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Supreme Court of Victoria |
Last Updated: 25 May 1998
No. 188 of 1997
JUDGES: TADGELL, ORMISTON AND BUCHANAN, J.J.A
WHERE HELD: MELBOURNE
DATE OF HEARING: 25 March 1998
DATE JUDGMENT
HANDED DOWN: 28 April 1998
CATCHWORDS: Criminal Law - Defrauding the Commonwealth -
Sufficient evidence - Alleged abuse of process -
Delay in formulating charges - Claim that
Commonwealth had taken contradictory stance in
proceedings for winding-up company controlled by
applicant and in prosecuting applicant - No relevant abuse of process - Separate trials.
APPEARANCES: Counsel Solicitors
For the Crown Mr R.J.H. Maidment Mr P.C. Wood
Solicitor for
Public Prosecutions
For the Applicant Mr B.G. Walmsley Wisewoulds
VICTORIAN GOVERNMENT REPORTING SERVICE
167 Queen Street, Melbourne - Telephone 9603 2404
31963
TADGELL, J.A.: In my opinion this application should be dismissed.
I publish my reasons.
ORMISTON, J.A.: I am also of the opinion that the application should be dismissed.
I publish my reasons.
TADGELL, J.A.: Buchanan, J.A., who is sitting elsewhere this morning, authorises me to say that he also agrees that the application should be dismissed.
With his Honour's authority and on his behalf I publish his reasons.
The judgment of the Court is that the application for leave to appeal against sentence is dismissed.
No. 188 of 1997
JUDGES: TADGELL, ORMISTON AND BUCHANAN, JJ.A.
WHERE HELD: MELBOURNE
DATE OF HEARING: 25 March 1998
DATE OF JUDGMENT: 28 April 1998
CATCHWORDS: Criminal Law - Defrauding the Commonwealth - Sufficient evidence - Alleged abuse of process - Delay in formulating charges - Claim that Commonwealth had taken contradictory stance in proceedings for winding-up company controlled by applicant and in prosecuting applicant - No relevant abuse of process - Separate trials.
APPEARANCES: Counsel Solicitor
For the Crown Mr R.J.H. Maidment Mr P.C. Wood
Solicitor for Public
Prosecutions
For the Applicant Mr B.G. Walmsley Wisewoulds
________________________________________________________________________
SC/SD V.G.R.S. 9603 2404
TADGELL, J.A.: I agree with Ormiston, J.A.
I certify that this page is a true copy of the reasons for judgment of Tadgell, J.A. of the Court of Appeal (Tadgell, Ormiston and Buchanan, JJ.A.) of the Supreme Court of Victoria delivered on 28 April 1998.
DATED this day of 1998.
__________________
Associate
ORMISTON, J.A.: This application for leave to appeal against conviction arises out of the conviction of the applicant Allan Keith Paroissien, an accountant, on four counts of defrauding the Commonwealth contrary to s.29D of the Crimes Act 1914. Upon conviction the applicant was ordered to be imprisoned on each of counts 1, 2 and 3 for a term of six months, the term in each case being wholly suspended for a period of two years upon his entering into a recognizance in the sum of $500, and on count 4, although he was originally sentenced to pay a fine of $30,000, that was varied the following day by reducing it to a fine of $10,000.
Each of the four counts, and thus the four convictions, arise out of what was described as a scheme by the applicant and one Andrew Phillip Afif, as director of a company Vibrant Solutions Pty. Ltd. ("the company"), to defraud the Commonwealth of group tax and income tax unpaid by that company and income tax unpaid by Mr and Mrs Afif in respect of the period 1 July 1991 to 30 November 1992. That scheme involved, in broad terms, alterations to certain entries in the company's books and consequentially false statements in the income tax returns of the company and Mr Afif and his wife for the year ended 30 June 1992, and it led also to the forwarding by the applicant of a false Group Employer's Reconciliation Statement for the company for the same financial year. Again speaking in broad terms, the object was to make entries in the books and in the returns designed to demonstrate that a substantial sum of group tax had been remitted to the Commissioner of Taxation when it had not, at the same time seeking to show that Mr and Mrs Afif were entitled to be credited with that group tax, and, secondly, to show that the company had no money to pay such group tax as was outstanding, or which might later be found to be outstanding, in particular by seeking to induce the Commissioner to believe that the company when wound up would have no assets and that he would have no means of recovering any sums sufficient to pay all or any of the outstanding group tax. In furtherance of that objective, loans owing to the company by Mr and Mrs Afif were converted to wages paid by the company. Involved in the scheme, though not forming part of any charge, except to the extent that it proved fraudulent intent, the insolvent company was not to be allowed to be wound up in the ordinary way but it was to be de-registered by the making of representations that the company had no assets, so as to induce the Commissioner, so it was alleged, to take no step to seek recovery of the group tax, or to prevent the de-registration of the company, or to have the company restored to the register thereafter. As it turned out the application for de-registration was frustrated by an application on behalf of the Deputy Commissioner to have the company wound up on the ground of inability to pay debts as they fell due, and a winding-up order was made in the Trial Division of this Court on 7 April 1993.
