Application Refused: Crown's Case Adequately Particularised

The court dismissed an application by defendants arguing that the Crown's opening statement misled them. The court found that the Crown's case was adequately particularised over several years, and thus the application was refused.

Supreme Court New South Wales

Medium Neutral Citation: R v [NAME]; R v [NAME] [2015] NSWSC 1299 Hearing dates: 4 September 2015 Date of orders: 07 September 2015 Decision date: 07 September 2015 Jurisdiction: Common Law - Criminal Before: Harrison J Decision: Application refused Catchwords: CRIMINAL LAW – particulars – where detailed particulars of allegations provided over several years - Crown opening – whether Crown restricted or limited its case in opening to the jury – whether Crown case as opened different to case led at trial – whether [NAME] provided with adequate particulars in such circumstances Cases Cited: [NAME] (1987) 27 A Crim R 438 Category: Procedural and other rulings Parties: [NAME] ([NAME]) [NAME] ([NAME]) Representation: Counsel: [redacted] [NAME] with [NAME] ([NAME]) P Bruckner with R Johnson ([NAME])

Solicitors: [redacted] [NAME] ([NAME] and [NAME]) File Number(s): 2009/237556;2009/237509 Publication restriction: Nil

Judgment 1. HIS HONOUR: The [NAME] have each applied to restrict or confine the Crown case to misrepresentations referred to by the Crown in the Crown's opening. The burden of the application is that each of the [NAME] has been misled by the scope of the opening to believe, and to conduct their respective cases so far based upon the belief, that the Crown had abandoned so much of its case as had not at that time specifically been mentioned. That is said to be so notwithstanding the extensive anterior written particularisation of the Crown case over some years preceding the commencement of the trial. The Crown's response to the application has been to contend that the opening presented to the jury was no more and no less than a summary of the case that the jury might be expected to hear, and that detailed reference to the precise terms of every representation upon which the Crown relied in support of its case was not, and should not be taken to have been, a modification of the case that has long been known to the [NAME] and their legal advisers. For the reasons that follow, I consider that the Crown's position on this application is unassailable and that the application should be refused.

Background 1. The Crown presented an indictment charging: "Between about 24 May 2001 and about 30 December 2002 at Sydney in the State of New South Wales and elsewhere [the [NAME]] did conspire with each other and divers other persons with the intention of dishonestly influencing a Commonwealth public official, namely the Commissioner of Taxation, in the exercise of his duties as a public official."

1. In brief compass, [NAME] were respectively the legal and accounting architects of tax minimisation schemes promoted for the 1999, 2000 and 2001 tax years. Although the schemes had various differences in each of these years, they were in essence all designed to provide participants with a tax deduction in the relevant year of $500,000 for an initial cash outlay of only $125,000 or 25 percent of the proposed total contribution. The money was to be used for the production of whisky in a Scottish distillery. The unpaid sum of $375,000 in each case was to be financed by a loan secured by promissory note payable in twelve years and drawn on what was described as a finance company by the name of [COMPANY].

2. In the years in which the schemes were current and thereafter, [NAME] became engaged in discussions with the Australian Taxation Office about them. Participation in the schemes had been promoted upon the basis of the tax deductible status of both the cash contributions as well as the loan funds. In the events that occurred, the Australian Taxation Office did not issue a favourable Product Ruling for any of the schemes and declined to acknowledge that the contributions to the schemes were deductible. The Crown alleges that in the course of what amounted to negotiations between the Australian Taxation Office on the one hand and [NAME] on the other hand concerning the refusal to [NAME] tax deductible status to the participants' contributions, [NAME] conspired between themselves and with others to make statements to the Commissioner or his representatives that were false and dishonestly intended to influence the Commissioner.

3. The relevant Crown Case Statement was filed on 1 April 2011. It contains as many as 48 alleged misrepresentations between [316] and [363]. Some of these are no longer pursued.

