Aylen v The Queen

[1988] HCATrans 182

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide No A49 of 1987

B e t w e e n -

ANTHONY FREDERICK GORDON

AYLEN

Applicant

and

THE QUEEN

Respondent

Application for special

leave to appeal

WILSON J
BRENNAN J
DEANE J

DAWSON J

TOOHEY J

Aylen

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON WEDNESDAY, 24 AUGUST 1988, AT 12.35 PM

Copyright in the High Court of Australia

AlT6/l/SH 1 24/8/88

MR K. BORICK: If the Court pleases, I appear with

MR A.REDFORD, for the applicant. (instructed

by Scales & Partners)

MR R.E. LINDSAY:  May it please the Court, I appear with

my learned friend. MISS D.A. SHELDON, for the

Crown respondent. (instructed by R.F. Hayes,

Corporate Affairs Cotmnission)

WILSON J: Yes, Mr Borick.

MR BORICK:  Your Honour, I hand up the outline of argument.

WILSON J: Yes, Mr Borick.

MR BORICK:	As indicated in paragraph 1 of the outline, the applicant was the managing director a group of
investment and finance companies which was known
as the Swan Group and the company Swan Nominees which
was named in the information was a company set up within the group to receive moneys on deposit from members of the public and lend them out in
terms of a deed of trust in which the investor
was described as the beneficiary and the company
as the trustee.

It may be convenient just to briefly refer

Your Honours to the relevant clause in the deed

of trust which clause 3 and the most convenient

point to find it would be in book 3 in the

beginning of the judgment of the Acting Chief

Justice Mr Justice Jacobs.

WILSON J: What page in book 3?

MR BORICK:  At page 466.

WILSON J: Thank you, yes.

MR BORICK:  And that reads that:

The trust may invest and reinvest the

principal sum in the name of the trustee

in such manner as the trustee shall think

fit whether in investments authorised by

law for the investment of trust funds or
otherwise and in particular but without

limiting the generality of the foregoing - and then the two paragraphs (i) and (ii) which I

do not need to read.

It was alleged by the Crown that between

September 1978 and March 1980 that the applicant

AlT6/2/SH	2	24/8/88
Aylen

engaged in a course of conduct in which he

fraudulently misappropriated $1.4 million of

investors' money and it was alleged that he, in effect, in September 1978 set up a scheme

to do just that and that he had the requisite

fraudulent intent from beginning to end.

In order to establish the criminal intent,

the prosecution sought to prove that the applicant
aided and abbetted the passing of trust funds to

struggling associate companies within the group

and that he, in effect, knew that these companies

were a risky investment. The evidence for the

prosecution fell into the four broad categories,

financial and accounting sources from the group

during the relevant period, statutory records and

inter-company records, evidence of conversations

between the applicant, his employees, between

himself and his accountants and his financial
advisers and the fourth category, evidence from

the liquidator and members of his staff.

The prosecution relied upon the evidence from

the liquidator to prove the figure of $1.4 million

which they, themselves, quantified and they quantified

it in a way it could be best described by inviting

Your Honours to look at Mr Justice Jacobs' description

of it at page 474 of his judgment. Now, at page 474

of the judgment there is set out in full a chart

which was prepared by the prosecution and which

was before the jury and His Honour Mr Justice Jacobs

explains quite quickly what it is about:

The first figure 'Investors Funds $5,036,183'

is said to represent the amount which could

be 'traced' as having been deposited with

R.W. Swan Nominees Pty Ltd pursuant to the

provisions of the Trust Deed. It was less

by -

as His Honour says -

more than $2 million than the unsecured

creditors -

but that probably does not matter for present

purposes.

The second amount of $578,996 represents

interest earned by the investment of the

depositors' trust funds. Then, against

the aggregate of these two amounts there

are certain credits. Item C is expressed

to be interest paid to depositors, but the amount includes collections fees which the

trustee was entitled to retain.