What has been argued in support of the application for leave to appeal against conviction, however, has primarily been directed to the proceedings both criminal and civil brought by the Crown (in right of the Commonwealth) against Mr Paroissien and the company, respectively, alleging abuse of conduct in bringing the criminal proceedings. One aspect of this first head of argument is a claim that the two accused, Mr Paroissien and Mr Afif, should have been separately tried and that the judge was wrong in not ordering separate trials. A second aspect of abuse of process argued both below and before this Court is the alleged delay in bringing prosecution against the applicant in particular from the time of first discovery, at the end of April 1993 or shortly thereafter, until the laying of charges on 23 July 1996. Incidental complaint is made that the present counts raised different charges from those originally brought. The next head of abuse of process, argued with some pertinacity, which was said to rely on certain statements in Rogers v. The Queen (1994) 181 C.L.R. 251, alleged inconsistency between the Crown's bringing the present counts and the application by the Commonwealth Deputy Commissioner of Taxation to wind up the company in reliance on a notice pursuant to the former s.460(2) of the Corporations Law. That notice asserted that the company owed substantial amounts of group tax whereas it is now said that that debt was not owed and the purported liability formed part of the false representations relied upon as part of the prosecution case. It may be remarked that this ground was not raised at the trial but it is said to be of such significance that it can now be relied upon so as to quash the conviction and stay any further proceedings. The only specific ground going to the evidence or proceedings at the trial proper is a ground which asserted that the jury could not have properly been satisfied beyond reasonable doubt of certain allegations made in counts 1, 2 and 3, including claims of falsity and dishonesty. There are also grounds alleging that the verdicts were unsafe and unsatisfactory and that there had been a substantial miscarriage of justice, but those were expressly stated by counsel not to be intended to raise any issues other than those raised by the other grounds of the application.
Some description therefore will be required both of the surrounding facts and of the history of the proceedings. Some detail is called for, as from their retelling it may be seen why I should say at once that there is in my opinion no substance in any of the grounds and one can only characterise counsel's argument as a valiant attempt to make bricks without straw.
(i) Surrounding Facts and Circumstances
It is first necessary to say something further about what was alleged by the Crown and what is said to be implicit in the verdicts of the jury. The co-accused Mr Afif was a computer programmer and used the company Vibrant Solutions Pty. Ltd. as the vehicle through which he carried on that business, so that his wife was not an active participant in it. From about the year 1989 Mr Afif engaged Mr Paroissien to act as his and the company's accountant but, as I would understand it, primarily for the purpose of preparing tax returns and related book entries.
It seems that in the period leading to the events in question and to the failure of the company, it was Mr Afif's practice not to pay himself or his wife any salary but to remunerate each of them by drawing cash for his and his wife's purposes from the same account as was used to pay the business expenses of the company. It was likewise his practice at the end of each year to allocate those drawings between wages, shareholders' loan accounts and appropriately designated business expenses. Whether this was upon the advice of Mr Paroissien at that time is not clear but it was certainly irregular and the irregularity was reflected in particular in a failure to remit group tax to the Commissioner of Taxation in accordance with the legislation then in place and indeed in a failure to withhold tax instalment deductions by deducting them from each payment of salary or wages. Not unnaturally difficulties arose out of this practice which were reflected at least as early as the year ended 30 June 1991 where it was asserted by the applicant that the salary of Mr Afif and his wife amounted to $20,000 and that $7,000 had been deducted in respect of tax instalment deductions, but only some $1,500 was paid for that year. In fact the reconciliation statement prepared by the applicant showed that $7,000 had been both deducted and paid by the company but it was accompanied by a letter in which the applicant said that, though $7,000 had been deducted, a cheque for $1,500 in part payment of the deductions was enclosed, the balance to be paid "as soon as funds come to hand". So far as I am aware the balance was never paid but this reconciliation statement is not the subject of count 4 nor directly of any other count. What the Crown said it served to show was that, as the matter was never pursued by the Tax Office, this relatively minor deception was of a kind prone to be overlooked by that office, thereby leading to the later and more significant deception.
Thus for the year ended 30 June 1991, apart from irregularities relating to the deduction and payment of group tax, the books of the company were able to be rationally explained even if the salaries of $20,000 to each of Mr and Mrs Afif were reconstructed later from the drawings made by them. However, the latter procedure left behind what, as will be seen, turned out to be a "time bomb" (though thought to be the opposite), so far as the preparation of later books and tax returns were concerned in that the balance of drawings for that year, amounting to $68,156, was attributed to and appeared in the balance sheet as the balance owing under the "shareholders' loan account", i.e. as an asset which the company might recover from Mr and Mrs Afif.
The following year the company was less successful, its total income, by way of computer consultant's fees earned by Mr Afif, falling from $87,931 to $54,610 for the year ended 30 June 1992. So far as one can gather from the general ledger and other books of the company put in evidence, all of this was spent by Mr and Mrs Afif both on company expenses and by way of drawings for their own purposes. Again there was a failure on the part of the company, advised by the applicant, to attribute these drawings during the year to business expenses, salaries and the shareholders' loan accounts, presumably on the basis that all these matters would be put right by appropriate entries by the applicant as the company's accountant at the end of the year. There was no reason to doubt that at 30 June 1992 the company, Mr Afif and the applicant would have dealt with the matters broadly in the same way as they had in the past except for two matters: the company had no money and it had failed to make any deductions whatsoever in respect of the "salaries" for Mr and Mrs Afif. The latter was to pose problems when the applicant came to prepare the books but it was the first that proved the catalyst.
