Peters v The Queen M6/1997 [1997] HCATrans 153 (29 May 1997)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M6 of 1997

B e t w e e n -

PHILIP PETERS

Appellant

and

THE QUEEN

Respondent

TOOHEY J

GAUDRON J

McHUGH J

GUMMOW J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 29 MAY 1997, AT 10.17 AM

Copyright in the High Court of Australia

MR P.G. PRIEST: If the Court pleases, I appear for the appellant. (instructed by Jonathan Kemp & Associates)

MR B.R. MARTIN, QC: May it please the Court, I appear with my learned friend, MR N.T. ROBINSON, for the respondent. (instructed by M. White, Solicitor to the Commonwealth Director of Public Prosecutions)

TOOHEY J: Yes, Mr Priest.

MR PRIEST: If the Court pleases, my friends in their written submissions spent a lot of time talking about Salvo and why Salvo is an inappropriate test, a case of conspiracy to defraud. They spend very little time talking about Ghosh, save this: at paragraph 5.7 they say:

The subjective element in Ghosh provides a sound basis for assessing mens rea.

They do not make the same claim for the objective component. Indeed, if one looks at what my friends do say, there is very little, indeed no, discussion of the objective component in the Ghosh test and why such an objective component ought be the law. The only reference seems to be - - -

GAUDRON J: Does not the subjective component combine both in Ghosh? I mean, I never understood why it is thought to be both objective and subjective.

MR PRIEST: Your Honour, I rather put the same argument to the court below and submitted that, properly understood, Ghosh really does provide a subjective test. That did not find favour with the court below and, indeed, seems not to have found favour with other courts that have discussed Ghosh and, for that reason, I was rather prepared to concede, for the purposes of argument, that Gosh does provide both a subjective and an objective component, and that is the way it is generally understood. Indeed, that is the way the trial judge understood it in this case and, indeed, he put to the jury that there was an objective component.

GUMMOW J: But your grounds of appeal involve an attack on Ghosh.

MR PRIEST: Yes. And, indeed, the thrust of my submissions is that Ghosh is wrongly decided for two principal reasons: one is to provide for an objective test is contrary to principle; secondly, there is no reason, as a matter of statutory interpretation, why "dishonestly", as used in the section that was considered in Ghosh, ought be read as providing for an objective test. Your Honours, what I want to do, if it is convenient, is to look at some other parts of what my friends have had to say, and then turn back to my own submissions.

GUMMOW J: Well, they say a lot about the proviso.

MR PRIEST: They do. Again, by their silence, their submissions are quite eloquent in a number of ways. It is worthwhile noting, your Honour, that they refer to none of the cases decided by this Court on the application of the proviso. In particular, I have in mind, of course, Mraz, Quartermaine, Wilde, Glennon. Those cases, in my submission, bear out two propositions - - -

TOOHEY J: Just a moment, Mr Priest. We seem to be getting away from the main thrust of your argument. Could I just ask you this? In your notice of appeal you assert various grounds and then you ask that the judgment of the Court of Appeal be set aside.

MR PRIEST: Yes.

TOOHEY J: That does not leave you very far advanced, does it?

MR PRIEST: I am not being deliberately obtuse; I do not understand really what you - - -

TOOHEY J: What is the effect? What are you asking for; that the conviction be quashed?

MR PRIEST: Yes, your Honour.

TOOHEY J: That there be a retrial or what?

KIRBY J: He would have to face a new trial.

MR PRIEST: No, indeed, the ultimate submission that is made, I think, in the written submissions, your Honour, is that given the staleness of the offence there ought be no new trial ordered.

KIRBY J: How could that possibly be, if in fact there was a misdirection? If the law, as clarified, makes it clear, then just as you insist on having a trial according to law, the Crown is entitled to have a trial according to law. There is just no possibility that your client could walk away without facing a retrial.

MR PRIEST: Your Honour, it is not something - - -

KIRBY J: How could we judge the dishonesty by subjective standard? That is a jury question; it would have to be decided by a jury properly instructed.

MR PRIEST: Yes. The only basis upon which I make the submission that there ought be no new trial ordered is simply on the basis that it is now a very stale offence, and at least it is relatively common in the Court of Appeal in Victoria not to order a new trial in circumstances where, for example - - -

KIRBY J: But there is plenty of evidence here on which a jury could come to a view that your client subjectively was dishonest.

MR PRIEST: Yes, your Honour, and I concede that.

KIRBY J: If that is so and if the trial miscarried for wrong direction, then we merely do our job by upholding the law and then the law is carried out by a retrial.

MR PRIEST: Yes, your Honour, and it is not something that I press strongly that there ought be no order for a new trial.

KIRBY J: Why does the Court of Appeal of Victoria not order retrials where there has been a legal misdirection? Is this something to do with availability of funds for retrials? I hate to introduce a practical element into this.

MR PRIEST: Certainly there are not very many funds available for new trials.

KIRBY J: That is a matter for the Director of Public Prosecutions to decide, not for courts.

MR PRIEST: Your Honour, with respect, I am content to concede that.

TOOHEY J: Mr Priest, could you take us to your main argument, which seems to be in part an attack on Ghosh and in part a contention that the trial judge in any event failed to direct in accordance with Ghosh. Is that the way you put the case?

MR PRIEST: Yes, your Honour, the first certainly. The second was the way it was put below but it was not the way that I was putting it here. Rather, what I was contending here was that there were two aspects of the decision below that were wrong. First of all, by adhering to Ghosh there was an adherence to an objective component where, in my submission, the test for dishonesty should be purely subjective. Secondly, in so far as Ghosh revolves around community standards, in my submission, that is the wrong test and a test more akin to Salvo is a more appropriate test.

TOOHEY J: The language of the indictment is "conspiracy to defraud the Commonwealth". What do you say are the necessary elements the Crown has to establish in order to make good a charge of conspiracy to defraud the Commonwealth?

MR PRIEST: An agreement, obviously, to defraud. To defraud is to dishonestly deprive someone of something that is his. So that, in my submission, the Crown would have to prove that an agreement between, in this case, Mr Peters and at least one of the other conspirators named in the indictment to deprive the Commissioner of Taxation of tax that was payable to him, and that was done or needed to be done dishonestly.

TOOHEY J: Dishonestly in what sense? Do you mean dishonestly in the sense that the appellant believed that what he was doing was dishonest or that what he did was dishonest according to ordinary standards? How do you put it?

MR PRIEST: What he believed was dishonest, not what some objective bystander might think - what he believed was dishonest.

TOOHEY J: So that if he thought it was all right to do something that had the effect of avoiding the payment of tax which otherwise should have been paid, that that is a sufficient answer to the charge?

MR PRIEST: If he believed that he could lawfully do that, then that would be a sufficient answer to the charge. If he believed that he could morally do it, then not so. But that is the essence of what I put, that Salvo is - - -

GAUDRON J: Any reasonableness in it?

MR PRIEST: No, your Honour.

KIRBY J: But it was said long ago that the devil himself knoweth not the mind of man. If that is so and therefore no one except your client knows what was going on in his mind, what is so wrong with a judge saying, "Well, he says he didn't do it dishonestly but you have to consider whether he did it dishonestly and in considering that you have to take into account common sense and the practicalities of how people work in society and you can infer from objective facts"?

MR PRIEST: Well, there would be nothing wrong with that.

KIRBY J: You say that the fault here was that the judge did not lend his authority to insisting that they must look from first to last to find the subjective dishonesty of your client.

MR PRIEST: To his state of mind, yes. Juries are called upon daily to assess what is in the mind of the accused subjectively.

GUMMOW J: But you seem to be saying he can set his own standards of dishonesty.

MR PRIEST: No, your Honour, that is not what I am putting, with respect. What I am putting is this; that the jury have got to focus on whether he believed that he had a legal right to do what he did.