AlT6/3/SH	3	24/8/88
Aylen

And His Honour points out:

Items Dl and D2 are of critical importance. Item Dl is the realisable amount of secured

loans at the date of liquidation, but the
evidence disclosed that there were other

secured loans which had been repaid prior to the

liquidation. Item D2 is the estimated

proceeds of realisation, after liquidation,

of unsecured loans, mainly to Westland

Finance Pty Ltd.

And Westland Finance Company was the finance company

set up within this group and Westland:

In turn made loans to other group companies;

and finally, Item E -

which is described in the chart as

charged:

And is said to represent monies fraudulently

appropriated in breach of trust -

but -

Is in reality an estimated loss of depositors

funds on liquidation -

or estimated net loss and that, in turn, was given
the description of a general deficiency.

Now, the applicant had given evidence that he - and that is. briefly putting his case - that he always

believed the group was solvent, that liquidation only

occurred because of changes in the Security

Industries' legislation - arx:i that was in about January

of 1980 - andnot because of insolvency. He attributed

any loss on liquidation to the dramatic diminution in

value occasioned by a forced liquidators sale on a

depressed market;

impact of liquidation upon an investment group of :fn particular the disastrous

companies. We have provided some examples of that

in schedule which is at page 6 of the outline of

argument. It is important to my argument if I could

just briefly mention these to you now, Your Honours.

Firstly was the fact that a brickworks

which had been valued at $1.3 million-odd was sold

by the liquidator for about $45,000. There were

two mortgage portfolios which had been purchased

for $660,000-odd in early 1979, were sold for

$20,000. The cost of the liquidation was in excess

of $800,000 to November 1986 and those above

examples alone amount to approximately $2.8 million.

AlT6/4/SH	4	24/8/88
Aylen

TOOHEY J:  Mr Borick, when you give that example, a brickworks,

the trustee was empowered to invest on mortgage and

like securities so what are we talking about here?

A security that was sold by reason of default or some asset of the trustee or what?

MR BORICK: Well, it was an asset of the group, owned by the

group, the brickworks,which had been valued and it

was, in looking at the assets of this group in the

overall sense, the brickworks had been valued at

$1.3 million-odd.

TOOHEY J: Yes, but where would that fit into that chart that

appears on page 474?

MR BORICK: It does not, with respect, fit into there. What

in fact has happened - the figure of $1.4 million,

which was recognized by one expert witness,was not

a real figure in any sense because what the Crown

were really saying here is that the applicant set

up a scheme to defraud the public and that he had

the intent to defraud the public from September 1978

right through until March 1980 and it follows that

what the Crown were really saying is that every

amount of money invested into this company from

September 1978 onwards was, in effect, fraudulently

appropriated because, according to the Crown, he

had the fraudulent intent the whole time and that

whenever he got the money, he, with that - obviously

having that intent, he used it for the purposes of,

in effect, his own companies.

BRENNAN J:  Then what element of the offence is this shortfall

in investors'funds relevant to?

MR BORICK: Well, what the Crown, in effect, put to the jury

and, with respect, what the learned trial judge said

in his summing up is that the $1.4 million represented

a general deficiency; in other words, the amount of

money that was misappropriated by the applicant.

BRENNAN J: Well, do you accept that?
MR BORICK:	No.

BRENNAN J: Has it got anything to do with the misappropriation?

MR BORICK: 

With respect, no. It had nothing to do with the

misappropriation because if you look at it from,
perhaps, another point of view, the Crown, in effect,

was saying that money which investors had put in but

which had been returned to them on request during

that two year period had to be excluded from this

calculation.

AlT6/5/SH	5	24/8/88
Aylen

BRENNAN J: Well, am I right in thinking that what this is

saying is that that is the amount that the investors

have lost as a result of the crime charged?

MR BORICK: Well, that is what the Crown was saying about this

amount of money but, in actual fact, the sum of
money referred to was only an estimated net loss on

liquidation and bore no relationship to the way in

which the Crown case was, in fact, presented.

DAWSON J:  Do I understand you to be saying it would not matter

whether he made a loss or a great profit, if he was

to misappropriate the moneys by placing them with

a company, the loss or profit is irrelevant.	He
either did or he did not.

MR BORICK: Exactly, yes.