What next happened, apparently before the applicant had turned to preparing the books for the past year and before he had put in the group tax reconciliation statement, was that the Deputy Taxation Commissioner on 25 September 1992 served a notice on the company pursuant to s.460(2) of the Corporations Law seeking payment of some $26,155 which was made up primarily of two sums of unpaid company tax for the years ended 30 June 1990 and 30 June 1991, together with penalty tax. As I have said the company had no money with which to satisfy this demand, so clearly it was at risk of being wound up if it failed to comply with the demand, and Mr and Mrs Afif were at risk that such sums as stood to the credit of the shareholders' loan account (which must have been by then in excess of $68,000) would be demanded by a liquidator if the Commissioner succeeded in having the company wound up, as it must have done if the demand was not satisfied.
The demand was received by the applicant who informed at least Mr Afif, and it was the Crown's case, which one must assume was accepted by the jury, that they then sought ways to thwart the Commissioner's demands and this is what is said to have led to the applicant's exercise in "creative accounting". For this purpose, as the applicant said that he was not an expert in matters of insolvency, at some stage they sought the advice of another accountant, Mr Dunner, but, although the latter was extensively cross-examined by counsel on behalf of the applicant, it would seem that such advice as he gave (and some was certainly given) was in terms of generalities and possibly given after the matters now to be referred to were put in train, or at least the jury must be taken to have reached such a favourable view of his participation in these events.
What was then devised was a scheme whereby the company would avoid being wound up and for that purpose application would be made on behalf of the company to have it deregistered as a defunct company pursuant to s.573 of the Corporations Law. It was thereby hoped, so one may infer, that the Commissioner would lose interest in collecting the debts owed by the company, not merely the unpaid company tax which was the subject of the demand but also any other taxes, including especially any group tax for which no deductions had been made nor any provision made since 1 July 1991. The Commissioner would have to have seen it worth his while both to have the company re-registered and then to pursue it into liquidation upon the basis that there were some assets worth recovering. To achieve the end of an effective deregistration the company had to, and upon the advice of the applicant it seems it did, cease to carry on business and then put itself in a position of being able to say that it had no assets, as was declared by Mr Afif in the notice filed on 15 January 1993. As the company had on paper in September 1992 a substantial asset in the form of the shareholders' loan account, it had to be "stripped away" before there would be a basis for the deregistration application. Other steps were also seen to be necessary to deal with the company's increasing liability for group tax which, as will be seen, had consequential benefits for Mr and Mrs Afif, certainly if the Tax Office took the same passive attitude to non-payment of those deductions as it had in the previous year.
That being the plot, if I may so describe it and presumably as the jury saw it, its working out was reflected in the matters relied upon as the basis of the four counts on the presentment. The order of events is not clear but one may assume that those relied upon for the purpose of count 1, the fraudulent causing of entries to be made in the records of the company, ought to have preceded the preparation and submission of the tax return of the company, which it seems was submitted by computer on 24 December 1992. Although the group employer's reconciliation statement, the subject of count 4, bore date 7 July 1992, it seems accepted that it was not signed or submitted until late in December, as were the individual tax returns of Mr and Mrs Afif. The primary task, however, was to get rid of such sums as were credited to Mr and Mrs Afif in the shareholders' loan account which had reached $68,154 by 1 July 1991. The drawings for the year to 30 June 1992 all had been added to that account which, but for two further steps, would have stood at some $117,652 at the end of that year. The course devised by the applicant was to treat the whole of that amount as "wages credited during year". But this required a second step which threw up the company's failure to make any deductions of group tax or to pay any to the Commissioner during the year. If wages of $118,000 (the rounded sum chosen by the applicant) had been paid during the year, then that would have required the deduction of $82,000 by way of group tax, making the gross sum to be treated as having been paid by way of salaries $200,000. Thus, and to this end, entries were made in the company's books by or at the direction of the applicant which produced the artificial figure of $200,000 "salaries" on the expenses side of the profit and loss account for the year ended 30 June 1992. In consequence the asset consisting of the shareholders' loan account in the sum of $117,652 disappeared and the only asset represented on the balance sheet prepared by the applicant for the year ended 30 June 1992 was a current asset of $88 in two bank accounts.
The falsity of these entries, which formed the primary basis of count 1 on the presentment, did not merely consist in the artificial construction of entries which produced a figure for salaries entirely inconsistent with what had occurred and which gave rise to an obligation which the company had no means to pay, but they also, assuming even that some reconstruction could be made of the drawings for the year ended 30 June 1992, wrongly took into account and used for this purpose the $68,156 already entered in the ledger as an amount owed to the company by way of the shareholders' loan account. Although this sum clearly related to an earlier year, the applicant simply added to it all the drawings (also credited to the shareholders' loan account) for the year ended 30 June 1992 and by a journal entry converted the rounded sum of $118,000 into "wages" for that year. I should add that in respect of the period 1 July 1992 to 30 November 1992 (entries relating to which form part of the allegation of falsity under the first count) drawings of approximately $27,000 appearing as an asset in the shareholders' loan account were also by journal entry converted into wages, and the sum of $40,000, including unpaid group tax deductions, appeared as "salaries" in the profit and loss account to 30 November 1992.
The only other false entries in the books, which need here to be referred to and which consequentially flow from the entries already described, were an item of "net loss" of $149,638 in the profit and loss account and an item of "current liabilities" of $112,270 on the balance sheet, each for the year ended 30 June 1992.