TOOHEY J: Yes. Now, that seems to me to introduce a notion that may have no part to play in this. It comes through in some of the cases which are referred to in the submissions where someone does assert a claim of right to property and then questions of belief and so on may prove quite critical where somebody takes property believing it to be his.

MR PRIEST: Yes.

TOOHEY J: But that is not the situation here. I mean, the situation is whether or not there was a conspiracy to defraud the Commonwealth, and whether there was a conspiracy to, if you like, dishonestly deprive the Commissioner of revenue that was its entitlement.

MR PRIEST: And, in doing that, one cannot ignore the element of "dishonestly".

TOOHEY J: Surely the accused cannot say, "Well, now, these are the standards by which I operate and, by my standards, what I did was not dishonest."

MR PRIEST: What the appellant said here was that he believed that what he was doing was proper and that he was merely acting as an ordinary, honest solicitor would in the circumstances. Indeed, the cross-examination of him by the prosecutor below led off with a question, which has no relevance here, about the content of his counsel's opening, and the prosecutor then focused his main attack on the ethics of doing what the appellant did. He started off cross- examining him as to whether or not he had learned ethics at law school, and the cross-examination went on from there. Of course, your Honours would not pick that up from the papers, but the cross- examination, to a very large extent, revolved around the assertion by the appellant that what he was doing was, in his eyes, perfectly proper.

Again, your Honours will not pick it up from the papers but by way of example the evidence bore out this, that the appellant received a number of conveyancing files from another solicitor. He became aware that the man Spong had used false names in order to purchase those properties. The appellant said that he advised Spong not to use false names. In the end those transactions were completed using the false names. He thought that there was nothing wrong in that happening. Whether the jury believed that or not, or had a reasonable doubt about it more properly, was critical.

TOOHEY J: But he is not charged with being a party to the using of false names alone.

MR PRIEST: No.

TOOHEY J: He is charged with being a party to an arrangement in which false names were to be used in order to avoid the payment of income tax.

MR PRIEST: That is right and there were a number of components to them which included the creation, so it is said, of bogus mortgages. Again, the appellant said in essence that he did not believe that there was anything wrong with what was happening. His case was that he understood Spong was using these false names in order to avoid publicity that was attracting to Spong because he had been charged with counterfeiting. It was the applicant's case that he did not believe that it was Spong's object to avoid the payment of taxation.

GAUDRON J: If that had been believed, then he would have been acquitted. You have to come to the point where what it was was necessary to show that it was dishonestly intending to avoid the payment of taxation.

MR PRIEST: This comes back to the question I was asked by the learned presiding Judge. There are a number of components to what was said to have been the scheme, if you like, or the machinery by which the Commissioner was to be defrauded of his taxation; they included the various things that the applicant did. What the jury had to focus on was whether or not he believed that what he was doing, when he did each of those various things as a solicitor, were honest or, more properly, whether the Crown had proven beyond reasonable doubt that they were dishonest. The fact that the transactions themselves may have seemed rather startling, particularly to other lawyers, is not to the point; it is really what the jury were to make of his claims that he believed that what he was doing was ethical and proper and honest.

TOOHEY J: But it seems to me to be getting away from the appeal. You are not attacking the verdict on the grounds that it was unsafe or unsatisfactory. Your grounds of appeal go to the direction which the trial judge gave to the jury and which you say was in error.

MR PRIEST: Yes.

TOOHEY J: Is it not necessary for you to make good that proposition?

MR PRIEST: Yes.

TOOHEY J: Not so much by reference to facts; they might become relevant if the question of proviso is reached. You really need to focus on the direction and to demonstrate if you can that it was in error.

MR PRIEST: Your Honour, the main error revolves around the suggestion or the direction to the jury that they ought judge the appellant's conduct objectively and according to the ordinary standards of reasonable and honest people in the community.

TOOHEY J: Can you take us, Mr Priest, to the particular passages that you say reveal an error on the part of the trial judge.

MR PRIEST: Yes. They are in the book at pages 117 to 118. For the sake of ease, your Honour, I have set the impugned passage out in full at paragraph 4.1 of the written submissions.

TOOHEY J: Is it the entirely of those passages of which you complain, or part of them?

MR PRIEST: I endeavoured to highlight those parts via telex that it is submitted demonstrate error.

KIRBY J: Sometimes it is useful to see, in a charge to a jury, the offending passage in its context. Now, you have taken us to a decision in the Court of Appeal, but do these all follow one another consecutively - these six items?

MR PRIEST: Yes.

KIRBY J: They are just numbered for convenience. Now, do you have the reference to the page where it appears in the charge itself?

MR PRIEST: Yes. What is set out in the submissions is taken verbatim. It is a direct copy from the charge, your Honour. The numbering of the passages is that of Mr Justice Southwell. In what is paragraph [1], the Court will see that the trial judge said:

"The final element of the charge involves establishing that the accused was acting dishonestly.

He goes on to say:

The first involves an objective test and the second a subjective test. It is a matter for you to decide whether what was agreed to be done was dishonest. In deciding this, you apply what in your view is the current standard of ordinary and reasonable honest people.

And the next paragraph it said:

You apply what you consider to be the current standard of ordinary reasonable and honest people in our community. It is for you to say whether what the accused did or meant to do was dishonest by that standard. As you will observe, that is an objective test; what would ordinary reasonable honest people think?

Now, in my submission, that is an error of law. It is not what reasonable, honest people might objectively think; it is what the accused, as he then was, thought, and whether the Crown had proved beyond reasonable doubt that he believed subjectively that what he did was dishonest.

GAUDRON J: Does your argument go to this? If ordinary people would not believe it is dishonest, but the accused does, he is guilty?

KIRBY J: On this charge.

MR PRIEST: That if ordinary people would not believe it was dishonest, but the accused does, then he is guilty?

GAUDRON J: Yes.

MR PRIEST: Yes.

KIRBY J: But the converse is that if ordinary people believed it was dishonest, but the accused did not, then, on your theory, he is entitled to an acquittal.

MR PRIEST: That is right.

KIRBY J: Even though his belief might be perverse, might have no rational foundation, might be ridiculous, if the jury comes to the view that, for whatever reason, this man did not have an dishonest belief, then he is entitled to walk away.

MR PRIEST: Yes. Of course, in judging whether or not he held that belief, the jury would look at all the circumstances. But in the end, if they came to the view that he believed it, whether it was reasonable or not, then he is entitled to an acquittal. One finds support for that sort of submission in cases that revolve around a claim of right. For example, Nundah, which I think I have referred to in the submissions - that point is well made. You find the same in Langham and Lopatta, which were both cases from the South Australian Court of Criminal of Appeal. In fact, if I might digress for a moment, Langham was - - -

TOOHEY J: Do not digress too much, Mr Priest. If you are going to refer to these cases, you had better give us the references for the transcript.

MR PRIEST: Yes. I confess I had not intended to read either of these cases.

TOOHEY J: I am not inviting you to read; I am simply asking you to give us the reference.

MR PRIEST: Langham, your Honours, is (1984) 36 SASR 48, and Nundah [1916] NSWStRp 77; (1916) 16 SR(NSW) 482 and Lopatta (1983) 35 SASR 101. Langham was quite a startling case. In Langham he used a gun to get $301 that he said was owed to him by the person from whom he got the money, and he did at the point of a gun. The South Australian Court of Criminal Appeal made it clear that a claim of right is established so long as it was believed by the accused that he had such a right, and the reasonableness or otherwise played no part in it at all.

Lopatta was a case where a manager who had been fired broke into a factory and took goods to the value of the wages that were outstanding to him, and I think long service leave or holiday pay or something of that nature. Again the Court of Criminal Appeal made the same point. Nundah's Case was charge of larceny of two heifers and - - -

McHUGH J: One of my problems in this case is perhaps my mental frame of reference is right off the track, but what has Ghosh really got to do with this case? We are dealing with a particular statute, 86A, and why is not the whole law about subjective intention described by simply saying that the accused is guilty if he conspired with others intending to deprive the Commissioner of Taxation by dishonest means of something to which the Commissioner was or might otherwise be entitled?