4. On 19 March 2012 the Crown prepared and provided to the [NAME] a document entitled "Outline of the case the Crown will present at trial." Paragraphs 1 to 10 inclusive of that document are as follows: "Object and substance of the conspiracy 1. Essentially the Crown case concerns an agreement to make false representations to tax officers in the course of an audit by the Australian Taxation Office ('ATO'). 2. [NAME] and [NAME] together with [NAME] and [NAME] entered into an agreement to make false representations to officers of the ATO with the intention of dishonestly influencing them to approve and accept deductions claimed in the 1999, 2000 and 2001 income tax returns of taxpayers who had participated in whisky schemes in these years. The representations were to convey false and misleading information regarding: (i) the association of the [NAME] with and the relationship between the entities involved in the schemes; (ii) [COMPANY] and (iii) [COMPANY]. The tax audit in which the misrepresentations were made 3. To establish the significance and context of the alleged misrepresentations the Crown will prove the nature and details of the tax minimisation schemes which came under investigation by the ATO in the period 2000-2003 inclusive.

4. Annexed to this outline are three diagrams of what the Crown intends to prove in this regard. (NB: These diagrams are revised versions of similar diagrams provided to the defence on 3 February 2012. They are in draft and may be amended in minor respects prior to the commencement of the trial).

5. To prove these transactions the Crown intends to tender a folder containing transaction documents for each of the three years in which the schemes were implemented, which support the description of the schemes shown in the diagrams.

6. These transaction documents have been examined by [NAME], of the ATO, who will be a witness at the trial. [NAME] has also analysed transaction documents which record the funds flows and the quantity of whisky actually produced each year. The Crown does not intend to tender all of the documents examined by [NAME], just sufficient to support his conclusions and to verify the correctness of the diagrams. The subjects of the misrepresentations 7. The Crown will prove that when the ATO was investigating the deductibility of the participants' contributions to these schemes, in particular during the calendar years 2001 and 2002, information was sought from both [NAME] and [NAME].

8. The Crown expects to prove that they conspired with each other (and other persons) to provide false and misleading information to the ATO auditors, particularly [NAME].

9. The case will endeavour to prove that the conspiracy was directed to the making of misrepresentations in relation to the following two companies (whose status and role were of importance to the ATO auditors in the conduct of the investigation). In particular the conspiracy concerned misrepresentations about the following aspects of the companies: (i) [COMPANY]: (a) whether it was a bona fide finance company; (b) whether it was independent of the promoters and managers and of the schemes; (c) whether it was independent of other entities involved in the schemes. (ii) [COMPANY]: (a) the nature of the company's undertaking and activities and its background; (b) whether it was independent of the promoters and managers of the scheme.

10. These two companies were of importance to the ATO in relation to the determination of how the provisions of the Income Tax Assessment Act 1936 (C'th) and/or the 1987 Act applied and in particular whether the provisions of Part IVA of the 1936 Act applied."

1. Paragraph 11 of that document then proceeded to outline a very detailed particularisation of the several overt acts that are alleged by the Crown to constitute the conspiracy. Each of these particularised acts is cross-referenced to a nominated paragraph in the Crown Case Statement. There are 26 such acts particularised in this way. It is impractical to include the detail of this paragraph in these reasons.