The second count alleges that the applicant defrauded the Commonwealth by submitting to the Australian Tax Office an income tax return for the company for the financial year ended 30 June 1992 which contained four false representations. The contents of the return and their falsity resulted from the steps to falsify the books which I have already described. Those figures from the balance sheet and profit and loss account were alleged to be reflected in the following false entries in the computerised tax return submitted on 24 December 1992: (i) salaries here described as "external labour costs" of $200,000; (ii) the net loss on the profit and loss account, which is consequentially false, is described in the return as a "taxable loss" of $149,638; (iii) total assets of $88; and (iv) total liabilities of $112,270. It may be accepted that each was found by the jury to have been false.
The large sums falsely said to have been paid or treated as incurred by way of wages are also reflected in the matters dealt with in counts 3 and 4, although there is a further element of falsity which is peculiar to them. Count 3 alleges that the applicant was party to a fraudulent submission to the Tax Office of tax returns for both Mr and Mrs Afif for the year ended 30 June 1992 in that they falsely represented that Mr and Mrs Afif were paid gross wages of $100,000 by the company and that each of them had tax instalments of $41,000 deducted by the company from those wages. These allegations are not difficult to pick up from the returns in that the income of each of Mr and Mrs Afif is there said to be $100,000 and there is likewise claimed by way of deduction from tax in each case the amount of $41,000, said to appear in a group certificate. Likewise each was supported, if that be the right word, by the employee's original copy of a group certificate, signed by the applicant, containing the same figures and also bearing the false date 7 July 1992, which was a date when such a certificate might be expected to have been prepared, but which clearly was inaccurate.
Likewise the final count of fraud alleges that the applicant submitted a false group employer's reconciliation statement for the year ended 30 June 1992 which falsely represented both that tax instalment deductions had been made by the company and had been paid to the Australian Tax Office. This statement also bears date 7 July 1992 but was obviously prepared later and received by the Tax Office on 30 December. It contains entries in the two relevant boxes stating that $82,000 was the total of all tax instalment deductions on group certificates and that that was the total amount of "payments made to the Tax Office for deductions" for the year ended 30 June 1992.
The next step in the scheme, as I have earlier stated, was that, with no assets and no operating business, application would be made to deregister the company and such an application was made on 15 January 1993. As the advertised notice stated, at the end of three months from publication of the notice the registration of the company would have been cancelled and the company dissolved. However, the various tax returns, in particular those which asserted that such large payments of group tax had been made in respect of Mr and Mrs Afif's wages, alerted members of the Tax Office to the possibility that the company owed the Tax Office at least $87,500. On this occasion the Tax Office was not prepared to ignore the inaccurate statement, perhaps because no explanation came from the applicant as it had in the previous year. So by 22 January 1993 a further notice under s.460(2) of the Corporations Law was prepared on behalf of the Deputy Commissioner and served on the company for a total of $114,528.62, including sums due as an additional amount and by way of penalty on the outstanding deductions. The company did not dispute the application for winding up which followed, so that the Court ordered the company to be wound up on 7 April 1993, presumably on the basis of inability to pay its debts as and when they fell due.
It should be noted that this step of seeking to have and succeeding in having the company wound up, in consequence of an unsatisfied demand for tax instalment deductions covering the relevant period, is now said to have been an abuse of process inasmuch as the Crown in right of the Commonwealth in the subject prosecution had alleged that no such group tax was payable. So it is claimed that the Crown's course of conduct in alleging that entries made in respect of that group tax fraudulently misrepresented an obligation to pay such tax which did not exist was inconsistent with its earlier claim for unpaid tax which founded the proceedings for winding up the company.
Reliance is also placed on the facts that the s.460(2) notice was served almost the day after those responsible for the investigation learnt of the receipt of the reconciliation statement and that the necessary audit was in an advanced stage at the time the winding up order was made. Mr Afif had been interviewed on 24 March 1993. So it is said, by reason of certain answers given by one member of the Tax Office in cross-examination, that that office was not deceived by the documents. In particular both witnesses from the Taxation Office, Messrs Bennett and Allsop, were and remain of opinion that there "were wages" paid and that group tax has at all times been owing, so that it is argued that that was inconsistent with the main thrust of the Crown case on this prosecution and on this appeal.
(ii) Course of Prosecution and Proceedings
Some narrative of the proceedings leading to the applicant's conviction is also required. It seems likely that Mr Paroissien was a possible suspect as early as April 1993 and he provided some information to the Tax Office at that time. He was not, however, interviewed as a suspect, with a full warning, until 9 May 1994. In that interview with members of the Australian police, apart from admitting his signature on a number of the relevant documents, he asserted his right not to answer and said in each case that on legal advice he did not wish to comment. Consequently most of the interview was not relied upon at the trial of the applicant. On the other hand two interviews with Mr Afif in February 1994 and January 1997 resulted in a number of admissions led at the joint trial.
It seems that, although the officers of the Taxation Department formed the view that both Mr Afif and the applicant should be prosecuted in about May 1994, there was a gap for two years before any charges were laid on 23 July 1996 when the applicant and Mr Afif were charged on summons. So far as the applicant was concerned those charges were, at first, three charges of being knowingly concerned in Mr Afif's defrauding the Commonwealth, together with twelve summary charges relating to the false statements relating to group tax deductions. In respect of the three indictable offences there was a committal hearing in February 1997 upon which the applicant was committed for trial. After a number of mentions a new indictment containing the present four counts was filed and, upon arraignment, the applicant pleaded not guilty.