TOOHEY J: Could I just interpolate. This is really what Chief Justice King said, did he not, the way he put it in Kastratovic, which is in the respondent's list of authorities.

MR PRIEST: Kastratovic itself was an interesting case.

TOOHEY J: Forget about for a moment what the case itself is and its interest, but what do you say in response to Justice McHugh?

MR PRIEST: That "dishonestly" is an element of the offence.

McHUGH J: No, no, it is by dishonest means. So that is where the defrauding comes in; there must be an intention to deprive somebody by dishonest means of something to which that person is or might be entitled. Talking about "dishonestly" as an adverb just seems to me to be off the path here.

MR PRIEST: Your Honour, it seems to be tolerably clear from the authorities that the agreement to deprive somebody of something that is theirs must be done dishonestly. Dishonestly - - -

McHUGH J: It must be done by dishonest means but, if a person intends to deprive the Commissioner, you look at what that person's intention is. You do not ask whether that person subjectively thought what he or she was doing was dishonest; you say, "Did he or she intend to deprive the relevant person by dishonest means?" So the "dishonest" is objective in that sense of something to which the person was entitled or might be entitled.

MR PRIEST: Your Honour, whether the means were dishonest surely, with respect, involves a focus on what was in the mind of the person who was depriving the Commissioner of Taxation because, otherwise, who is to say that it was dishonest? I mean, a jury when called upon - - -

McHUGH J: But it is the intention. Mens rea is if you have the intention to deprive by dishonest means then the offence is made out, whether or not you yourself regard it as dishonesty.

MR PRIEST: Yes, but, again, an intention to deprive by dishonest means must focus attention on what was in the mind of the person who was doing the depriving, in my submission.

KIRBY J: I take your argument to be that whether it is an adverb or an adjective does not matter very much. The word "dishonest" is in there. Dishonest brings with it a jurisprudence and that is reinforced by the fact that this is a criminal statute and there is a long line of authority that says that unless it is clear you will interpret a criminal statute against the golden rule.

MR PRIEST: Yes, your Honour.

TOOHEY J: But dishonestly is the term that is being imported, is it not? I mean, the charge is conspiring to defraud the Commonwealth.

MR PRIEST: Yes, and, of course, dishonesty or dishonestly is not used in terms in the section which creates the offence, but - - -

TOOHEY J: I know. This is the point, is it not? It comes back to Justice McHugh's question.

MR PRIEST: But the authorities with which my friends make no challenge suggest that the elements of conspiracy to defraud under the statute are the same as those at common law. When you go to the cases at common law, particularly Scott, Scott establishes, in my submission, authoritatively that dishonesty is a component, an element of conspiracy to defraud. So that - - -

TOOHEY J: Yes, but in what sense? That is important question, is it not? Is it an agreement to achieve a result by dishonest means?

MR PRIEST: Yes.

TOOHEY J: But then you would seek to read into that dishonest according to the subjective standards of the accused.

MR PRIEST: Yes. In my submission it must be. If one looks at common law offences to try and determine whether there are any others where an objective standard is sufficient to establish mens rea, the only one that really springs to mind is one of manslaughter by negligence. There may be others, but with the exercise of what poor ingenuity I have, I could not come up with any other offence at common law where it was held that an objective intent, if you like, or a constructive intent was sufficient to make it out. That is why it is so odd that there has been such an adherence to Ghosh in this country without, it seems, with the greatest of respect, much analysis of whether or not Ghosh was correctly decided or not.

TOOHEY J: That may be true. I mean, on one view perhaps Ghosh is unduly favourable to the accused.

MR PRIEST: Your Honour, in my submission, that cannot be right because it gives him two hurdles that he has to jump, the major one being what the ordinary jury might think about his conduct.

GUMMOW J: Is that what Ghosh really decides anyway? Is not the crucial passage in Ghosh at page 1064 of (1982) QB between letters B and D? It is all in the paragraph reading "There remains the objection". I know the next paragraph talks about two steps and that was probably an unfortunate way of expressing what follows from the immediately preceding paragraph?

MR PRIEST: Is this at 1064, your Honours?

GUMMOW J: 1064, yes. The paragraph beginning "There remains the objection". Is that not the heart of it?

MR PRIEST: Yes.

GUMMOW J: It is talking about subjective test. It is not talking about the subjective and objective test.

MR PRIEST: Your Honour, with respect, I put the very same argument to the court below.

GUMMOW J: Well, you may have, and you can put it here if you want to.

MR PRIEST: The court below thought that that was wrong and that - - -

GUMMOW J: Well, they may have.

MR PRIEST: The point I am making about it is this, that it is not understood that way and has not been - - -

GUMMOW J: What I am putting to you is that maybe it should be.

MR PRIEST: Your Honour would find furious and heated agreement, with respect, from me that there should be a subjective test. That is one of the main thrusts of my argument but Ghosh has not been understood that way. In fact there are only two - - -

GUMMOW J: Look, what has been said in other courts in Australia does not bind us, that is what I trying to get at you. The question is what we are going to do about the problem. The question is: what submissions do you make?

MR PRIEST: I submit that the test in principle ought be subjective. In so far as it was held in the court below and the jury were charged that there was an objective component, it was wrong.

TOOHEY J: But that is very loose language, Mr Priest. When you say "subjective", you have to do better than that, I think. In what sense do you mean subjective? What does the Crown have to prove in a charge of conspiracy to defraud the Commonwealth? Leave the conspiracy side of it for the moment.

MR PRIEST: They have to prove the agreement, they have to prove that the agreement was to defraud. To defraud ordinarily means to deprive by dishonest means.

TOOHEY J: And you would say to deprive by means which, it must be shown, the accused knew were dishonest?

MR PRIEST: Yes.

TOOHEY J: That is the submission, is it?

MR PRIEST: Yes. It does not carry with it any objective component at all. That throws up - - -

TOOHEY J: So in a sense the word "dishonest" loses its meaning a bit, does it not?

MR PRIEST: No, your Honour. What that throws up is whether or not "dishonesty" needs to be defined for a jury. There is a respectable view, one that was held by Mr Justice McInerney in Salvo, that "dishonestly" need not be defined for a jury. It also throws up the question: if it is to be defined for a jury, what is the proper test? My submissions can be shortly put. It should be defined for a jury and it should not be defined according to Ghosh.

TOOHEY J: But what would be the point of defining it? On your approach, the accused sets his own standards, his own tests - something which the Crown could hardly ever prove.

MR PRIEST: I do not argue with your Honour that I may have put that. That is not what I meant to be understood by what I have submitted. The attention must be on what was in the mind of the accused person, but the standard has to be whether or not he believed that what he was doing was legally right, whether he believed he had a legal right to do what he did. In my submission, that is what "dishonesty" means or should mean.

GAUDRON J: Are you saying in the facts of this case - I know it is always dangerous to descend to the particulars - that it was open to the jury in this case to find that your client had an honest belief of his right to deprive the Commissioner of Taxation of tax that would otherwise be payable, because otherwise this question does not arise?

MR PRIEST: Your Honour, it comes back to a question that I was asked by Justice McHugh about whether or not the dishonesty went to the means, and this may well answer your Honour's question because his case was that he believed that the things that he was doing as a solicitor were perfectly proper.

GAUDRON J: That does not answer the question. He was charged with conspiracy to defraud the Commissioner of Taxation. Now, they obviously found that he intended to deprive the Commissioner of Taxation of tax which was otherwise payable. That was an element of the charge. That had to be proved, at the very least. Now, are you saying that on this case the question arose whether your client had an honest belief that he was entitled to deprive the Commissioner of tax that was otherwise payable?

MR PRIEST: No. No, his case was that he was not party to any conspiracy.

GAUDRON J: Okay. That is beside the point. We are now dealing with the question of depriving the Commissioner of Taxation of tax which was otherwise payable, are we not?

MR PRIEST: Yes.