DAWSON J: Well, I understand what you are saying, yes.

MR BORICK:  And that when the Crown in this case were saying

that they were, in effect, being generous to the

accused by bringing it down to a minimum amount

according to this formula, that cut across what

they were really saying, namely, that every amount

of money that an investor put into this group of

companies was fraudulently misappropriated.

DAWSON J: What was the intent which was alleged by the Crown?

MR BORICK:  The intent to defraud, in broad terms, the intent

being to use investors' money to prop up this

investment group which they said the applicant

knew was in a very shaky financial position from

1978 onwards.

DAWSON J: Does that mean it was an intent that the companies

into which the money was put should use the money as

their own?

MR BORICK:  As their own, yes, and associated with the fact that the applicant knew that they were in a very

shaky financial position and took, as was put to

the jury by the trial judge, a great risk with the

investors' money and, knowing he took the risk in

that form, he had the necessary fraudulent intent

and there was a great deal of evidence led at the
trial one way and another as to whether the

applicant knew that the companies were, in fact,

in a parlous financial position, even assuming they

were.

DAWSON J: And the loss was also put for that purpose,

presumably, to prove that the companies were, in

fact, in a shaky financial position and that he

ought to have known that.

MR BORICK:  I am sorry, I just missed the end part of what Your Honour said to me.

AlT7/6/SH	6	24/8/88
Aylen

DAWSON J:  The loss was presumably put also to show that the

companies were in a shaky financial position and

that he ought to have known of it.

MR BORICK:  Yes, their loss was put forward to establish both

the fact of misappropriation and of the intent to

defraud.

WILSON J:  Mr Borick, this might be a convenient time for the

Court to adjourn.

MR BORICK:	Thank you, Your Honour.
WILSON J:	We will resume at 2.15 pm.

AT 12.47 LUNCHEON ADJOURNMENT

AlT7/7/SH	7	24/8/88
Aylen
UPON RESUMING AT 2.15 PM:

WILSON J:	Yes, Mr Borick.
MR BORICK:	I had got to a point at page 2 in my outline

where I had pointed out that the prosecution had

contended that the estimated net loss on liquidation

was evidence of a general deficiency and, as such,

was admissible not only as proof of the various

acts of misappropriation but also to prove the

intent to defraud. I would like now to take

Your Honours to what the learned trial judge told the

jury on that topic.

TOOHEY J:  Mr Borick, just before you do that, how does

the notion of the general deficiency tie in with

the 94 counts?

MR BORICK:  Well, originally, the applicant was charged

with 94 counts and the prosecution at that stage

was saying that they could, in fact, identify

each amount of money that had been fraudulently

misappropriated and the date and therefore divided

them into the 94 counts.

TOOHEY J:  But in the prosecution of the case are you saying

that that was pursued or abandoned, that approach?

MR BORICK:  Abandoned. And then this count came into

existence, that was, I think, just shortly before

the committal proceedings. So originally they

were saying they could trace, by the very nature

of the information contained in the 94 counts

and then as they were to subsequently put their

case they were saying that it was impossible

to trace. That apparently was the rationale

for the change from one information, namely, 94

counts, to the information containing just the

one count.

TOOHEY J:  So the matter went to trial on the basis of one

information only with a count of a general

deficiency?

MR BORICK:  Yes, and that general deficiency was the

estimated net loss on liquidation.

TOOHEY J:	Yes, thank you.
BRENNAN J:	Where do we find the information?
MR BORICK:	At page 15, Your Honour.
BRENNAN J:	Page 16, is it?

8

A1T7/l/MB	24/8/88
Aylen
MR BORICK:	The actual information in the supreme

coort is page 16.

BRENNAN J: Well, now, that says:

appropriated monies to the amount of

$1,475,760.00.

MR BORICK:	Yes.
BRENNAN J:	Is that the Crown case?
MR BORICK:	Yes, although the Crown saying that was the

minimum amount.

BRENNAN J: Appropriated?

MR BORICK:	Appropriated.
BRENNAN J:	Proved by the amount of the loss at the end of

the day?

