Ground 2
55 The Appellant contends that his Honour erred in allowing the Crown to cross-examine the accused in an unfair manner, namely, by splitting his case. Ms Fullerton informed the Court that this ground of appeal was relevant only to the two counts of defrauding the Commonwealth.
56 During the course of his evidence in chief the Appellant gave evidence that he worked for O'Donovan as the principal of both Star Suppliers and A-Quip and had done so for many years. Two distinct lines of cross-examination arose in this regard. First, cross-examination based on the tax returns of the Appellant indicating no identification of O'Donovan or either of the companies as a relevant employer. During the cross-examination the Appellant stated that O'Donovan paid him in cash and those payments had not been declared for taxation purposes. Secondly, cross-examination about the financial circumstances of the Appellant. This included cross-examination as to how he had accumulated assets and, particularly, how he had been able to finance a home purchase and make repayments on his mortgage.
57 Objection was taken before the trial judge. His Honour referred to the relevant principles in Shaw v The Queen (1952) 85 CLR 365 and The Queen v Chin (1984) 157 CLR 671. Subsequently, the High Court has considered this matter in R v Soma (2003) 77 ALJR 849.
58 Before the trial judge, as in this Court, counsel for the Appellant submitted that the Crown was splitting its case. It was or should have been apparent to the Crown that the modest income declared for income tax purposes when contrasted with the improvement in the assets of the Appellant and his wife over the relevant period were probative of the case that the Crown alleged against the Appellant.
59 Before the trial judge, and in this Court, the Crown asserted that the questions complained of arose only out of the evidence by the Appellant that he had worked for O'Donovan. They did not arise in the Crown case. The detail of the taxation returns became significant only when the Appellant claimed to have been employed by O'Donovan for extensive periods, leading to the proposition that he was a mere employee doing what he was told.
60 In the course of his reasons for rejecting the application to restrict the Crown's cross-examination his Honour said:
"During the evidence of the accused he has given evidence that he was employed by a Mr O'Donovan for approximately the period 1989 to 1998. The Crown submitted that this was the first time that they became aware that this was what the accused's line of defence was. There is nothing in the evidence that I have seen that countermands that assertion.
In cross-examination the Crown asked questions of how Mr O'Donovan paid the accused. The accused said that he was paid in cash. The Crown has apparently the tax returns for the accused which would appear to contain prior inconsistent statements with regard to both the accused's employer and his method and quantity of payment. The Crown now would seek to cross-examine on those reports.
The defence accept that prior inconsistent statements with respect to the name of Mr O'Driscoll's employer are relevant and prima facie admissible, but argue that the Crown should have predicted the nature of the defence being conducted by the accused and tendered them in chief and that to tender them now or even cross-examine on them is splitting the Crown case.
I disagree with that submission. To predict the nature of the defence in that manner might have led to the tender of a vast quantity of irrelevant material for the jury's consideration. The accused has, as was his right, never divulged his defence before yesterday. Even in cross-examination of the Crown witnesses the precise nature of his defence was not divulged. I do not say that to criticise the defence. It is merely a fact. In my view the Crown are entitled to explore the answers given by the accused in chief and that must include an examination of the nature, amount, style and quantity of any such payments by Mr O'Donovan."
61 His Honour went on to say, with respect to the second issue I have identified above:
"In similar vein the accused objects to any cross-examination by the Crown as to the accused's financial circumstances. Hypothetical questions such as 'where did you get the money to pay your mortgage payments?' were posed. Apparently the Crown does propose to ask such questions. The accused points out that the financial circumstances were known to the Crown prior to the trial and that they could have sought to prove that he appeared to have the benefit of unidentifiable enrichment but chose not to do so. The Crown has responded by submitting that they did not know the nature of the defence in that they did not know that the accused would maintain that he was a labourer on the railways at night and that during the day he did errands for Mr O'Donovan. Given the nature of that work, the fact that he was able to pay off large sums of money from his mortgage, if it be a fact, is relevant to show that he was not in fact working as a labourer or an errand runner at all. Again I find that there is substance in the Crown submission. This is not a case where the Crown ought reasonably have anticipated the defence and therefore it is not a question of splitting the Crown case. The evidence is so intrinsically tied in with the accused's defence that he worked as a labourer for Mr O'Donovan during the day that the questions are relevant to the fact in issue and are prima facie admissible."