GAUDRON J: Now, what do you say is the relevance of your submission, in that context?

MR PRIEST: His state of mind and what he did, and the question of an agreement, are all inextricably interwoven and, in my submission, to focus attention on what the jury may have believed about his conduct objectively was to set them off on the wrong track.

GAUDRON J: Well, what is the right track? We still have not heard what you say is the right track. What is the precise direction that should have been given, in your submission, in the context of this case?

MR PRIEST: In the context of this case, the jury should have been told that the offence was not made out unless what the accused did was dishonest. Dishonesty is to be judged by what was in his mind, not what the jurors might have thought about it themselves.

GAUDRON J: That has no context.

MR PRIEST: Just to finish that thought, and that the definition of "dishonesty" was an absence of a belief that he had a legal right to do what he did.

GAUDRON J: Well, what do you mean by "to do what he did"? What precisely does that mean?

MR PRIEST: This is one of the problems about the charge, your Honour; that the trial judge did not tell the jury.

GAUDRON J: Well, it had to be, did it not - - -

MR PRIEST: It had to be a number - I am sorry, your Honour.

GAUDRON J: He took a number of steps in concert for the purpose of depriving the Commissioner of Taxation of tax that would otherwise be payable, do you accept that?

MR PRIEST: Yes, your Honour.

GAUDRON J: Then what your submission must mean is that, in the context of this case, he believed it was a defence for him to believe that he had a right to deprive the Commissioner of Taxation of tax that was otherwise payable.

MR PRIEST: Yes, I am content with that, your Honour.

TOOHEY J: Well, you really have to, on your argument. You have to put it that way, do you not?

MR PRIEST: Yes.

TOOHEY J: And it was an onus on the Crown to establish that as an element of the offence.

MR PRIEST: Yes. And here, you see - and this is one of the problems about descending into the facts - here there are a number of different things that were allegedly done which may or may not have been regarded as being dishonest.

TOOHEY J: But they are evidentiary questions, are they not?

MR PRIEST: They are, but you cannot look, with respect, at the conviction in isolation. One of the critical parts of the Crown case was a meeting on 23 December 1983 in Campbell's office - Campbell was another solicitor. The main Crown witness, Butera, said that Mr Peters was present at that meeting, and that there were two bogus mortgages produced.

MR PRIEST: Coppens is another witness. He said that Mr Peters was present. If Mr Peters was to be convicted on the count of conspiracy to pervert the course of justice, it had to be accepted beyond reasonable doubt that Mr Peters was present at that meeting. The jury failed of satisfaction beyond reasonable doubt on the count of conspiracy to pervert the course of justice, which means that they must have failed of satisfaction that Mr Peters was at that meeting. That meeting was also important so far as the count upon which he was convicted was concerned, because it dealt with, among other things, the creation of what was said to be two bogus mortgages. So it is difficult - - -

TOOHEY J: But that is not a part of your grounds of appeal. That is the problem, is it not? You are not attacking the admissibility of the evidence or whether the verdict was unsafe or unsatisfactory, you attack only the direction of the trial judge.

MR PRIEST: Yes, your Honour. What I am endeavouring to show, your Honour, is that there are a number of different components, a number of different things that Mr Peters did which could have been said to have been the conduct which made up the particulars of the charge upon which he was convicted.

TOOHEY J: Mr Priest, were particulars sought of these charges?

MR PRIEST: Yes, there were particulars of overt acts provided; they have not been given to the Court.

KIRBY J: From your point of view, is it important that we have them or not? If it is not important, well - - -

MR PRIEST: No, your Honour. I must say I had not anticipated that things would unfold this way. I am sure there is no argument with the proposition by those opposing me that there were a number of different things that went to make up the conduct of the appellant. It is difficult - it would be impossible, in any event, no matter what particulars were provided, to determine now what it was that the jury were satisfied about.

TOOHEY J: On your approach I do not suppose it would matter what the particulars were.

MR PRIEST: No, because in my submission they were set off on a wrong line of reasoning.

TOOHEY J: I did not mean it quite in that context, I meant that it would be very difficult for the Crown, on your approach, to prove its case whatever the particulars might be.

MR PRIEST: No - - -

TOOHEY J: Because it would have to prove your client's lack of belief that what he was doing was honest.

MR PRIEST: Yes. With respect, I do not foresee that the Crown would have any particular difficulty about it if my client's claim was disbelieved by the jury beyond reasonable doubt.

KIRBY J: As I understand it, you have a very, very short point; it is simply that the judge misdirected the jury and therefore you did not get a trial according to law.

MR PRIEST: That is it.

KIRBY J: And that all the judge had to say, as judges have been saying for hundreds of years to jurors, "You've got to test this by the subjective belief of the accused." That is not all that unusual. The question is whether or not that fits with this particular statute. I think Justice McHugh's question goes to the heart of it, of whether, because of the terms of the statute, a different test is appropriate.

MR PRIEST: Yes. Your Honour, if it is accepted that dishonesty is an element, then the jury have got to be told about it, in my submission: whether that be that - it is an ordinary English word and it does not need any further definition; whether they be told that it bears the meaning in Ghosh; or whether they be told it bears the meaning in Salvo or some other meaning altogether.

TOOHEY J: The last comment lets in what Chief Justice King said in Kastratovic:

In all cases, the element of intent to defraud connotes the intention to produce a consequence which is in some sense detrimental to a lawful right, interest, opportunity or advantage of the person to be defrauded -

MR PRIEST: Yes. My friends in their submissions point out the passages from Kastratovic and I think also from Viscount Dilhorne in Scott's Case, where it has been suggested that it is unwise to endeavour to define these things. The problem, however, is in the practical day to day running of trials if juries are not supplied with some definition, then they are very much left to their own devices. Experience tells one that even if you tell a jury that, "Look, these are ordinary English words and do not bear any further definition," juries frequently come back and ask. "Beyond reasonable doubt", they are frequently told, "They are ordinary English words; they mean what they say."

Juries day to day come back and ask for further elucidation of what those words mean and have to be told that they cannot have any further definition. Culpable driving, an offence in Victoria, can be committed by gross negligence. Juries are charged. Gross is an ordinary English word. It does not require any further elucidation. Juries frequently come back and say, "What does gross mean?", and the same - - -

TOOHEY J: Yes, but this is in part because it is your argument that the word "dishonestly", as it were, permeates the entire charge.

MR PRIEST: Yes.

TOOHEY J: I think what Justice McHugh was putting to you and what in a sense is said by Chief Justice King and also by Viscount Dilhorne is that were the means employed to deprive a person of something that belong to him or her dishonest means?

MR PRIEST: Yes.

TOOHEY J: Which is putting it differently to the way that you put it.

MR PRIEST: Your Honour, it still requires an examination of what interpretation is to be given dishonest, dishonesty and dishonestly, and it is wrong, in my submission, to tell the jury, as the trial judge did here, that they judge that according to their own standards or the standards of ordinary, reasonable, honest people was the expression the trial judge used. That is the wrong way of approaching it, in my submission.

KIRBY J: Can I just take you back to that question I asked earlier? Given that the jury cannot know exactly what was in the mind of your client, what else do they do than apply their own standards?

MR PRIEST: Yes, well, of course they have got to judge it according to commonsense, but they do it daily, your Honour, in - - -

KIRBY J: You say there is a fine line between the subjective intent and, as it were, the imputed intent applying commonsense standards but it is important for the judge to lay emphasis upon the fact that the jury's search is for the subjective intent?

MR PRIEST: Yes, your Honour. To use the Langham example of before, a trial of Langham by 12 ordinary landlords would be a different trial than by 12 ordinary tenants and that is why the jury should not be left at large to determine what dishonestly means or dishonesty means. If it is accepted that it is an element of the offence, then it requires, in my submission, judicial interpretation, judicial direction.