2. Following receipt of that document the Crown also provided particulars of the basis upon which it asserted that the alleged representations referred to in paragraph 11 of its outline were said to be false. Those particulars of falsity were provided in the following terms: "Particulars of falsity In relation to [COMPANY] ('Chambers'): (a) the representations conveyed the false impression that Chambers was a financier, whereas in fact Chambers: (i) was not a financier; (ii) had no assets; (iii) had no funds under management; (iv) had no assets under management; (v) had no ability to fund the loans; (b) the representations conveyed the false impression that Chambers was based in the United Kingdom and was similar to a merchant bank, whereas in fact Chambers: (i) was a shelf company incorporated in the British Virgin Islands; (ii) was not independent of other parties to the arrangement; (iii) did not operate any business out of the address shown on its letterhead; (iv) had no assets; (v) for much of the period relevant to the charge, had no bank account; (vi) had no funds under management; (vii) had no assets under management; (viii) had no ability to fund the loans; (c) the representations conveyed the false impression that Chambers was independent, whereas in fact Chambers: (i) was not independent of other parties to the arrangement; (ii) was managed by [NAME] and others at the behest and the direction of the [NAME]; (d) the representations conveyed the false impression that Chambers provided information requested by the ATO as part of its audit, whereas in fact the [NAME] procured and drafted the information contained in Chambers' responses to the ATO; (e) the representations conveyed the false impression that Chambers would provide finance equivalent to 75% of each participant's commitment, whereas in fact Chambers: (i) did not contribute 75% of each participant's commitment; (ii) did not contribute to the cost of production of the whisky; (f) the representations conveyed the false impression that Chambers was involved in many international transactions funded in a range of different ways and provided cash funding and funding by way of negotiable instruments, whereas in fact Chambers: (i) was a shelf company incorporated in the British Virgin Islands; (ii) had no assets; (iii) had no funds under management; (iv) had no assets under management; (v) had no ability to fund the loans; (vi) did not contribute 75% of each participant's commitment; (vii) did not contribute to the cost of production of the whisky; (g) the representations conveyed the false impression that Chambers contributed funds that were used towards the cost of the raw materials, commissions and all other expenses of the schemes, whereas in fact Chambers: (i) had no assets; (ii) had no funds under management; (iii) had no assets under management; (iv) had no ability to fund any loans; (v) did not contribute 75% of each participant's commitment; (vi) did not contribute to the cost of production of the whisky; (vii) did not advance borrowed funds to the venture; In relation to [COMPANY] ('[NAME]'): (a) the representations conveyed the false impression that [NAME] was independent of all other parties, whereas in fact [NAME]: (i) was not independent of other parties to the arrangement; (ii) was managed by [NAME] of [COMPANY] in Hong Kong at the behest and the direction of the [NAME]; (b) the representations conveyed the false impression that [NAME] provided information requested by the ATO as part of its audit, whereas in fact the [NAME] procured and drafted the information contained in [NAME]'s responses to the ATO; (c) the representations conveyed the false impression that [NAME] had know-how and expertise in the production of whisky, whereas in fact [NAME]: (i) was a shelf company incorporated in the British Virgin Islands; (ii) was utilised in the scheme at the request of the [NAME]; (iii) was managed by [NAME] of [COMPANY] in Hong Kong at the behest and the direction of the [NAME]; (iv) did not possess the know-how or expertise to arrange production of whisky; (d) the representations conveyed the false impression that [NAME] had agreed to have the initial cost divided into a cash component and to use a funding arrangement in order to increase the production of whisky that would otherwise have been possible, whereas in fact: (i) no loan funds were contributed towards the production of the whisky; (ii) no loan funds were advanced to the venture."