62 The written submissions in this Court put it this way:
"The Crown knew in advance that the modest income declared in tax returns could not have come close to funding the assets the appellant had accumulated. The Crown did not need to know what work the appellant did before adducing evidence of his significant and unexplained accumulation of assets. It was simply a means of adducing evidence which ought to have been lead in its own case and was unrelated to the defence case in any sufficiently material sense."
63 During the course of oral submissions Ms Fullerton SC narrowed the focus to one particular aspect of the evidence adduced in cross-examination as constituting the splitting by the Crown of its case. She accepted that in the light of the evidence given in chief by the Appellant about his employment by O'Donovan, it was permissible for the Crown to seek to tender the income tax records as a prior inconsistent statement. Those records failed to identify O'Donovan as an employer. Nevertheless, she maintained the position that the Crown ought to have tendered in its case in chief these tax returns together with evidence of unexplained wealth to establish the proposition that it was the Appellant rather than anybody else who was the controller of the scheme.
64 The particular item of unexplained wealth on which she focused was the evidence that the Appellant had been able to obtain $200,000 from Ireland in order to acquire a house. She submitted that the combination of the low income suggested by the tax returns, the knowledge that $200,000 had come from the Bank of Ireland for the private purposes of the Appellant, together with the fact that, during the course of the scheme, drafts on the Bank of Ireland had been purchased in cash was evidence that was admissible to establish the basic Crown case as to the participation in, and the role of, the Appellant in the scheme. It should have been tendered in chief. She accepted that the drafts from the Bank of Ireland which were purchased in Australia were not directly referable to the single transaction of receiving $200,000 from Ireland.
65 The relevant cross-examination included the following (T673-677):
"Q Where did that money come from?
A Well I had money in an account overseas.
Q I'm sorry?
A I had an account with some money in it and - overseas and I got a mortgage for the remainder.
…
Q Was that money which you had put in that account from Australia?
A Yes it would have been.
Q Had you done that using overseas bank drafts?
A I did.
Q How much money did you draw from that account to help pay for the house?
A From memory about 200 maybe - $200,000.
Q $200,000 Australian dollars?
A Yeah $200,000 Australian dollars, around that figure.
Q That was money which you had sent to Ireland from money you had earnt in Australia was it?
A Yeah that's right.
Q Do you say do you that it was money that you'd earnt from Mr O'Donovan?
A That's right.
Q Over what period of time had you sent it to Ireland?
A I suppose over a period of a number of years. Probably from about '89 till 1998." (T673-674)
66 The questioning went on:
"Q Was that money in the Irish bank account an accumulation of cash drawn from the accounts of Star Suppliers and A-Quip Hire Pty Limited?
A This is drawn from A-Quip and Star Suppliers.
Q Yes. Did you take cash out of those accounts and send it to Ireland to be deposited into that bank account?
A I remember on one occasion I asked Mr O'Donovan would it be okay to get a bank draft and he said it was okay provided I gave him - I had cash at home that was in the house and I sent the bank draft then to a bank in Ireland.
Q Once?
A A couple of times." (T677)
67 The Appellant also gave evidence that he kept a large amount of cash in his house, some in a wardrobe and some in the freezer. This, he said, was cash that he had earned for working for Mr O'Donovan over the years (T679). He also said that he had paid off a considerable amount of the mortgage within six months and that the cash to make those payments had also come from what he had earned over the years from Mr O'Donovan (T680).
68 Ms Fullerton submitted that the course of this cross-examination allowed this material to be brought out in a manner which put the Appellant in a bad light. The Appellant was denied the opportunity of presenting an explanation for the acquisition of the house in his own case in a manner which was less prejudicial.