KIRBY J: What is your answer to the "Robin Hood" defence, that is to say that everybody else in society would think this was dishonest, but this particular accused has this theory of his own that he can go ahead and do something because he does not like Australia's drug laws or does not like its tax laws or - - -

MR PRIEST: Yes. If the Earl of Locksley was tried by a jury of bishops whose purses he had unloaded, then I am sure he would be convicted. If, however, he was tried by a jury of serfs who had received his largesse, I am sure the result would be different, and therein lies one of the problems about leaving it to juries to determine what dishonesty is because there is a fallacy that there is some sort of community norm and there may or may not be. An example that only really occurred to me this morning. Assume for the sake of argument that there is a culture where it is thought that the charging of interest on moneys loaned is wrong, improper.

Assume that a person of that culture borrows money from a bank and has the use of that money for a couple of years, and repays the principal because his culture tells him that it is all right to borrow money so long as you repay it back, but, by some dishonest means, does not pay any interest on the money - - -

TOOHEY J: You mean alters the mortgage so that there is no interest payable?

MR PRIEST: Perhaps.

TOOHEY J: That is a defence, is it, in those circumstances?

MR PRIEST: If he was tried by other people of his culture, they may well acquit him on the basis that they regard it as being perfectly honest to deprive somebody of interest; whereas, if he was tried by other people not of that culture, a different result would follow. That is why, in my submission, a jury should not be left at large to determine what "dishonesty" is.

TOOHEY J: That rather puts the emphasis, again, on the means that he used to deprive. But I do not know that we are assisted by a lot of the authorities that you have referred to, Mr Priest. Are there any particular cases that you want us to look at especially? Any particular passages?

MR PRIEST: Really, the principal authority, your Honour, was Salvo, and the reasoning that was employed by Mr Justice Fullagar in Salvo at arriving at the definition of "dishonesty" that he did.

TOOHEY J: Can you take us, if you wish to, to that passage?

MR PRIEST: Yes, your Honour. At page 426 of the Victorian report, his Honour commences his discussion of "dishonesty" and - - -

KIRBY J: Where is the section set out - the actual elements of the section?

MR PRIEST: The section is set out at page 425, at line 46 and following:

"A person who by any deception dishonestly obtains property --

That section is very similar to that which was discussed by the Court of Criminal Appeal in New South Wales in Love, your Honour.

KIRBY J: As Justice McHugh points out, that is an adverb attaching to the very act which is the criminal act, as distinct from an adjective attaching to the means used for the purpose of the criminal act.

MR PRIEST: Yes, your Honour.

McHUGH J: When you come to the concrete facts of this case, there just seems to me to be something unreal about this whole discussion. Why is not the offence made out, in this particular case, if your client agreed to and intended to deprive the Commissioner of his entitlement to tax by entering into sham transactions? Why is that not a conspiracy with intent to defraud?

MR PRIEST: If they were sham transactions, your Honour, and this is - - -

McHUGH J: Well, that is right. But it has got nothing to do with dishonesty.

MR PRIEST: Well, it does, your Honour, because the appellant would take issue with the suggestion that what was done were shams. "Sham" has a pejorative - - -

McHUGH J: You may want to define "sham" in some more particular way, but it has got nothing to do with the accused's state of mind. It is an objective fact. I mean, surely the intent to defraud is that you intend to deprive the Commissioner by these means. In some cases it might be a false pretence and, if it is a false pretence, well, you are guilty, maybe by forgery, maybe by sham transactions. But what has it got to do with dishonesty in some abstract sense?

MR PRIEST: Your Honour, the whole of the focus of this case - - -

McHUGH J: I know, and I know that is the way the trial judge directed the jury, in accordance with Ghosh, and, at the moment it seems to me that is where the case may have started to go wrong.

MR PRIEST: Yes. The whole of the focus of the case was on whether or not the accused believed that he was entitled to do what he did.

TOOHEY J: But your client might well have done better with the direction that he got than the direction that was perhaps appropriate in the circumstances if it is the direction of the sort that Justice McHugh suggested.

MR PRIEST: Hardly, your Honour. With respect, the appellant said in his evidence that he believed that it was perfectly all right to complete conveyancing transactions in aliases, for example.

GAUDRON J: But he was not charged with completing conveyancing transactions in false names. That is not the charge. There is another element involved in it as to which the jury was clearly satisfied.

MR PRIEST: That is right, your Honour, but one of the overt acts - and there were a number of them - included completing conveyancing transactions in these false names.

McHUGH J: Yes, I know, but it is all about intending to deprive the Commissioner of his right to taxation by these means and that is why it just seems to me the whole case really turned on a factual issue as to whether or not your client was present and whether these things were said when these things were allegedly said at this meeting. If he was, end of case and to be talking about subjective states of minds really - - -

MR PRIEST: No, the meeting was only part of it, your Honour.

McHUGH J: Well, I know there was a background.

MR PRIEST: And in some ways only a small part of it because there were a large number of transactions and he maintained throughout that the means by which he completed these conveyancing transactions was perfectly proper and the focus of the whole case, indeed, just about the whole of the cross-examination of him, which went for many pages, was on his state of mind. The cross-examination began with an examination of what he knew about ethics and it continued from there. The whole focus of the case was on his state of mind and it is unrealistic to think that a jury did not look at that principally and his claim that what he was doing was honest in deciding his guilt.

KIRBY J: As I understand it, you would concede if pressed that your client has a number of difficulties in the facts, but you say that at the very least he is entitled to have a jury charged according to the correct principles and he did not get that.

MR PRIEST: Yes.

KIRBY J: So it is a purely technical question. It is not a case dripping with merit, but you say that he did not get a trial according to law and that is what we have got to focus on.

MR PRIEST: Yes, your Honour.

KIRBY J: Back to Salvo. If one goes to 426 of the Victorian Report, his Honour starts at first principles, he looks at the dictionary meaning of "dishonestly" and he comes to the view that it has a number of possible meanings, one of which is akin to "without a belief and unlawful claim of right". His Honour then at 427 develops that further and what his Honour does later in the judgment is he looks at what the previous law said on the subject in order to give colour to the new statutory provision.

TOOHEY J: Where is the critical passage from your point of view, Mr Priest?

MR PRIEST: Your Honour, I will just take you to it. At 432 in the second paragraph his Honour says:

In my opinion "dishonestly", in this statute, is used in that sense of "with disposition to defraud" which means "with disposition to withhold from a person what is his right" and in the special context thus imports into the offence the element that the actor must obtain "the property" without any belief that he himself has any legal right to deprive the other of it.

If I can skip the next paragraph and the first two sentences of the next paragraph, his Honour says:

What is important in the connotation of the word "dishonestly" in s 72(1) is shown to be the state of mind of the appropriator at the time of the appropriation-with-intention-permanently-to-deprive, and the question whether he then believed that he had some colour of legal right to carry out the appropriation-with-intention-permanently-to- deprive. Belief in a claim of legal right may be more than, but must include, a belief that the acts are not contrary to the law, civil or criminal, just as s 73(2) speaks of a right "in law".

TOOHEY J: But you can see how those concepts come in where the defence is that the accused was entitled to the property - he might believe that it was his - but that is not really the case here.

MR PRIEST: No. Here he said in effect he was entitled to carry out the means in the way that he did. The focus was really on his state of mind and what he did as a solicitor. There is just one other passage at page 433 that I would like to take the Court to. At line 10:

In my opinion the concept involved in "dishonestly" is very close to the common law requirement of "intent to defraud", or absence of a claim of right, but it is "subjective" in the sense in which the Court of Appeal has used that word in this context, and the emphasis is on the intention to "defraud" the other of (eg) the possession, in the sense of to take without any belief in any legal right to take.

It goes on. My submission is that there ought be one standard and it is tolerably clear that there is not. In my submission, your Honours, the focus should have been on the appellant's subjective intent. It was not. In my submission, the trial judge should have charged the jury as to the element of dishonesty, that it meant an absence of a belief in a legal right or similar. In my submission, the - - -

GAUDRON J: Absence of a legal right to do what in this case?