MR BORICK:	No, the estimated net loss on liquidation.
BRENNAN J:	Were there any particulars sought or given of the acts of appropriation?
MR BORICK:	There were particulars sought and there was a pre-trial conference in which various matters
were sorted out but it became clear that the exhibit P88 was the particular, if you like, which
provided us with the information as to how the
Crown worked out the $1.4 million.
BRENNAN J:	I am not asking about the $1.4 million, I am

asking about the act of appropriation. Were there

any particulars sought or given as to what
amounted to the alleged appropriation?

MR BORICK:  Well, the particulars given to us were that

the applicant had the intent to defraud throughout

the whole of theperiod and that each and every

sum of money invested by each and every investor

was misappropriated. But that was obviously

inconsistent with the amount alleged in the

information and we, at that point, claimed

pre-trial, that the information was defective

and should be struck out because the particulars

did not support -

BRENNAN J: 

Can I just ask one further question. What do

you understand to have been the alleged acts of
appropriation?

MR BORICK: 

As stated by the Crown,the investment of money

into Swan Nominees, that is, from the time the

AlT7/2/MB	9	24/8/88
Aylen

investor walked in with his cash_ or cheque, handed

it into the company and then went into Swan Nominees

and at that point the appropriation or

misappropriation occurred.

BRENNAN J:	That is, the act of receiving by Swan Nominees was the act of appropriation?
MR BORICK:	Yes.
BRENNAN J:	Charged in the indictment?
MR BORICK:	Yes, and the act of misappropriation.
DAWSON J:	And Swan Nominees was the company to whom the

investor intended to pay the money?

MR BORICK:  That was the company to which the money was

paid to.

BRENNAN J:	How could that be an act of misappropriation?
MR BORICK:	That was our point in the course of the

proceedings.

DEANE J:  But was it not the Crown case that Swan Nominees

as trustee had applied moneys it had received as

trustee to other canpanies in the group and that

that was not an authorized appropriation under the

terms of the trust deed?

MR BORICK: That was not the Crown case.

DEANE J:	I see.
MR BORICK:	The Crown said that the very setting up of

Swan Nominees was a fraudulent act designed to milk the public, the unsuspecting public, that

was their case.

TOOHEY J:  But the allegation in the information is that

Swan Nominees appropriated moneys which it held

as trustee: -

for the use or benefit of persons other than

the persons for whose use or benefit the

said monies were held in trust.

MR BORICK:	Yes.
TOOHEY J:	Well, that seems to suggest a misappropriation

dependent upon something other than the mere

payment of money to Swan Nominees?

MR BORICK:  That is right and that was the inevitable confusion,

in our respectful submission, in the Crown case

because when they changed from the 94 counts

AlT7/3/1:!IB	10	24/8/88
Aylen

they were, in effect, saying we cannot trace

because once the money left Swan Nominees and

got into the Swan Group generally it would be
difficult to trace. But that was not their case

at the end of the day. Their case at the end of

day was that as soon as the money went into Swan

Nominees, because that was a fraudulent and a

devious set-up ..... that that is when

the appropriation or misappropriation occurred.

So there was never any need for them to trace.

DAWSON J:  Well, there would then be no need to look at the

loss if every amount - they could surely say how

much was invested with Swan Nominees.

MR BORICK:	That should have been their loss.
DAWSON J:	The total amount, you are saying, was the amount

they are alleging was misappropriated?

MR BORICK:  That is right, each and every amount that the

investor put in was misappropriated, according

to the Crown case. So there was never my need to

produce this P88 and, in fact, the learned trial

judge said as much to the jury in his summing up.

I think he used the expression, "Perhaps that was

the wrong way to go about it." May I take

Your Honours to what His Honour told the jury

about this aspect of the case. It is in book 1,

starting at page 150.	In the middle of the page
His Honour said:

The second element is one, what I might call,

the misappropriation element.

Then, further down into the next paragraph:

Now you know that in the information it is said that the amount misappropriated was

1.4 odd million -

he mentions some amount -

I am never quite sure that I can say these

millions correctly ..... That is what is
written in the information.

