 165 in relation to the evidence of the Seymours. Counsel asked to consider the matter over the luncheon adjournment after which, before the jury returned, she stated: "…… after giving it much more careful consideration I am not going to ask you to give a (section) 165 warning". (AB 412-413). 44 Despite this circumstance, the ground was sought to be pressed. Criminal Appeal Rule 4 applies, nevertheless I shall refer to submissions advanced on behalf of the appellant. Reference was made to the expression in s 165(1)(d) to a witness who might reasonably be supposed to have been criminally concerned in the events giving rise to the proceeding, but a warning of the type postulated is not in relation to that provision aligned with some collateral provision such as, for example, identification evidence, which, although defined in the contingent language of s 165 in subsection (1)(b), nevertheless attracts an overriding obligation on the part of a judge to give a direction, whether or not requested. See s 116. 45 In submissions, the appellant pointed to a number of aspects of the evidence of the Seymours, the greater part referring to the evidence of Denys Seymour. The Crown joined issue with the assertions but it is not necessary to recite the challenges item by item. Merely because it was open to the jury to accept or reject evidence of a witness (including the Seymours) does not give rise to a requirement that the judge warn the jury that the evidence of the witness may be unreliable. No more is demonstrated in the argument in support of this ground than there was scope for submission to the jury inviting them to doubt the evidence of these witnesses. 46 The defect in the appellant's contentions on this ground can be exemplified from the submission that the evidence of the Seymours concerning the offer of invoices to Concourse's drivers was contradicted (so it was said) by the witnesses Mr Hood, Mr Monaghan and Mr Butler. Applying the approach advanced by the appellant it would follow that if inviting the jury to consider whether to act upon the evidence of these witnesses, a warning should be given that it may be unreliable because it had been contradicted by the evidence of other witnesses, namely the Seymours. 47 This ground fails. 48 Grounds 5 and 6 were argued together. They contended: "5. The summing up of the trial judge was unbalanced. 6. The summing up of the trial judge misstated the evidence and went beyond the Crown case and as such was procedurally unfair". 49 The first observation that might be made is that it was inevitable that his Honour would spend considerably more time summarizing the Crown case than that of the defence. The factual matrix out of which the offence was alleged to have arisen necessitated reference to a considerable amount of detail. On the other hand, the defence material consisted of some documentation, the appellant having exercised his entitlement to refrain from giving any testimony. No complaint was made about the accuracy of his Honour's observation to the jury that trial counsel "confirmed to you that the only real issue in the trial was the accused's knowledge and she submitted to you that you would not be satisfied beyond reasonable doubt that the accused knew that he was selling marked fuel". 50 The "balance" of the summing up was appropriate to the circumstances. 51 Some specific complaints were raised. In a portion in the summing up his Honour referred to the testing of "any fuel" and this is said to have inaccurately described the overall results achieved by Mr Flynn. The Crown submits that his Honour was referring to all testing including some done, other than by Mr Flynn, at the behest of a Concourse customer, Austral Bricks. 52 Be that as it may, even accepting the appellant's contention, its sting is more than blunted by the attempt to examine this observation in isolation from the whole case, at the heart of which were the repeated purchases of marked fuel from Chemsol which dealt exclusively in fuel of that category. 53 A second specific matter of complaint referred to the evidence of Mr Monaghan. He testified that he was employed by Mr Macarthur (presumably through Concourse) and drove the prime mover and tanker; confirmed that there was relevantly only one tanker possessed by Concourse; obtained supplies both from Chemsol at Smithfield and Solchem at Chipping Norton, and delivered his loads to "mainly transport companies as directed". He finished his employment in early 1998. He said that it was by late 1997 common knowledge in the industry that the new excise regime was imminent. 54 He discussed this matter with the appellant. One aspect related to his conveying a pamphlet given to him by an employee of Chemsol to pass to his employer. Other evidence, notably from a Mr Taylor, showed that only one edition of a relevant pamphlet was made and distributed. 55 His Honour referred to the eliciting in cross examination of answers from Mr Monaghan which indicated "that his memory wasn't all that good and he couldn't precisely remember having given the pamphlet to Mr Macarthur". 56 His Honour went on to say: "The Crown says well that merely reflects the honesty of Mr Monaghan in not being dogmatic about it and in being prepared to admit, as most of us would have to, that we can't remember that kind of thing after such a passage of years in any precise detail".