69 It was a central part of Ms Fullerton's submissions that the evidence as to limited earnings and the acquisition of a house with a cash transfer from Ireland was admissible in the Crown case. She submitted that this evidence was at least consistent with the Crown case that the Appellant controlled the scheme and this gave him access to significant amounts of cash, i.e. the 7 percent commission.
70 Mr Staehli submitted that the material was not admissible. He submitted that it was not capable of being tendered because of an inability to link the information of which the Crown did have knowledge in any relevant manner. He submitted, specifically, that it was not until the cross-examination that the Crown had any evidence that the bank draft that came from the Bank of Ireland to the Appellant, in order to pay a substantial proportion of the purchase price of a house, was his own money. No such link could be drawn from the fact that drafts in smaller and different amounts had, over a period of time, been sent from the account of the company to Ireland. This was in part because the company had engaged in activity other than the avoidance of the PPS scheme by means of payments of cash to workers. The amounts sent to Ireland could have been the property of the employers who had used the Appellant's cheque cashing facility.
71 On the evidence available to the Crown, the companies were involved in a scheme of paying false invoices for contractors in the building trade. The Appellant had issued false or blank invoices purporting to represent work carried out by Star which, in some cases, represented an amount additional to the amount owed to the contractor. On those occasions the owners of the businesses were able to claim the amount of the invoice as a deduction whilst effectively having cash returned to them. On at least some such occasions, according to evidence available to the Crown, the cash of those owners was transferred to them by means of a bank draft drawn by the company Star and payable to Ireland.
72 There was, accordingly, Mr Staehli submitted, no inference available that amounts sent by the companies to Ireland by way of bank drafts could be said to be the money of the Appellant. Until the Appellant's evidence in chief, the Crown could not establish that the money which came from Ireland and which was applied to buying the house had been the property of the Appellant.
73 Mr Staehli relied on the judgment of Lee J, with whom Carmichael and Lusher JJ agreed, in R v McMahon (NSWCCA, 23 June 1978, unreported). In that case the Crown tendered a significant quantity of money. The accused was charged with possession of drugs. Lee J held that possession of the sum of money had no relevance "to the charges that the appellant was facing". His Honour said:
"I am unable to see how the fact that $2,595 was being carried by the appellant at the time the search was underway to determine whether he was in possession of any heroin, could have any probative value in relation to the issue of possession or no possession of the heroin the subject of the second count and this whether treated alone or in association with the evidence that the appellant was not in employment at the time … although unusual, it was not a state of affairs necessarily pointing to wrong-doing. The possession of the money could only be related to a possible trafficking in heroin or possession of heroin as a matter of pure speculation. There were many sources, legal or illegal - savings, sale of an asset, betting, stealing, robbery to mention some that come to mind - from which a man may have obtained such an amount of money, but no basis at all in my view to make a choice and relate the possession of the money to trafficking in heroin or the possession of heroin in the absence of some other evidence suggesting such a relationship. This was not a case of facts being proved from which an inference could be drawn that the money was related to trafficking in heroin, so as to permit that inference to be drawn if no explanation were put forward by the accused. At its highest the evidence of possession of the money could only be traded as raising a suspicion that it may have come from some dealing in heroin, but that suspicion was always a suspicion only and the money could equally have come from a number of other sources."
74 Although Lee J did discuss both "possession" and "trafficking", the case before him was one of possession only. The observations in relation to trafficking are obiter. This is of some significance as it is much clearer that unexplained wealth is not relevant to the issues posed by a charge of possession of drugs.
75 The judgment of Lee J was relied upon by the appellant in R v Edwards [1998] 2 VR 354. In that case the applicant was found guilty of a count of trafficking. One ground of appeal was that the trial judge erred in admitting evidence that the accused had $3,050 in his possession. Eames AJA, with whom Hayne and Batt JJA agreed, distinguished McMahon albeit not on the basis that the counts in the case related only to possession.