I direct you, as a matter of law, that

the exact amount does not matter. The amount

in the charge, that is 1.4 million is a loss,

said in the information to have been suffered.

Mr Moen -

and Mr Moen was one of the Corporate Affairs

investigators -

said it was really more.

AlT7/4/MB	11	24/8/88
Aylen

Then His Honour, in the next passage, refers to

a statement by Mr Moen that $1.4 million really:

bore no relation to reality.

That was what the Crown was saying about their

own particular. Then His Honour referred to

exhibit P88, the chart, as to how that amount

was worked out and described it briefly.	At page 152,
at the top, His Honour said:

Now there is a good case for saying that that is the wrong way to lay a charge of this

sort.

May I interpose there, that is what the defence

had said from beginning to end.	And continuing,
to quote from His Honour:

It may be that if the sum of five million
or so dollars was received by investors

by R.W. Swan Nominees and put to a use

other than that of the investors, then

that five million dollars was the

misappropriated amount, whatever monies

were recovered later on.

His Honour then proceeded to give a short analogy

and then the further paragraph down:

Mr Lindsay points out that of the amount

charged to have been misappropriated, is

the loss calculated most favourably to the

accused, and that was no doubt done out of

a sense of fair play, but it may be in fact

the wrong way to do it. Splendid though

the motives for doing it that way were.	As
I say, it doesn't really matter.

The Crown does not fail because the

exact amount in the charge is doubtful.

Of course if your doubt is so great that

you doubt that any money or any substantial sum of money was lost at all, then you will

acquit. You will have to acquit then in

the light of the way in which the case has

been put. But if the fact is that some

large part of the investors' money was

misappropriated, then the fact that the

amount stated is 1.4 million rather than

some other amount, does not matter.

Our submission in relation to that at page 2,

point 7(ii), that the learned trial judge at first instance agreed. He directed the jury

that if they were satisfied that substantial

or a large part of the investors' money was lost

then that in itself was proof of misappropriation.

AlT7/5/MB	12	24/8/88
Aylen

a doubt as to whether any money was lost. Further he told the jury to acquit if they had

BRENNAN J:  Now, where was that direction about:

if they were satisfied that substantial

or a large part of the investors' money
was lost then that in itself was proof

of misappropriation.

MR BORICK:  In our submission, Your Honour, that is the

total effect of the sunnning up in the passages

from page 150 through to page 153 when read as

a whole, and that is certainly the way - as I will

take you to in a minute - that Justice Jacobs

in his dissenting judgment read that passage of the

summing up.

BRENNAN J: Well, however Justice Jacobs may have read it,

is it to be found anywhere in the passages that you

have thus far read to us?

MR BORICK:  In my submission, Your Honour, taken as a whole,

that when His Honour said:

the fact is that some large part of the
investors' money was misappropriated, then

the fact that the amount stated is 1.4 million rather than some other amount, does not matter.

And at the bottom of page 152:

The Crown does not fail because the exact

amount in the charge is doubtful. Of course

if your doubt is so great that you doubt that

any money or any substantial sum of money

was lost at all, then you will acquit.

The effect of that was that if the jury were	unable to be satisfied, direct with that standard
that no amount of money was lost, then they would
have to acquit, but in reverse, if they were
satisfied that that amount of money was lost then
they had proof of misappropriation.

BRENNAN J: Well, those are two separate propositions. The

first proposition is more favourable to you, perhaps,

than you are entitled to. In other words, you are

given prospect of acquittal if there was some

doubt about whether there had been any loss, but

if looking at the top of page 152 His Honour had

correctly directed them that the receipt by Swan

Nominees and the putting to use, in the way indicated there, was the misappropriation, then it seems to me that the proposition that is advanced in 7(ii) is not made out.

A1T7/6/MB	13	24/8/88
Aylen

MR BORICK:  Well, all I can say in answer to Your Honour,

with respect, that the way we read that proposition,

if you look at the reverse side of it, that as

soon as the jury were satisfied that there was

a loss at the time of liquidation, then that became

the general deficiency, that became the amount

misappropriated. Our submission was, and is,

that simply because there was an estimated loss

at the point of time of liquidation that did not

prove that there was an appropriation.,. let alone

a fraudulent appropriation, or for that matter

a misappropriation, whether it be fraudulent or not.