MR PRIEST: In this case it would have to be to deprive the Commissioner of Taxation. The whole focus in this case was on his state of mind. In my submission, the jury were not charged according to the law. He did not get the trial to which he was entitled and, in my respectful submission, the appeal ought be allowed.

TOOHEY J: Thank you, Mr Priest. Mr Martin.

MR MARTIN: If the Court pleases, in our submission, the issue really did not arise but it might depend upon the Court's view of "dishonest means" or "dishonest object". I should point out that the way his Honour left it at the trial, he referred to "dishonesty" as related to the object, not to the means. The issue at the trial was not a focus on whether the accused believed that what he was doing was honest - that is, in advising and being part of the sham transactions; he acknowledged they were sham. The issue, however, was whether he was part of the conspiracy.

Could I take the Court to page 53, which was the beginning of the passage my learned friend started to cite from the summing up. His Honour turned, at line 21, to the final elements establishing that the accused was acting dishonestly and then gave the two steps. In our submission, ultimately, the Ghosh test, by the way, is a subjective test. It does not have an objective component at all, but before you get to that, according to Ghosh, you ask whether the conduct was, according to community standards, dishonest. Then you address the accused's state of mind. So, in our submission, it is truly a subjective test, which I think was the point made by your Honour Justice Gaudron at the outset. If we go on with the way his Honour approached it, having taken the two steps, the first the objective test, as he called it, line 7 on page 54:

what would ordinary reasonable honest people think?

GUMMOW J: Could we go back to page 52, line 14? That is correct, is it not, that paragraph?

MR MARTIN: Yes.

GUMMOW J: That is what the intent is.

MR MARTIN: That is correct, your Honour, and that is the way his Honour, in later passages, came back to effectively saying the same thing, that is an intention to be part of that agreement to deprive the Commissioner of Taxation of income tax to which he was entitled. That was the way that his Honour left the real issue for the jury.

GAUDRON J: The directions about dishonesty is really a gloss in the accused's favour in this case.

MR MARTIN: Absolutely, your Honour, and quite unnecessary in the circumstances of this case. When we put it - - -

KIRBY J: The question is though, whether by adding that gloss and the talk of ordinary members of the community, that in a sense waters down the fairly clear instruction as to the intent, the subjective intent on page 52. That is the - - -

MR MARTIN: We say it would not have watered it down, your Honour.

KIRBY J: You say his Honour came back to intent later on.

MR MARTIN: Yes. He in fact really tells the jury that dishonesty is not the issue in this trial, the issue in this trial is whether this man was part of that conspiracy. On anyone's view, Mr Peters being a solicitor, he did not raise any suggestion that he believed there was any legal entitlement or that it was honest to deprive the Commissioner of the income tax that was due.

KIRBY J: The conspiracy being the means by which the Commissioner was defrauded of the taxation.

MR MARTIN: Rather the conspiracy in having its object as depriving the Commissioner of the income tax, the means by which it was carried out ultimately being evidence, if you like, that this man must have been part of the conspiracy, because there are a whole series of sham transactions. His defence was, "Yes, I knew that these identities that were being used were false. I believed I was simply acting as a solicitor and therefore in those transactions I was acting honestly but I was not part of the conspiracy to deprive the Commissioner of the income tax. I did not become part of the object behind those transactions."

If we go ahead on page 54 his Honour then, beginning at line 8, dealt with what he referred to as the subjective question:

whether the accused himself knew that what was to be done was dishonest by that standard.

The key question is what was to be done? It was not related to the means, it was related to the object of depriving the Commissioner. Can I go down further. Having discussed the concept that it is not enough for the accused to say, "I thought it was all right to do, even though I know the community would think of it.", at line 27 we find the key words:

The dishonesty here referred to relates to the evasion of payment of income tax or the risk of such evasion. The laundering of black money, that is money which may have been gained by criminal activity may of itself be a dishonest act. However, it is not that aspect of dishonesty with which you are concerned. The dishonesty which is here to be considered is whether the accused in being a party to what was intended to be done, assuming you find that he was such a party, believed or realised that in depriving the Commissioner of Taxation of income tax or risking that deprivation, he was acting dishonestly according to the standards or ordinary reasonable and honest people in the community.

I have to tell you all those things about the elementsof the offence because they are elements. A lot of them, as I understand it, are not in contention. You have not heard any argument addressed as to what reasonable members of the community would think about this as to whether they regard it as dishonest and so forth or as to whether or not there was or there was not an intent to defraud.....you have not heard any arguments from Mr Grant because his case is that Mr Peters simply was not a member of the conspiracy so these things do not arise.

With great respect to the trial judge, it was quite unnecessary for him to have given the direction and, in a sense, he opened up a possible line of defence that was really not available to this accused.

His Honour also referred to that essential issue at page 61. Having referred to the conspiracy - at the top of the page - the period of time through which it was alleged to have run, at line 9 his Honour said:

the Crown case is that Mr Peters was a party to it, that he joined the conspiracy at some stage.

The defence case is not -

presumably there should be a "this" - this -

is not so. That he had nothing to do with it. True, he handled these conveyancing transactions, true he realized - he was informed by Spong at some stage - that the moneys had not been advanced by Dial Finance and accordingly, moneys that were going to Dial Finance were coming back to Mr Spong but that he did not, by that means, join in any illegal conspiracy of the kind alleged, that he was merely acting as a solicitor.

Then again, at page 63, at the top of the page, having pointed out that Mr Peters became involved in the conveyancing transactions, his Honour, at line 5, said:

The real issue seems to be whether he was a party to a conspiracy. The first issue was whether the relevant conspiracies alleged in each count occurred. It is a matter for you. I do not think there is any real dispute about that but again it is a matter for you. The real dispute is whether Mr Peters was or wasn't a party to the conspiracy.

KIRBY J: Given that he was not charged with being a party to a conspiracy, would it not have been better if the judge had focused on the statutory provision under which he was charged?

MR MARTIN: Your Honour, he was charged with conspiring with others, and his defence was, "If that conspiracy existed, I was not a party to it." Page 1 is the indictment. So, in that sense, we would say his Honour is using language readily understood by the jury to convey his essential defence that, "If this conspiracy existed, I did not join it," and it is count one. Of course, he was acquitted of the second count.

McHUGH J: The description of the elements of the offence, from 55 over to 56, seems at the moment, to me, to be an accurate statement of the case.

MR MARTIN: Yes, your Honour, quite so. Although, I do draw your Honour's attention to page 56, where he deals with the fourth element:

Four, that what was intended to be done was dishonest according to

the standards of ordinary reasonable and honest people -

Now, that is not related, as your Honour put it earlier, to the means by which it was to be effected. And, finally, the accused - fifth:

the accused knew that what was intended was dishonest by those standards.

Just one other and if I may complete the reference. The final reference is page 92 in a series of further directions where his Honour came back to the objective/subjective test and then repeated the ingredients at the bottom of the page. Now, if one looked at in a very strict technical sense, if the offence is made up of dishonest means, then his Honour did not give a direction related to those specific means, but, in our submission, conspiracy is not limited to a case where the means are necessarily dishonest and, of course, in Scott's Case the court had to address the question - I will just give the court the reference to Scott, which is in our list, but it is - - -

McHUGH J: It is (1975) AC.

MR MARTIN: That is the one, your Honour, at 819. The court addressed the question as to whether it was necessary to have a deception in order to achieve the conspiracy and to defraud and the House of Lords held that it was not necessary at all. Now, we suggest, with respect, that it follows that it is not necessary that there be dishonest means. In the vast majority of cases there will be. In the vast majority of cases there is a deception of some sort.

McHUGH J: I think Lord Denning sitting in the House of Lords once said that the intent to defraud means an intent to practise a fraud.

MR MARTIN: Yes. I think that is probably in Welham's Case.

McHUGH J: In Welham, yes.