His Honour went on to refer to the evidence which Mr Monaghan gave that he remembered receiving the pamphlet and being asked to pass it on to his employer. 57 The appellant complains that nowhere in the transcript did the Crown make a representation similar to what his Honour said regarding "the honesty and reliability of Mr Monaghan". His Honour of course did not use the word "reliability" but only "honesty". The context of his remark would be understood by the jury to be commentary rather than direction, and they had been given the usual cautions concerning their exclusive function in relation to fact finding. 58 The testimony of Mr Monaghan was, of course, but one piece of evidence relied upon by the Crown as pointing to its contention that it was inevitable that the appellant was aware of the regime. 59 In the search of his premises a memorandum was found, and this document appeared to relate to contact with a Mr Fraser who operated coaches in Dubbo. The document was tendered and read: "I gave him details and quote him 60 cents a litre delivered. He is most interested but raised the query about tracer in the fuel. I advised that Concourse Oil was getting legal advice about that matter. He didn't seem too concerned. The price interested him". (Exhibit C). 60 It was also observed that the figure 60 appeared to be struck out and the figure 58 substituted. 61 It is not insignificant that what is now complained of did not seem to attract complaint from those acting in the interests of the appellant, who were able to gauge the atmosphere of trial. 62 Argument proceeded to assert that his Honour used emotive language to the detriment of the appellant's case. Again those present at the trial would be in an advantaged position to gauge whether this was so and no application was made to his Honour to amend, withdraw, or supplement his charge to the jury. These grounds should be rejected. 63 Ground 7 is in these terms: "Even if the events of 5 May 1999 are deemed by the Court to constitute the appellant having been informed on that date of the legislative regime and the liability to remit excise and the appellant having disregarded that advice and delivered marked fuel in circumstances where an obligation to remit excise arose, that is not evidence of consistent breaches of the legislation by the appellant in respect of every tanker of fuel purchased by Concourse Oil from Chemsol over an 18 months period and the conviction has produced a miscarriage of justice warranting that the verdict be set aside". 64 The submission in support of this ground included: "Even if the Crown satisfies the required standard of proof that the conversation by the driver Mr Hood to the appellant after the testing of the Concourse Oil tanker on 5 May 1999 constituted notification to the appellant that the fuel in that particular tanker was marked and that he had a legislative obligation to remit excise and that he ignored such rights and delivered fuel in circumstances where excise in relation to that load was payable, that does not constitute conclusive evidence of knowledge over the entire period as the legislative requirements or that every tanker of fuel purchased by Concourse Oil from Chemsol was marked and on sold in circumstances where reliability to remit excise arose". 65 The evidence of Mr Hood has been referred to previously. To recapitulate with some further detail he described his employment interview with the appellant who told him that his job would be to deliver diesel to customers who were mainly transport companies; the appellant took him to the Chemsol premises (where other evidence showed only marked fuel was marketed); on 5 May 1999 (his last day of employment) he was spoken to by revenue officers at Chemsol and told that the fuel was marked fuel and could not be used in combustion engines; he telephoned the appellant and passed this information and was told to take it (to his) home; he did so and whilst there obtained some advice from a solicitor; the appellant then rang him and told him to deliver the load; he refused and took the tanker to the appellant's premises at Kenthurst and terminated his employment. 66 This evidence, insofar as it was probative of the appellant's knowledge, was, of course, not proof of retrospective knowledge. The submission of the appellant seems to be founded on a proposition that this was "the only cogent evidence on those points". This is simply not so. There was other inculpating evidence including, not insignificantly, the testimony of the Seymours and the memorandum found at the appellant's home concerning Fraser Coaches. I recognize that it was not the Crown case that it had been shown that this memorandum was authored by the appellant, but it was open to the jury to conclude that Concourse was seeking legal advice about tracer in the fuel; to find that the pamphlet given to Mr Monaghan had in fact been passed to the appellant, and that he thereby had communicated to him (if he did not already know) sufficient pertinent information about the regime and it was a matter of almost inexorable logic that if legal advice was being sought, the seeker would be aware of the facts and circumstances in respect of which that advice was being sought. 67 Ground 7 should be rejected. 68 I return to Ground 1. 69 The appellant observes that for conviction to occur the jury had to be satisfied that marked fuel was sold by Concourse. That was indeed fundamental but the submissions in support substantially refer back to the proposed testimony of Professor Batts which offered no more than speculation based upon criticism of the evidence of Mr Flynn's tests. As previously noted, that evidence was, in any event, of secondary importance to the Crown case. 70 Of primary importance was an exhibit which portrayed a schedule of Chemsol and Concourse invoices, very simple analysis of which would demonstrate the link between fuel obtained from Chemsol and delivered to Concourse's customers. It was uncontradicted evidence that fuel obtained from Chemsol had to be marked fuel. 71 I have mentioned some of the evidence concerning the appellant's knowledge in dealing with other grounds. The jury were entitled to accept evidence of the conversation between the appellant and Denys Seymour about the introduction of the marked fuel regime. They could also accept the evidence of a driver, Mr Butler, that the appellant told him not to write "unmarked fuel" on an invoice. From this, inference was available that the appellant must have had an awareness that there existed something other than "unmarked fuel", the logical alternative being "marked fuel". There was also evidence of a Mr Dow, from a transport company who queried whether Concourse had delivered marked fuel and the appellant told him that it was "okay". Further, the evidence of Mr Monaghan and Mr Hood respectively was available to be acted on by the jury. 72 In final address the Crown Prosecutor submitted that the Crown case was quite straightforward. It was. He referred to four "steps", first, during the period stated in the indictment, Concourse purchased marked fuel from Chemsol; second, Concourse sold that fuel for on-road use in internal combustion engines; third, Concourse did not pay the penalty surcharge applicable to marked fuel put to such use and thereby defrauded the Commonwealth, and fourth, the appellant was knowingly concerned in that fraud. 73 As counsel for the accused said in her address, the only real issue for the jury to decide was the appellant's "knowledge". As already observed, there was ample evidence upon which the jury could be so satisfied. 74 Lest the mention should lead to misapprehension, the remark that the appellant chose not to testify is acknowledged but it is important to bear in mind that the absence of evidence from him as to what his knowledge was or was not, is not to be treated as an impediment to the possible success of his appeal: Dyers v The Queen 2002 210 CLR 285. In his charge to the jury his Honour gave cautions according with what was required by Azzopardi v The Queen 2001 205 CLR 50 and no complaint is made in respect of those directions. 75 In the present case, the first three steps articulated by the Crown Prosecutor, whilst not admitted, were not specifically contested and the fourth, which was the focus of contest, was available to be found adversely to the appellant in the content of ample evidence from multiple sources. 76 None of the grounds of appeal is made out. The appeal should be dismissed. 77 JAMES J: I agree with Grove J. 78 BARR J: I agree with Grove J.

Regina (Cth) v Macarthur

At a glance

Court

Decision date

Before

Source

Judgment (14 paragraphs)

Parties