76 His Honour did so on the basis that the evidence was admissible only with respect to one of the two counts and with respect to that count there was no other circumstantial evidence. His Honour noted that the possession of the large sum of money was able to be one element in a circumstantial case and that the mode of proof of a circumstantial case had been clarified by the High Court in judgments delivered subsequent to McMahon (i.e. Chamberlain v R (No 2) (1984) 153 CLR 521 and Shepherd v R (1990) 170 CLR 573). His Honour held that the discovery of such a sum of money was an item of circumstantial evidence which the jury could consider along with other circumstantial evidence on the charge before the court.
77 The reasoning in Edwards is, in my opinion, inconsistent with reasoning in McMahon insofar as that reasoning extends beyond a possession charge. In that respect McMahon was obiter and Edwards should be followed. (See also R v Campbell & Greig (1999) 109 A Crim R 174 esp at 180.)
78 A critical issue at the trial was whether or not the Appellant was conducting the scheme as a principal on his own account or, as he claimed, whether he was taking all steps at the direction of O'Donovan. In my opinion, the combined effect of the two items of evidence referred to in the course of these submissions, i.e. the tax returns showing little in the way of income and access for his own private purposes to a substantial amount of money transferred to him in a non-traceable manner was admissible evidence on this issue. The fact that drafts may have been sent from the company Star on account of one of the employer companies as part of the false invoicing scheme is not to the point. That circumstance does not suggest how any money would be transferred from Ireland to be used by the Appellant for his personal expenditure. It may be that a jury, properly instructed to the effect that, in a circumstantial case, there must be no reasonable hypothesis consistent with innocence, may conclude that in the absence of evidence linking the flow of funds to Ireland to the defendant the Crown has not established its case. That, however, is a different proposition to that which arises on admissibility.
79 In my opinion, evidence of unexplained wealth was admissible in the Crown case in chief.
80 In R v Soma, supra at [11] and [14]-[15] the joint judgment in the High Court emphasised the need to identify which limb of the statutory jurisdiction of a court of criminal appeal is invoked. Two limbs of s6 of the Criminal Appeal Act 1912 are relevant:
· "the wrong decision of any question of law"
· "there was a miscarriage of justice".
81 The specific ground relied on is:
"His Honour erred in allowing the Crown to cross-examine the accused in an unfair manner, namely by splitting its case."
82 So expressed, the ground can be understood to invoke each of the two limbs of s6 I have highlighted.
83 In R v Soma, the joint judgment affirmed that, as a matter of practice and procedure, rather than of substantive law, there is a general principle or rule that "the prosecution must offer all its proof before the accused is called on to make his or her defence" ([29] and see [27]-[28]). There can, however, be departures from the general rule ([28]).
84 The rule is not a technical rule but is based on fairness (see e.g. Killick v The Queen (1981) 147 CLR 565 at 569; R v Chin, supra at 686). Where an issue arises in the course of cross-examination, Dawson J in Chin at 686 posed the test in terms of whether:
"… its admission for the first time during cross-examination would unduly prejudice the accused, having regard to the obligation resting upon the prosecution to make its case known before the presentation of the defence case."
85 What constitutes relevant unfairness or prejudice must depend on all the circumstances of a case. It is pertinent to consider the reasons why the Crown did not adduce the evidence in its own case. In Soma, for example, it was not a good reason that the Crown anticipated an objection may be taken to its tender. (See R v Soma (2001) 122 A Crim R 537 at [26] approved in the High Court at [31] and see at [12]-[13].)
86 In the present case, the explanation proffered was that the Crown was unaware that the $200,000 that came from Ireland was the Appellant's own money, rather than a loan or gift or pre-existing capital. That, however, went to the weight of the evidence it could adduce, rather than to its admissibility. In the reasons I have indicated above, the evidence which the Crown was in a position to prove was admissible. It could not, in my opinion, be said that this evidence was "marginally, minimally or doubtfully relevant". (See R v Chin supra at 676.9 per Gibbs CJ and Wilson J.) The combined effect of low income over a long period of time and access to substantial funds was probative of the Crown case. The amount of $200,000 was sufficiently large although, in the scheme as a whole, not patently so, to be relevant to the issue of whether the Appellant was the controller of the scheme.