MR MARTIN: Yes, quite so, but, in our submission, the common law has always been careful not to limit the question of intent to defraud because, as Chief Justice King pointed out in Kastratovic, there is a need for great flexibility in this area. So, in our submission, the dishonesty is not limited to the question of the means and, if it was limited to the question of the means, then one would come back to the question, "Well, what does dishonesty mean even in that context?", and in our submission the approach taken in Ghosh is the appropriate approach in those circumstances if the issue arises.

The Court will see from the various authorities that have been referred to that prior to the word "dishonesty" appearing in the English Theft Act the common law courts shied right away from defining "fraudulently" other than to say it means dishonestly. I think Williams might have been the one exception to that and, of course, in Feely's Case the court said that was an incorrect decision. They shied right away and what was happening, of course, was that in each individual case the court was deciding whether on those facts that amounted to a conspiracy to defraud and in Carpenter's Case - - -

TOOHEY J: You had better let us have those references if you want us to go to them, Mr Martin.

MR MARTIN: At some stage it was suggested it might be appropriate to go back to Carpenter just as a demonstration. In Carpenter's Case (1911) 22 Cox CC 618 Justice Channell actually directed the jury that if certain facts existed then that was an intent to defraud and those facts were in effect taking deposits of money on one basis and using them for another purpose. So that is the way that the courts traditionally approached it by really taking, I suppose in a sense, the question out of the hands of the jury, but at no stage when they talked about fraudulent means dishonest, which is what Viscount Dilhorne said in Scott's Case, did they attempt to define dishonesty.

In our submission, it certainly was not necessary in this case. When we talked in our outline of written submissions of the application of the proviso, it is really not a situation where the proviso should be applied because the direction was not necessary in the first place. The English cases to which we refer in that section of our submission again were cases where the court did not in fact apply a proviso, so our submissions are inaccurate to that extent. What the court did in those cases was say that the directions were not necessary on these facts.

So, in our submission, if the Court takes that view of the matter, it is not necessary to go any further. We do recognise, however, that the situation is this: in Victoria the application of the question of dishonesty to section 81(1) is governed by Salvo and other cases that followed Salvo. However, other Victorian cases have declined to apply Salvo outside that limited area. Could I take the Court to paragraph 4.9, page 12, of our written submission. There are a series of cases at the bottom of the page where the court in Victoria has restricted the operation of the principle in Salvo to section 81(1) of the Victorian Crimes Act, the section with which Salvo was concerned, obtaining - - -

TOOHEY J: Do you mean where there is a claim of right involved or may be involved?

MR MARTIN: No, section 81, your Honour, where there is "dishonestly obtaining property by deception". I think the Court has been provided with the legislation. There is a volume of legislation that we provided. The Crimes Act Victoria is the very last tab. The Court will see section 72 of the Victorian Crimes Act provides the "Basic definition of theft" and then provides in section 73(2) that:

A person's appropriation of property belonging to another is not to be regarded as dishonest -

(a) if he appropriates the property in the belief that he has in law the right to deprive the other of it -

So quite specifically they provide for in effect the Salvo defence specifically provided in the legislation. However, those exceptions do not appear in section 81(1), "Obtaining property by deception". Mr Robinson points out to me that section 73(1) provides that those exceptions in 73 only apply "for the purposes of that section". Section 81(1) is the section with which the court was concerned in Salvo and the interpretation of "who by any deception dishonestly obtains". In Victoria the Victorian Full Court itself in the other cases we have listed specifically has restricted the operation of Salvo, the "belief in a legal entitlement" defence, to section 81(1) and has - - -

KIRBY J: It leaves the law in a rather messy state, does it not?

MR MARTIN: It does in that sense, your Honour. I suppose it can be said that it is even messier if we appreciate that, although as we point out in paragraph 4.10, page 13, the various cases in which Ghosh has been applied in preference to Salvo on charges of conspiracy to defraud under the Commonwealth Crimes Act and at common law and of other fraud cases, those marked with an asterisk dealt with the offence with which this Court is now concerned. Although Ghosh has been applied so frequently, in New South Wales the case of Condon - and this is referred to at paragraph 4.12 of our submission, page 14 - the New South Wales court applied Salvo to a charge of conspiracy to defraud the Commonwealth, the same charge with which this Court is concerned. I am sorry, it may have been defrauding the Commonwealth, my friend points out, which would have the same effect.

In our respectful submission, although the Court in Condon - one of the judges had sat on a previous decision - may have been aware of some of the controversy, that is the difference between Ghosh and Salvo, the Court will find that nowhere in the decision is there any reference to other cases that had followed Ghosh. So the Court in Condon, it would appear, was not made aware of the other authorities around the country that had declined to apply Salvo to this type of offence. In our respectful submission, Condon was incorrectly decided in those circumstances.

KIRBY J: Ghosh has been criticised in the two Law Review articles that were referred to by the appellant.

MR MARTIN: Yes, it has. In the Model Criminal Code Report there was a debate also about - and I do not think the Court has that. Part of the Model Criminal Code discussion I do not think has been referred to the Court. If I - - -

KIRBY J: I think we have that. This is in the Model?

MR MARTIN: Yes, it may have been provided.

KIRBY J: Yes, we have got that.

MR MARTIN: There is one section that is not referred to in the parts my friend has handed up. If I simply make those available to the Court after they have been stapled together. We can make them available to the Court. There is a discussion also, a debate, and they come down on the side of the Ghosh test. Your Honours, there is quite clearly a legitimate debate that takes place. There are disadvantages, whichever way the Court proceeds, if this is the law that is to be applied. What we have endeavoured to demonstrate in our submission is that Salvo is too narrow and lacks the flexibility to do fairness to an accused person. In a sense - - -

GAUDRON J: It is an issue that only arises really when there is a claim of right.

MR MARTIN: That is correct, your Honour.

GAUDRON J: In that situation there is an evidentiary burden on an accused to raise it and you only have to deal with the matter involved in Salvo if that is raised by way of defence.

MR MARTIN: In our submission, that is a very practical way to approach it, your Honour. It is the way it has been approached in these types of offences throughout the history of them that the Crown has to prove the ingredients of the crime. The issue of a claim of right, nobody talks to juries about that unless an accused person specifically raises it. In our submission, that is when that issue can be presented to a jury. But to suggest that the test is in each case to be applied in that way, in our submission, is to be too narrow, is to give rise to circumstances of injustice, and I suppose in some sense the Crown is in this case presenting a submission that is to the benefit of accused persons rather than for the benefit of prosecution.

KIRBY J: Where do you deal - your written submission, which are excellent, if I can say so, deal with it as a matter of authority but in your last comments you touched upon issues of principle and legal policy. Is there anything else that you want to say on that score given that there is a debate, there is perhaps a choice to be made, why should one test be preferred to another?

MR MARTIN: On a matter of practicalities, your Honour?

KIRBY J: Practicality and legal policy.

MR MARTIN: Page 17, paragraph 5.6, we cite some debate about why there is no uncertainty in the test, and we answer the suggestion that the jury are without assistance by pointing out that in practice the juries are given evidence of objective circumstances. May we assume, for example, terms of a trust. It may be that an employer/employee situation where the employee takes money from the till, the practice that whether that has been allowed or disallowed, whether it has happened in the past, if one is charged with defraud in, say, an area of securities - I think this might have been mentioned in one of the discussions - how will a jury know what is appropriate in the practice with securities? The answer is that there is evidence led by either the Crown or the defence or both that this is the accepted practice, not on what is dishonest or what is not dishonest, but these are the facts upon which a jury can be guided as to whether something was dishonest in that area.

There are, for example, the broker and the client. Let us assume for a minute a broker has a client who invariably has followed his advice and the broker cannot get on to the client and sees a need to change investments as a matter of urgency because of circumstances, does so without the permission of the client, assuming there were losses. If Salvo was applied, the broker does not believe that he has a legal entitlement to do so, but quite clearly he believes that he was not acting dishonestly. There is another example of why Salvo is such a narrow test that will work injustice. So in our - - -

KIRBY J: If Salvo were applied in that case, there would be no dishonesty of a subjective kind.