DAWSON J:  While you are just looking for your place, I

am quite right in saying, am I not, for the trust deed

Swan Nominees was able to invest the moneys where

it would?

MR BORICK:  Yes, according to clause 3 of the deed of trust.

DAWSON J: Whether in trustee securities or not?

MR BORICK:  Yes, yes. Mr Justice Prior at page 517 of

book 3 agreed when he said:

So, to identify the lost trust monies is

to identify money appropriated by the

companies having the use of it.

That is the conclusion after a discussion of

the way in which the Crown had worked out the

loss and as we read His Honour Mr Justice Prior

he was, in effect, saying that once the money

was lost and established to have been lost by

the jur½ then that identified the amount which

was, in effect, misappropriated. At the bottom

of 7(iii) it is our proposition that money may

be lost in many ways. Mere loss does not mean

misappropriation.

In a case involving an allegation of fraudulent misappropriation the misappropriation cannot be

established simply by proving a net estimated

loss on liquidation. Proof of the estimated net

loss on liquidation was classified as a:tlgeneral

deficiency" which, in our submission, it is not.

Mr Justice Jacobs correctly points out it was

in reality an estimated loss of depositors' funds

on liquidation.

May I now take Your Honours to what

Mr Justice Jacobs said about it because it is

his judgment that we rely upon and it encapsulates

our argument and also points to the special leave

point in this argument.

AlT7/7/MB	14	24/8/88
Aylen

WILSON J:  Are there any respects in which you would part

company with Mr Justice Jacobs?

MR BORICK:  No, Your Honour. At the bottom of page 475

His Honour said he has:

come to the conclusion that the appellant's
challenge to the propriety of the information

and the sufficiency of the Crown case is well

founded.

He points:

In the first place there is a patent contradiction

on the face of Exhibit P88 with the whole

thrust of the Crown case which, as stated

earlier, imputed to the appellant, from

beginning to end, a fraudulent intent to extract

monies from depositors, under the guise of
a trust, for the purpose of sustaining group

companies which he knew to be in financial

difficulties.

TOOHEY J:  Mr Borick, was there any evidence that any

money given to the trustee by investors had been

applied in a manner not authorized by the trust

deed?

MR BORICK:  The Crown led evidence which they would say

pointed to that and that was bound up with their
evidence going to prove the intent to defraud.

In essence, at the end of the day, they were saying

that once this loss had been established then that
in itself was sufficient to prove that money had,

in fact, been misappropriated.

TOOHEY J:  I was going to add that rider, other than any

inference that might be drawn from the state of
the company's funds at the end of the day, but

in terms of particular transactions, was there

any evidence that an investor had paid money

and that that money was applied by the company

in some way not authorized by the trust deed?

MR BORICK:  I do not think the Crown led specific evidence

of that because of what they were saying in that

they could not trade the money. Since they

could not trace it they did not know whether it

had been put on the first mortgage or just where

it had, in fact, gone.

(Continued on page 16)

AlT7/8/MB	15	24/8/88
Aylen

MR BORICK (continuing): As I understand the Crown case

it was that the applicant was aware of the risk

associated with investing the money with his

companies which he knew to be in a very shaky

condition.

DAWSON J:	But how was that an appropriation because, presumably,
in return for the moneys which he invested, or in return there was a chose in action which was held in trust for the depositors.
MR BORICK:	Yes. That was our position and we pointed to two

other facts in relation to that. The first is

that whenever an investor wanted his money back

he got it and, secondly, interest was always

paid to each and every investor for the money

they had lent to this company or group of companies.

DEANE J:  But can I take you back to page 466. Was not

the starting point that these were trust moneys

which could be invested either pursuant to

clause 3(i) or pursuant to clause 3(ii)?

MR BORICK: Yes. It is the general clause, I think,

Your Honour, that we point to.

3.         The trustee may invest and reinvest

the principal sum in the name of the trustee

in such manner as the trustee shall think

fit.