The trial of the applicant on all four counts, and of Mr Afif on counts 1 to 3, took place in September 1997 over a period in excess of two weeks. At the end of that trial the applicant was found guilty on all four counts and was sentenced in a manner described earlier.
Because of the grounds raised it is also necessary to refer to matters which occurred in the course of the trial. Before the jury was empanelled a number of objections was raised on behalf of the applicant. In the first place counsel sought a permanent stay of the proceedings as an abuse of process due to delay. In support of the application a comprehensive written submission was handed to the learned judge by counsel then appearing for the applicant, a copy of which was provided by way of supplement to the written outline of argument before this Court. In substance it relied on the delays in charging the applicant and in formulating the counts on the indictment to which I have referred, together with certain alleged consequences. It was asserted that real prejudice flowed from the delay because a number of witnesses had difficulty in recalling various matters. They included one officer of the Taxation Department and one Federal agent, as well as the accountant, Mr Dunner. I would understand that similar prejudice is presently relied upon, although precisely what weight should be put upon the observations of these witnesses at the trial will be discussed below. It is sufficient to say they expressed some difficulty in recalling matters of detail. Reliance was also placed then as now upon the destruction of certain original documents. The documents destroyed are remittance advices and receipts and there is no dispute that the particular documents were destroyed after three years in accordance with official guidelines. Again the significance of the particular destroyed documents will be discussed below. After hearing oral argument also from both sides, the learned judge, while accepting the principles laid down in cases such as Jago v. District Court of New South Wales [1989] HCA 46; (1989) 168 C.L.R. 23, held that the delay was not such as to make the proposed trial necessarily unfair, although he expressed some disquiet about the two year delay which did take place.
Then followed a further application on behalf of the applicant for an order that there be separate trials of the two accused, in particular relying upon the fact that Mr Afif had made detailed admissions and was going to be unrepresented at the trial. It was again supported by a detailed written submission but the judge again refused to make the order sought, giving in his ruling no direct reasons, but apparently accepting the prosecution argument that the mere fact that each accused was likely to blame the other was not in itself sufficient to justify severance.
A jury was then empanelled and the trial continued in the conventional way. It is sufficient to say that most of the matters were proved from the documents to which I have referred and which form the basis for each of the counts, as well as other books and records of the company. In substance the Crown said that those documents spoke for themselves and, properly understood, could point only to the guilt of the applicant and Mr Afif. As I would understand it, there was no challenge to the authenticity of the documents and but a faint suggestion, in respect of the missing remittance advices, that other documents not produced in evidence would point to a different conclusion. Mr Dunner, whose advice was sought by the applicant and Mr Afif, did not concede in cross-examination that he had done any more than give general advice and was certainly not responsible for the scheme to write off the company's assets, although he did not deny recommending that steps be taken to deregister the company.
Apart from a number of character witnesses called on his behalf, the only evidence as to the events themselves given on his behalf was that of the applicant. In substance he did not deny the making of the entries in the company's books, the tax returns or the reconciliation statement, but said that he had no fraudulent or dishonest intent in making those entries or taking those steps. He said that he was not an expert in insolvency law and therefore he had sought the advice of Mr Dunner who, according to him, provided detailed advice as to the kind of entries which should be made to enable the company to be deregistered upon the basis of a statement that it had no assets. He also produced a number of stubs of remittance advices which purported to relate to the payment of group tax for the 1992 financial year. One stub purported to show that a remittance for $82,000 was sent on 24 December 1992. It was the actual remittance advices which had been destroyed by the Taxation Office. However, in cross-examination the applicant conceded that, though the remittance advice stub showed $82,000 as the amount paid, in fact no cheque for $82,000 accompanied the remittance advice but he had thought that that would alert the Taxation Office to the fact that the amount which ought to have been deducted had not been paid. The applicant further conceded that he had not written to the Tax Office or taken any other step to alert them to the discrepancy arising from the sending of this advice. The prosecution conceded that the remittance advices had been received and it seemed common ground that no payment of group tax had in fact been made as might otherwise have been expected.
It would seem from the verdicts of the jury on each of the four counts that it did not believe the applicant's version that he had no dishonest intent. From the verdicts the applicant has sought leave to appeal. I have already outlined the grounds of the application above and will deal with them more specifically below.
(iii) Grounds Alleging Abuse of Process
The first two grounds relied upon in this application alleged abuse of process in two differing ways. The first said that "the trial was an abuse of process of the court and should have been permanently stayed". It further asserted that the learned judge erred in not making such an order. The second ground said that the Court should quash the convictions and permanently stay the proceedings as an abuse of process of the Court. There would seem little difference but for one matter: the applicant said that there was an inconsistency in the position of the Crown in right of the Commonwealth inasmuch as it sought and succeeded to wind the company up relying on non-payment of a debt consisting of unpaid group tax and, on the other hand, in prosecuting the applicant and Mr Afif upon a basis which alleged that the relevant entries creating that debt were all fraudulent, thus offending, so it was said, the principle laid down in Rogers v. The Queen (1994) 181 C.L.R. 251 and other more general principles relating to abuse of process. That head of abuse of process and the alleged contradiction were not relied upon at trial and so it is said, in support of ground 2, that this Court nevertheless has power to set aside that which amounts to an abuse of process. The other manner in which the applicant sought to claim abuse of process arose out of the alleged delay which was a matter relied upon but rejected by the learned trial judge.