MR MARTIN: I am sorry, your Honour, if Salvo was applied in that case, according to Salvo there would be dishonesty because the broker did not believe that he had a legal entitlement to do what he did. On the other hand, if Ghosh was applied, there would be no dishonesty if the jury accepted the history of circumstances and the broker's version that he thought that the client would consent to this if the client had known about it. So that is an example of where Salvo works injustice. Can I take the Court, without going through them, and we begin at paragraph 5.2 on page 15 providing a number of examples of where Salvo would work injustice, pages 15 and 16, and we add to that the example that we have just given of the investment broker and also the example in Feely.

The Court will see in Feely's Case (1973) 1 QB 530 at page 593 the money from the employer's till is given as an example where the employee takes the money out for the purposes of paying for a taxi for his wife and that is a good example, in our submission, of where a Salvo test, if applied universally, would work injustice, but, of course, in our submission, the Salvo test has never been applied to defrauding or conspiracy to defraud. There is simply no authority to support that proposition and when one tries to transport it across then it fails.

GAUDRON J: But it could be applied.

MR MARTIN: It could be in the right circumstances, absolutely.

GAUDRON J: Yes, in particular circumstances.

MR MARTIN: And, your Honour, the approach could be, I suppose, one of two things. If one was using the Ghosh test - - -

GAUDRON J: The real question in this case is whether there is any need for a Ghosh test at all.

MR MARTIN: There was not, with respect.

GAUDRON J: But the Salvo test might apply with or without the Ghosh test if there are facts which raise it.

MR MARTIN: Quite so and it would be a question for, I suppose, either this Court or trial judges when addressing the issue, assuming for a moment that Ghosh was necessary, either by saying, if he had a belief in a legal entitlement, he was not dishonest because either it is not dishonest by community standards or because he believed he was acting honestly, one could incorporate it into Ghosh or one could separate it out alongside and say if the Crown proves these things, nevertheless you must consider now in this case the claim of right and treat it as a separate exercise such as has been done in the past.

So, in our submission, in terms of this offence Salvo is simply inapplicable both on principle and in practical terms. It was not needed in the circumstances. The fact that the direction was given did no harm, if anything it may have assisted the accused, the appellant, and in a sense it is not necessary for this Court to go further, but we do recognise the difficulty that can be created at the moment between New South Wales and within Victoria and the other States. If the Court pleases.

TOOHEY J: Thank you, Mr Martin. Mr Priest, in reply?

MR PRIEST: If I may. The learned director has said that no direction was needed as to dishonesty in this case. In my submission, if the trial judge, however, takes it upon himself to give a direction, as this trial judge did, he has to get it right and, in my submission, he did not. The second thing is this: it is not uncommon in Victoria to have Commonwealth and State offences tried together, so that you have, in Salvo, the test for dishonesty is, pithily put, an absence of a belief in a legal claim of right. A jury has to be charged as to the charges under the Theft Act that that is what "dishonestly" means, or "dishonesty" is, and yet, with regard to the Commonwealth counts, they are told that "dishonesty" means something else according to Ghosh. Now, that is absurd.

KIRBY J: I think you mentioned this on the special leave application, but we do not have a case under the Victorian Act and, therefore, anything we said about the Victorian Act would really just be obiter. We can only deal with the charges before us.

MR PRIEST: Save this; that the Court here is invited to define "dishonesty" and, to that extent, has a choice, in my submission, as to whether or not to give approbation to the test in Salvo or not.

KIRBY J: If we do that, we will upset the New South Wales process in Condon.

MR PRIEST: Well, this is the other curious point. If that person was, say, charged on the same indictment in New South Wales, then he would get a uniform charge as to the meaning of "dishonestly" because a trial judge in New South Wales would presumably tell a jury that "dishonestly" meant what Salvo says is meant, for both the State and the Commonwealth offences. It is an absurd state of affairs and, as Chief Justice Young said in Walsh and Harney - - -

TOOHEY J: Could you give us the reference for that?

MR PRIEST: Yes, (1984) VR, at page 474. This was one of my friend's authorities. Chief Justice Young said, at page 478:

In R. v. Ghosh [1982] EWCA Crim 2; [1982] Q.B. 1053 Lord Lane C.J. said, at p. 1059; [1982] EWCA Crim 2; [1982] 2 All E.R. 689, that there was nothing in Scott's Case to support the view that so far as the element of dishonesty is concerned theft was in a different category from conspiracy to defraud. In R. v. Salvo [1980] VicRp 39; [1980] V.R. 401 and in the cases which followed it, namely R. v Brow [1981] VicRp 75; [1981] V.R. 783 and R. v. Bonollo [1981] VicRp 63; [1981] V.R. 633, this Court declined to follow R. v. Feely [1973] Q.B. 503; [1973] 1 All E.R. 341 in so far as it held the jury could be left to decide for themselves what meaning should be attached to the word "dishonestly". The Court held that the meaning to be given to that word, as used in the statute, was a question of law for the Court and that it was the trial Judge's function to explain it to the jury. The High Court has not since said that this Court was wrong although special leave to appeal was sought in at least one of the cases referred to.

In Edward's Case (1988) VR your Honours will find a similar sentiment expressed, again by Chief Justice Young at page number which escapes me for a moment. It is clearly, your Honours, a case where there has been a deal of uncertainty for many years, and really only this Court can finally put the matter to rest.

Just one last matter, your Honours. Kastratovic (1985) 42 SASR 59 is referred to in terms by my learned friends in their submissions. Curiously, it is not on either list of authorities. There is a passage cited in my friend's submissions from Chief Justice King in that case at page 62, but there is a passage that precedes that at page 61 and going on to 62 where it was said:

The expression "with intent to defraud" is a familiar element of the many statutory offences which have been brought into existence by reason of the insufficiency of the common law offences relating to dishonesty. There is a current difference of judicial opinion as to the meaning of the word "dishonesty", and indeed as to whether it is used as an ordinary English word or with a fixed legal meaning, in offences relating to the obtaining of property created by the Crimes Act of Victoria and its English prototype.

Salvo, Brown, Bonollo and Feely are all cited, as indeed is an article by Edward Griew which the Court has been referred to.

The assistance to be derived from the judgments in those cases in the solution of the present problem is limited by the consideration that the expression "with intent to defraud" in s 234 of the Criminal Law Consolidation Act undoubtedly bears its legal signification. The present task is to determine what that legal signification of the expression is in its bearing upon the issue raised by the appellant's claim of present indebtedness to him.

He then goes on to discuss the meaning of "intent to defraud". Justice White in the same case spends the whole of his judgment, which ranges over many pages, discussing the controversy over the meaning of "dishonesty" and it is unrealistic in the extreme, in my submission, to submit, as my friend did not so many moments ago, that the Court of Criminal Appeal in New South Wales would have been unaware of the controversy when it came to decide Love's Case and Condon.

GUMMOW J: Why does it matter? We have got to construe this Commonwealth statute in the light of principle and the question of whether an intermediate Court of Appeal did or did not understand what had been said by another intermediate Court of Appeal is not going to resolve that question for us.

MR PRIEST: Your Honours, the controversy can only be determined by this Court.

GUMMOW J: Our task is to resolve it, not luxuriate in it.

MR PRIEST: No, your Honour, and that is, indeed, what the Court is asked to do, if the Court pleases.

TOOHEY J: Thank you, Mr Priest. The Court will reserve its decision in this matter. Justice Kirby has just raised the question of bail.

MR PRIEST: Your Honour, I would refer the Court to - - -

KIRBY J: Is the order until determination of the appeal?

MR PRIEST: Yes.

TOOHEY J: Yes, it takes care of itself.

MR PRIEST: It is page 129.

TOOHEY J: We will adjourn until 9.30 am tomorrow.

AT 12.06 PM THE MATTER WAS ADJOURNED