DEANE J:	So, that was what was relied on.
MR BORICK:	Yes.
DEANE J:	Well then, was not the case this: that a trustee
acting for a cestui que trust in whose interests he had to invest the money was acting in breach
of his duty and misappropriating the trust funds
if it invested it in a company with which it
was associated for its own purposes in circumstances
where it was aware that the funds would be likely
to be dissipated?

MR BORICK: Yes, it is.

DEANE J:	Well then, is that not really the point you have
to meet, that is, whether if Xis trustee to
invest money generally and instead of investing them in the ordinary course gives them to his
wife to go down the street and buy bags or something - whether that is a misappropriation for the purposes
of this section? I am not suggesting you are
necessarily wrong but it seems to me that you
may not be facing up to the strength of the
argument against you.

AlT8/l/AC	16	24/8/88
Aylen

MR BORICK:	With respect, Your Honour, if that had been
the case which we had to fight then there would
have been no real difficulty about it, particularly
when the Crown were alleging that the whole thing was a fraud and that the applicant knew that
the companies were shaky - I just cannot recall the exact words Your Honour used, but, shaky or dodgy - right from the outset.

But from that point they diverted and said

that proof that that happened came about because

of the loss that was proved at the point of

liquidation so that the case, if it now stands,

is authority for the proposition that once an

estimated net loss on liquidation is established

then that in itself may provide proof of

misappropriation of the very matters which the

Crown were alleging here. And that, with respect,

is why we say that that is the way the case was

argued in the sense that it shifted away from

the broad general proposition that Your Honour

put to me, came back to a question of: was there

a loss proved? Yes there was a loss proved,

it was that loss on liquidation, therefore

misappropriation established. And, therefore,

fraudulent misappropriation established because

the misappropriation was overwhelming in a sense,

once that had been found - evidence of doing

the very things that Your Honour had said they

ought not to do with the investors money.

TOOHEY J:	Say Swan Nominees had destroyed every record
that bore on any transaction with an investor
and it turned out that investors simply were
unable to get their money back because the money
was not there, how would the Crown go about proving a case of misappropriation? It would not be
able to take each investment and trace it through with a view to showing it was either applied
on first mortgage or in some other authorized
trustee investment.  I mean this may well be
why the case took that turn. That is not to
say that your submission may not be a sound one but is that, in fact, what happened during the course of the trial?

MR BORICK: Perhaps I am really answering for. the Crown here as

to why they did this but my understanding is
that, in effect, they were saying that nothing

could be proved. It was as though all the records

had been totally destroyed and in that event

because they could not trace it any further than

the money arriving at Swan Nominees and then,

right at the very end, coming out - because we

know that quite a lot of money was repaid to

individual investors when they wanted it. But

in the middle it was lost territory - no man's land.

AlT8/2/AC	17	24/8/88
Aylen

TOOHEY J:	Not so much in the middle, I think, as the very beginning. I mean, I gather from just a fairly
cursory reading of the papers that it seems to
have been impossible to trace what happened to
the money once it was given to Swan Nominees.
MR BORICK:	But on the Crown case it did not matter.

TOOHEY J:  No. I appreciate that but just as a question

of fact that the investigation seems to have broken down, as it were, right from the very

outset because the records were not available,

or did not disclose what had happened to these

moneys.

MR BORICK:  In the reality of this case the records are

not destroyed; they were there, but they were

in a very bad state and that made it - and I

could conceive it as difficult for anyone wanting

to trace individual amounts. The fact that the

books were in a bad state was a factual issue

in the trial because it was the applicant's

position that he was unaware that the books were

in the state that it was eventually proved. they

were in.	I hope I have answered Your Honour
Mr Justice Deane's proposition.	I think that

if we had to meet that at trial then the applicant

would say he could have met it and the trial

would have been a trial where the issue was

clear cut. It was never allowed to be that because

of the way in which the information was framed
and because of the particulars which led to a_

diversion and, we would say, a poisoning of the

atmosphere·of what was the real issue in the

case which we say was:  was there any misappropriation?