87 I have indicated in par [64] above, the submission made for the Appellant as to the prejudice suffered during the trial. The issue arose before the relevant cross-examination occurred. His Honour's judgment was given in anticipation of the line of cross-examination. At that stage the Appellant had been cross-examined on other matters for one afternoon (T439-482).
88 The next day Counsel for the Appellant identified the relevant prejudice as being the loss of the ability to give his own version of the facts in chief, rather than to give the appearance that he had been seeking to conceal it. His Honour thereupon gave counsel leave to reopen examination in chief (T527). Ms Fullerton rejected the opportunity to do that (T540).
89 Where, as here, an Appellant has been given an opportunity to substantially, if not completely, alleviate the unfairness involved in the Crown splitting its case, this is a material factor to consider in determining whether an error of law or a miscarriage of justice occurred.
90 This is reinforced by the comparatively insignificant, albeit not marginal, nature of the evidence that the Crown should have adduced in chief.
91 The significance of the evidence in the context of the Crown case on the two defrauding the Commonwealth counts appears from the summing-up of the trial judge. His Honour identified the case as almost entirely a circumstantial one and gave the appropriate direction to the jury as to how to approach such a case (T19).
92 His Honour also identified that the nature of the case was such that it was an essential requirement that the Crown establish that it was the Appellant who controlled and directed the affairs of the company (T33). He directed the jury that they had to be satisfied that he was controlling and directing the companies beyond reasonable doubt (T34).
93 His Honour then directed the jury that it had to be satisfied of intentional dishonesty and the elements of the offence about which he directed them (T35).
94 When his Honour came to summarise the evidence (T51) he did so by identifying matters in the following sequence:
· Incorporation of the companies and their application for tax file numbers and for deduction variation certificates, many of these documents were executed either in the name O'Donovan or O'Neill by the Appellant and in the case of the company A-Quip the accountant who conducted the incorporation identified the Appellant as using the name John O'Neill. The Appellant's evidence had been that all of this, including the impersonation of a Mr O'Neill, had occurred at the direction of Mr O'Donovan.
· Various bank accounts were set up and bank officers identified the Appellant as the person whose name was Pat O'Donovan.
· A number of bank officers gave evidence of the accused's modus operandi of obtaining cash on the cheques and using and occasionally in their presence signing the name O'Donovan to cheques. Bank officers identified the Appellant as the person who was known to them as Mr O'Neill with respect to the A-Quip company. Others identified him as O'Donovan in relation to the Star company.
· Various persons in the building industry gave evidence with respect to the cheques they had made up to Star or A-Quip and the way their employees were paid in cash.
95 His Honour gave the jury a direction not to use the evidence of the Appellant, that he had failed to declare income, for a tendency purpose (T90-91).
96 His Honour proceeded to summarise the evidence of the accused over some twenty pages of the summing-up (T92-114). His Honour referred to numerous aspects of the evidence but particularly focused on the existence, identify and conduct attributed to Mr O'Donovan. His Honour focused in detail on the examination in chief and gave a comparatively summary treatment of the cross-examination. In this respect also, however, the primary focus was on the alleged activities of O'Donovan. The evidence of which complaint is now made did not play a sufficiently prominent part in the trial for his Honour, in an otherwise comprehensive summation of the Appellant's evidence, to refer to it at all.
97 In my opinion although the evidence adduced could not be dismissed as "marginally or minimally or doubtfully relevant" (see Chin at 676.9 quoted above), it was of such low prominence at the trial that, when combined with the offer rejected on behalf of the Appellant to avert the prejudice by reopening his evidence in chief, I have concluded that his Honour committed no error of law and there was no miscarriage of justice in permitting the cross-examination to occur.
98 In my opinion, this ground of appeal should be rejected.