1. By comparison with these details and particulars, the Crown opened the case to the jury in terms that included the following: "The representations relate to a number of subject matters. I will tell you about them now. They will probably make a little bit more sense a little later when I show you some documents including some diagrams that include company names and flow charts which show the relationship between these companies but to give you the headlines now so you can see where we are going with this case, the headlines really are that the misrepresentations related to two companies and so there were effectively two groups of representations. Thirdly, representations in relation to the independents of the companies and individuals involved in these whiskey schemes so in effect three categories of representations. The first of those relates to a company called [COMPANY] and I expect you will hear that mentioned numerous times during this trial. The representations in relation to [COMPANY] were whether or not that company was a bona fide finance company. Bona fide is another way of saying real legitimate finance company. In addition there were representations made about whether or not [NAME] was independent of [NAME]. The promoters of these schemes, independent of some of these companies who you see on the flow charts are the managers of the schemes and independent of the other entities involved in these Tax Minimisation schemes. So in effect was [NAME] a finance company and, secondly. Was it independent? The second one relates to [NAME]. [NAME]. The representations in relation to this company again relate to whether or not it was independent of the promoters and managers of these schemes and, secondly, the nature and background of that company's business. Thirdly, the third general category of representations, is whether or not the other entities involved in these schemes and there are a number of companies both here, in Hong Kong, and registered in the British Virgin Islands, whether or not those entities were all independent of one another. … [NAME] also told the Tax Office in his correspondence following requests for information about [NAME] he said in his letter [NAME] provided vendor finance for the project and that that finance was for the payments due to [NAME]. In other words he represented the finance component was paid or to be paid to [NAME]. The Crown says that is a representation you would have seen from the document that is showing the flow of funds in red going to Scotland but none of the finance funds going to Scotland that that representation was not true. Other things were said by [NAME] in this letter and you will eventually see that when it goes into evidence, I am not omitting those now because it is not important, but I am highlighting the most significant parts. … You will see paragraph 41 that once [NAME] became aware of an audit in relation to the affairs of some of his participant taxpayers he wrote a letter on 5 June and that letter, you will see towards the top of page 9, has some relevant representations in it about the finances controlled by an independent third party. I expect the evidence will establish that [NAME] were in fact the controllers of [NAME] and in fact there was some evidence that they drafted letters on behalf of [NAME]. He also represented these finance arrangements were at arm's length, you will see that in B, the financing was not between related parties, there was no connection between the parties and relevantly in E, almost all of the contribution of the participants was expended on production. Those terms 'expended on production', can I suggest, when compared with the agreement, production refers to production of whiskey, that is almost all of the $500,000 misrepresented went into whiskey. I am not going to take you through all of these paragraphs, some are less significant than others but can I take you to paragraph 43 where we see [NAME] first dealing with the Tax Office. He sent an email to [NAME], the auditor, commenting on a draft report. You see amongst other things [NAME] said [NAME] was controlled independently. He told the Tax Office that that company had expertise into the whiskey industries and dealing with distilleries. Paragraph C of paragraph 43, you will see [NAME] represented [NAME] agreed to have the initial cost and that term is defined in the agreements to be the $500,000, the total amount, divided into two, that is cash component and to use the funding agreement. Relevantly, you will see [NAME] told the Tax Office this was done to increase the production. "Production", can I suggest to you, once you have seen the documents, can only be a reference to producing whiskey, in other words he was representing that the cash component and the finance both went to the production of whiskey. The Crown says that was a misrepresentation. No finance found its way into whiskey barrels. In D, the funding agreement was for the purpose of significantly increasing production. Representations in E about control and in F relevantly that [NAME] was independent and linked to other parties only by contractual arrangements. … To paragraph 59, on 5 November 2002, [NAME] prepared a letter that went to the Tax Office that referred, the Crown says, relevantly to the costs of raw materials in the production of whiskey. Commissions and all other expenses were paid for using the funds both contributed in cash and using the financing arrangement. I emphasise now and when you get the document, I will emphasise again, the cost of raw materials and other things were paid for at least in part using the financing arrangement. With respect, that representation was false because the financing arrangement did not contribute at all to any raw materials as you will have seen from the flow chart which showed only the cash component, the 25% found its way to [NAME] also indicated it was incorrect the funds borrowed were not available to be advanced to the venture. … All of which, the Crown says, at the time they made the representations, they knew were untrue. The Crown also says that [NAME] involved others in their dishonesty including [NAME] and [NAME], who they asked to sign letters on the letterhead of [NAME] and others to make representations on their behalf they knew were untrue and would be used to mislead the Tax Office. … The Crown case is that you can infer from their conduct, from their letters, from their dealings with the Tax Office that they were acting together and that they were acting in accordance with this agreement to send misleading information to the Tax Office. … In addition to those communications, the Crown will rely on the knowledge that [NAME] had from their dealings with the Tax Office that the Tax Office would play some significance in these issued, that they were asking these questions about the finance, about [NAME] for a reason relevant to the audit, in other words [NAME] knew that these questions were important to the Tax Office and that their answers had to be honest. In that context, can I suggest to you it is important that you take into account [NAME] are people of some sophistication."

1. The particulars upon which the Crown relies were also referred to in other documents exchanged with the legal representatives for [NAME] but none is critical to the present analysis.