It is preferable then, as counsel sought to do in argument, to deal with that aspect of ground 1 which was raised at the trial. Ground 1 also contained a series of particulars in four sub-paragraphs. The first three (paras.1.1 to 1.3) related to the Crown's allegedly contradictory stance but para.1.4 seems to be confined solely to matters of delay. Thus the particulars in ground 1 as to delay read as follows:
"The applicant could not, and did not, receive a fair trial. There was an unexplained, and unacceptable delay in charges being laid against the applicant, causing incurable unfairness to the applicant in his defence of the charges, as a result of :
(i) seriously impaired memory of events by witnesses,
(ii) the loss or destruction of original documents, and
(iii) the disparate and contradictory nature of the Crown allegations at various stages prior to and during the trial."
These matters might, in other circumstances, have pointed to the kind of unfairness which delay may produce and which may lead to the staying of criminal proceedings. However, upon careful consideration there is nothing in them and the ground should be rejected.
There can be no doubt that there was some delay, and delay of a kind which can fairly be criticised, in the bringing of these charges against the applicant and his co-accused. The length of delay, however, is not of a kind which would ordinarily result in a stay being granted unless there was some matter which led to irremediable prejudice. Where fraud is involved much depends upon when it can fairly be said that the fraud has been discovered, since the object of the miscreant is ordinarily to try to hide the falsity or other fraudulent aspect of his behaviour. Here it seems likely that the Taxation Office had some inkling of the applicant's participation as early as April 1993 and they certainly interviewed him in May 1994, though gaining little information from him apart from acknowledgement of his participation by way of signing the relevant documents. The two years' delay thereafter may be criticised but it was a sophisticated scheme and the precise role of each of the participants had to be explained very carefully to this Court, as undoubtedly was done in the course of the trial.
However, the alleged prejudice in the end amounted to very little. Undoubtedly the memory of a number of witnesses was impaired to a degree but none could properly be characterised as having a "seriously impaired memory", as was asserted on behalf of the applicant. As is not unusual, the professional witnesses, i.e. those who came across these matters in the course of their day-to-day activities, had some difficulty in recalling precisely every matter which was put to them at the trial but there was nothing to indicate that that difficulty in recalling matters was any greater than would have existed had the matter been brought to trial two years earlier. Moreover, the particular witnesses' evidence was not for the most part of great significance. As previously stated, the case largely proved itself from the documents tendered. The witnesses from the Australian Taxation Office merely provided background as to how the matter was discovered and ultimately brought to trial: they did not speak from their own knowledge of any of the events. Mr Dunner's position was of more significance but it is by no means obvious that any failures in his recollection disadvantaged the applicant. It was the applicant who was asserting that Mr Dunner had instructed him in the ways necessary to deregister the company and the applicant's evidence was the more likely to have been believed in the absence of any detailed denial on the part of Mr Dunner. At any event such lack of recollection was fairly the subject of comment by the trial judge.
It was also said that certain documents had been destroyed, namely the original remittance advices. This in the end turned out to be of no consequence. The stubs or counterfoils which were tendered supported only a view that the reconciliation statement was fraudulent. If anything one of them exacerbated it, because it purported to state that $82,000 had been remitted when in truth it had not. That much was conceded in cross-examination by the applicant and it was never suggested to the contrary; indeed, it was never in issue that these documents were sent to the Taxation Office. There was no prejudice because their contents could not in the circumstances have helped the applicant.
Finally it was asserted that the prosecution had changed its mind in the bringing of charges against the applicant in that it originally sought to charge him only as a principal in the second degree as being knowingly concerned in offences of defrauding the Commonwealth committed by Mr Afif, but at the end charged him with participating in and being responsible for the fraud in terms of the four counts on the indictment. No doubt the applicant wished to consider his position when the indictment was amended but there is no allegation that any necessary adjournment was refused and no application seems to have been made. There is thus no basis for the claim of abuse of process based on delay.
(iv) Alleged Abuse of Process - Contradictory Stance of Crown
This ground for supporting a claim of abuse of process has, upon analysis, even less substance. The particulars (paras.1.1 to para.1.3) show sufficiently the facts which are said to support it. First they refer to the undisputed fact that a notice was served under s.460(1) of the Corporations Law on 22 January 1993 and that the Australian Taxation Office relied upon and proved in the subsequent winding up proceedings the fact that the company paid wages to Mr and Mrs Afif from 1 July 1990 to 30 June 1992, that it made certain deductions from those wages, but failed to remit those to the Australian Taxation Office, thereby creating the debt which was then relied upon. Secondly, they referred to the Crown allegations at the trial that the applicant dishonestly caused entries to be made in the financial records of the company purporting to extinguish assets of the company and altered the nature and legal effect of certain transactions, in particular by altering loans from the company to Mr and Mrs Afif to wages paid to them, as well as by falsely representing that those wages had been paid, contained in both the company's tax return and in the income tax returns of Mr and Mrs Afif. They also referred to the false representation alleged against the applicant relating to the company's deducting the tax instalments relied upon for the purposes of count 4. So para.1.3 asserted:
"In consequence of these matters it can be observed that the facts and circumstances relied upon by the Australian Taxation Office, in its proceedings to wind up the company, are contradictory to, and defeated by, the facts and circumstances sought to be proved against the Applicant in his trial. Accordingly, any verdict upon such allegations could not be accepted as incontrovertibly correct."