Submissions of [NAME]

1. The burden of the proposition advanced for [NAME] is that the opening failed to refer to some particulars in terms or at all or that it failed to make clear that the references that were in fact made to arguably incorrect and therefore misleading statements were all to be relied upon as part of the Crown case in any event. In support of that argument, reliance was placed upon [NAME] (1987) 27 A Crim R 438 at 439ff: "More importantly, the way in which the conspiracy was ultimately left to the jury by the trial judge was not how the case was apparently opened by the Crown Prosecutor… An [NAME] person is entitled to have identified with precision the transaction upon which the Crown relies; he is entitled to be apprised not only of the overt acts alleged but also the legal nature of the charge against him and the particular act, matter or thing alleged as the foundation of the charge: Johnson v Miller (1937) 59 CLR 467 at 489, 495, 501-502. A charge of conspiracy does not differ in this respect from any other charge. The [NAME] is unable properly to plead to a charge unless he knows what is the precise case which is the basis for the charge preferred against him…He can hardly plead to a charge of conspiracy unless he knows precisely with whom it is going to be alleged that he conspired and the scope of the conspiracy alleged. It has long been considered a cardinal requirement of the criminal law that an [NAME] should be given proper particulars, and the courts possess an inherent authority to require the Crown to furnish particulars of the charge… In a conspiracy case, each [NAME] is entitled to particulars of the persons with whom it is going to be alleged that he conspired and as to the specific scope of the conspiracy alleged. Even where the particulars are not sought, it is nevertheless incumbent upon the Crown Prosecutor to give those particulars in the course of his opening address – at the latest."

1. The [NAME] contended that it would lead to a miscarriage of justice if the Crown were now permitted to rely upon matters not opened on as matters about which the [NAME] are alleged to have made deliberately false representations with the intention of influencing a public official.

Crown submissions 1. The Crown emphasised that detailed particulars of representations have been provided over the course of the six year history of these proceedings. They have been unambiguous and consistent. The outline referred to at [6] above cannot be read in isolation. The document as a whole makes it clear that the categories of representation to which it refers are all separately relied upon and that the introductory summary does not, and is clearly not intended to, derogate from its operative effect that is otherwise apparent from reading it.

2. The Crown submitted that there could never be grounds for complaint that the Crown had failed in any relevant respect to particularise the case adequately or sufficiently. He submitted that the case had in fact been particularised '"to within an inch of its life."

3. The Crown also submitted that there had been no departure from the particularised case in the course of the opening. The Crown opened to the jury on the basis that the representations fell into groups according to their corporate subject matter. This was clear at least from the written aide memoire provided to the jury in the course of the opening to which the Crown referred and to which the [NAME] did not object. The Crown emphasised that it did not expressly or by implication limit itself in opening the case to only some of the particularised representations. So much is said to be clear from the transcript extracted above.

4. The Crown contended in these circumstances that there could be no genuine doubt about the case that the [NAME] had to meet. In any event, both [NAME] and [NAME] from the Australian Taxation Office were cross-examined by counsel for the [NAME] in detail upon the credit facilities, the promissory notes and the drawing requests. If representations concerning any of these issues were thought to be outside the particularised case it was never suggested to these witnesses that this was so. The issue of whether or not and when the obligation fell upon [COMPANY] to pay money secured by the promissory note was squarely raised in that cross-examination. That suggested that the [NAME] were well aware of the significance and relevance of representations touching these issues.

Disposition 1. In my opinion there is no answer to the Crown's submissions. The Crown case has been particularised in exquisite detail over a long period. Documentary refinements of the allegations over time have only served to isolate and confine them with equal clarity. If the Crown opening created any surprise for the [NAME] it was slow to materialise in the course of the trial and only became manifest in the terms of the present application.

2. Mok and related cases support principles that are not in doubt. The facts of the present case do not, however, demonstrate any breach of or departure from those principles. I did not personally get an impression in listening to the Crown's opening that the case being presented was in any sense a departure from that which the Crown case statement had outlined in very explicit terms. The conduct of the case on all sides since then has encouraged me in that view.

3. This is not an example of what is perhaps the more usual defence complaint, that the Crown has opened its case too widely or that the evidence has not matched the opening rhetoric. On the contrary, the [NAME] argue that they have been somehow led or misled into believing or assuming that the Crown had modified its case or abandoned parts of it. I do not accept that. The Crown opening was necessarily confined within acceptably economical limits to the structure of the case it proposed to make out. It was not required to refer in detail to each and every allegation, and certainly not by way of a detailed recitation of the case particulars. There has not in my opinion been any departure from what is acceptable in the circumstances.

4. I am not prepared to accede to the application.

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