For the purposes of this argument the applicant relied upon a passage in the judgment of Deane and Gaudron, JJ. in Rogers v. The Queen at 273 where, in speaking of the Latin maxim res judicata pro veritate accipitur, it was said:
"That maxim gives expression to a rule of Roman law which has since been recognised as part of our common law. It expresses the need for decisions of the courts, unless set aside or quashed, to be accepted as incontrovertibly correct."
So it was said that that principle, in accordance with what was otherwise there said, was not only fundamental but also essential for the maintenance of public respect for and confidence in the administration of justice.
Doubtless this principle, and the related principles described in that judgment, should in the proper context be seen to be fundamental, but it must be remembered that they were expressed in the context of criminal proceedings in which a matter previously resolved in favour of the accused was sought to be reopened, and in circumstances where a majority of members of the High Court were attempting to replace the principles of issue estoppel with what they perceived to be some broader but more easily applicable principle which they brought under the rubric of abuse of process.
In the present case, the assertion that such principles are applicable so as to require the staying of these proceedings against the applicant has only to be stated to be seen to be inappropriate. Allowing for the breadth and flexibility of these newly stated principles, one must understand that there are rational limits which must be placed upon them. The present is a case where a few words taken out of context have given rise to a complete misconception.
To dispose of this misconception it is necessary to examine some later authorities referred to in argument. For this purpose I must confess some complicity, for I was party to a judgment in which again principles relating to abuse of process were expressed in broad terms, entirely appropriate for that case, but capable of misuse if their recognised limits were not understood. In R. v. Young [1998] 1 V.R. 402 this Court expressed the view (at 422) that:
"It is not merely the possibility that the evidence might 'tend to overturn' a verdict already entered but the likelihood that the jury will be invited to reach conclusions directly contrary to the effect of the acquittal, albeit for the purpose of determining guilt on another charge, and it is that sort of attack by a sidewind which is seen to be contrary to the requirement that a properly entered verdict must be treated as 'incontrovertibly correct'."
The principle there stated, perhaps unwisely, omitted any reference to the party who might rely upon any properly entered verdict. Later in R. v. Pennant (Court of Appeal, 12 September 1997, unreported) this Court had to consider yet another claim asserting abuse of process where the verdict or decision relied upon was that of a magistrate in acquitting a co-offender upon a slightly different charge from that which was the subject of the later trial. In rejecting the argument Hayne, J.A. said at p.2:
"Thus, there is, in my view, no abuse of process in prosecuting A simply because a prosecution against B has failed (at least where the charges against the two accused are unrelated) even if the two prosecutions require inquiry into the same general factual subject matters."
His reason for using the word "unrelated" appeared immediately thereafter where he said that he need not and did not decide what conclusion should be reached if two accused were said to have acted in concert. Phillips, J.A. expressed similar conclusions, and I said at p.11:
"The reasoning of all members of the majority makes clear that it is a previous determination in favour of the accused which is essential to the application of abuse of process in this context. As Mason, C.J. said (at p.256), in holding that a stay should be ordered, 'the tendering of the confessions by the prosecution was vexatious, oppressive and unfair to the appellant' in that he was thereby exposed to relitigation of an 'issue [which] had already been conclusively decided in [his] favour ...' (emphases added)."
I there sought to explain why a limitation of that kind should also be read into the expressions of principle of Deane and Gaudron, JJ. For this purpose it may be useful to read the whole of what appears at pp.9-17 of my judgment. It is sufficient to say that the conclusions expressed appear to me to be consistent with the judgment of Mason, C.J. in Rogers and Barwick, C.J. in R. v. Storey [1978] HCA 39; (1978) 140 C.L.R. 364 at 372, which I believed then and still believe to be wide but appropriately limited statements of general principle applicable to this kind of abuse of process.
The present case is far removed from any reasonable application of those principles. Essentially the winding-up order was not a finding binding any party, strictly understood, to the present proceedings, but, even assuming that the Deputy Commissioner of Taxation and the Crown in right of the Commonwealth in a prosecution may be treated as the same, the decision otherwise, and critically, did not apply in favour of the same person. First, if there were a finding, then that finding affected the company and there is no relevant relationship with the applicant which would entitle him to rely upon it. Secondly, it related to proceedings in which the critical issue was the inability of the company to pay its debts as they fell due, the notice under s.460 being merely a means to an end in that non-compliance with it resulted in there being a deemed inability of a kind sufficient to support such an application. Be that as it may, the decision then taken was taken in circumstances which were not shown to have been informed by knowledge of the fraud now alleged and proved against the applicant. There could be no basis in principle, at least where the connection was so tenuous, for saying that a prosecution must be stayed by reason of an act taken or an allegation made at a time where it is not shown that that fraud was known to any party responsible for the present prosecution.
This ground of the application must certainly fail. I would reiterate only that care should be taken in reading what has been said in the judgments to which I have referred (Storey, Rogers, Young, Pennant). They stand for broad principles but they are to be understood in the context of relitigation of issues of an identical or related kind and are not to be misused in circumstances such as these.
(v) Separate Trials
The argument then proceeded to ground 6 wherein it is complained that "the learned trial judge erred in law in not granting a separate trial to the applicant". Particulars were given to the effect that the co-accused was unrepresented, that he stood mute and that he had made a number of out-of-court admissions implicating the applicant in circumstances where those admissions could not be effectively challenged or tested and the jury could not be expected to obey directions as to their limited use. Each of those matters was raised before the trial judge, other than the fact that Mr Afif had stood mute, which at that time could not be known. For myself I see no reason to think that the judge was wrong in rejecting the application, nor do I see any ground for thinking that the end result was unfair to the applicant, having regard to understood authority.
There is always a tension to be resolved in applications of this kind, for there must be some prejudice flowing from the fact that one accused makes admissions and another does not, but it is almost invariably left to the good sense of the trial judge to give detailed and forceful warnings as to the use to which those out of court admissions can be used. It might be said that those difficulties could be exacerbated where the other accused is unrepresented, but on the present application the applicant's counsel conceded that in fact no difficulties in fact occurred. On this application counsel pointed to the fact that applicant's counsel had been forced to cross-examine first because of the lack of representation for Mr Afif, but that again seems of small moment inasmuch as counsel could not point to any specific difficulty which arose and flowed from that ruling.
There remained effectively only the inherent disadvantages of contesting a trial in which effectively each party blamed the other and one had made out of court admissions of a kind which firmly implicated the applicant. Counsel referred to cases such as Jones and Waghorn (1991) 55 A.Crim.R. 159, but he did not distinguish any feature in this case which made it appropriate that new trials should be ordered. That case and its well-known predecessors recognise fully the need to have joint trials unless the prejudice is likely of a kind which cannot be remedied. The fact that one blames the other has never been seen to be a prejudice which in the ordinary course cannot be remedied by appropriate directions. In the present case no matter referred to this Court required such a severance and this ground must be rejected.
(vi) Alleged Want of Evidence
Ground 5, which was also said to be the basis for grounds 3, 4 and 7 (which alleged unsafe and unsatisfactory verdicts, unsupportable verdicts and a substantial miscarriage of justice, respectively) asserted that there was no evidence upon which the jury could properly have been satisfied beyond reasonable doubt that:
(i) group tax for the year ended 30 June 1992 had not been deducted, as distinct from paid by the company;
(ii) the representations in the company's tax return for the year ended 30 June 1992 were false;
(iii) the income tax returns for Mr and Mrs Afif for the year ended 30 June 1992 falsely represented that tax instalments of $41,000 had been paid by the company;
(iv) the conduct of the applicant in respect of each of the counts was dishonest according to the required standard.
It should be said immediately that no separate argument was addressed to the Court as to proof of dishonesty, presumably having regard to the decision of the High Court in Peters v. The Queen [1998] H.C.A. 7, handed down on 2 February 1998. In the end, because of the objective facts proved and those facts which are merely inferences from the nature and form of the documents, many of these points came down to technical failures to prove the Crown case. For example, and this was one which was not the subject of any specific ground, it was said that count 1 had not been proved because, though it was alleged that the company through the applicant had "purported to extinguish the assets", it had not "purported" to do so because it had achieved that end. The point of the objection eludes me. Then on grounds 2 to 4 it was conceded that all the representations in issue were made but it was said that they were not made falsely. So it was said that one had to look elsewhere for evidence of that falsity. But the objective facts as analysed above make clear the falsity and it was for the jury to decide whether the Crown had made out dishonesty in all the circumstances. Having regard to the fact that it had heard the applicant give evidence, one may fairly suggest that what it had heard provided little basis for concluding that he was not aware of what each of the transactions was intended to and did effect. Then on count 4 it was said that the Crown had not proved that the deductions for group tax had not been made because two of the officers in the Taxation Office still thought that those deductions had been made so as to support the claim for recovery thereof. Whatever "deduction" means in this context, the objective evidence of this allegation was overwhelming that there were no such deductions made and no money at all paid in satisfaction. It was contended that it had not been established, in relation to the deductions, that they had not been made, even if it were shown that they had not been paid over. If the facts had been otherwise and there had been regular payments of salary, there may have been something to this ground. In truth the salary payments had been "constructed" subsequently from the shareholders' loan account and the drawings entered in it. There had been no attempt by the company to make the required deductions, there was no money which might be said to represent the deductions and, finally and most importantly, there was no objective sum by way of annual, monthly or weekly salary for each of Mr and Mrs Afif from which it might be concluded that the appropriate salary had been reduced by making payments to them of a lesser amount, thus effectuating a deduction for the purposes of the Income Tax Assessment Act. No such evidence was forthcoming. The evidence of failure to deduct was on the materials before the Court not refuted and there is no substance in this ground.
(vii) Grounds 3, 4 and 7
Counsel for the applicant said that he did not intend to raise any other questions on these grounds than those which had been argued in support of the grounds already discussed. For reasons already expressed none of these grounds have been made out.
In my opinion and for the reasons stated this application must be dismissed.
I certify that this and the preceding 22 pages are a true copy of the reasons for judgment of Ormiston, J.A. of the Court of Appeal (Tadgell, Ormiston and Buchanan, JJ.A.) of the Supreme Court of Victoria delivered on 28 April 1998.
DATED the day of 1998.
____________________ Associate
BUCHANAN, J.A.: I agree that the application should be dismissed for the reasons stated by Ormiston, J.A.
I certify that this is a true copy of the reasons for judgment of Buchanan, J.A. of the Court of Appeal (Tadgell, Ormiston, and Buchanan, JJ.A.) of the Supreme Court of Victoria delivered on 28 April 1998.
DATED the day of 1998.
.........................
Associate
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