If so, was it fraudulent? That was the issue but

poisoned by the particulars and particularly

the reliance upon P88.

BRENNAN J:	Mr Borick, I do not want to go back over the
things we have already discussed but looking

at page 152 and bearing in mind your answers·	to Justice Deane, was not His Honour telling
the jury that:·

if the sum of five million or so dollars

was received ..... and put to use other than

that of the investors, then that five

million dollars was the misappropriated

amount.

MR BORICK:  Yes. That is what His Honour was saying but

that then became enormously complicated by the

fact that the Crown deliberately excluded any

money of that five .million which had been repaid

to investors.

AlT8/3/AC	18	24/8/88
Aylen

BRENNAN J:	I do not know whether it excluded it or not but the way that reads is to put to the jury
as the issue for their determination the question
of whether it was put to a use other than that
of the investors - however much it was.

MR BORICK:  Yes. His Honour in that passage is saying precisely

what Your Honour has put to me but that was not

the end of the case by a long way because of

this complication that then arose where the

misappropriation the Crown said was proved by

the loss of liquidation which could never be

a loss which could become the general deficiency

which would get over the problem posed by the

inability to trace.

BRENNAN J:  Did His Honour ever direct the jury that they

could find that there was a footing to "use'; other

than that of the investors of money,by reference

to the general deficiency?

MR BORICK:  Yes. There and in other passages when His Honour

directed them on the law which is at page 172.
It begins at page 172 and then comes to 173.

Perhaps if I could take Your Honour to the passage on 173 - the paragraph beginning "I begin":

I begin by saying again that you cannot

convict unless you are satisfied beyond
reasonable doubt that the accused, within

the relevant time, had an intent to defraud those who invested in the Trust Deed scheme or some of it. It is not necessary for

a conviction that he should have intended

to defraud every investor, or any particular

number of them. Intention to defraud some

is sufficient. However, proof beyond

reasonable doubt of intent to defraud is

absolutely imperative before there can,be

a conviction.

Now, I must try to be a bit more help

in directing you as a matter of law, which

direction you must accept from me about

the meaning of the phrase, of the words

"with intent to defraud". It means dishonestly,

or with a dishonest mind, ·but dish6nestly

and dishonest are wide words. Dishonesty

is varied. Here, the type of dishonesty

is deception, deceit, deceiving. So the

accused, Aylen, cannot be convicted unless

it is proved beyond reasonable doubt that

within the relevant times he had an intention

to deceive the, or some of the investors.

And it is that passage put alongside the other directions. with respect to the way in which

AlT8/4/AC	19	24/8/88
Aylen

MR BORICK:	May I just preface my comment by saying that
that was not what Mr Justice Jacobs saw as the
critical part - that became, what he saw as,
the icing on the cake if you like - the third
point because prior to that he had said at page 476:

it is quite wrong to prove an "appropriation",

let alone a fraudulent appropriation by

proving a net estimated loss on liquidation.

DEANE J:  But His Honour distinguishes between the summing

up and the issue defined by the summing up and

the adequacy of the evidence to establish the

issue. Now, in those paragraphs,- it seems to

me, His Honour is identifying the issue as defined

in the summing up and what I was asking you was,

is there anything in .those paragraphs that you

would quarrel with?

MR BORICK: In the summing up?

DEANE J: In those two paragraphs quoted in the summing up.

MR BORICK: No. We would agree with His Honour the learned

trial judge that the Crown had to prove that the money had to be shown to be invested for the use, benefit of the group of companies only.

DEANE J: Well then, that being so, it is fairly apparent

what the nature of the alleged misappropriation
was. So, am I correct that the real issue is that referred to by Justice Jacobs on page 16

and that is whether the evidence adduced at the

trial did, or was capable of, establishing the

case for the Crown identified in that statement

of the issues?

MR BORICK:  That is the passage at page 480:

No doubt on liquidation there was a loss

of portion of the trust fund, and to that

extent some person other than the depositors

ultimately obtained the use and benefit

of the trust fund, but that did not prove

from beginning to end, as the Crown repeatedly

asserted, the trust fund was appropriated

in breach of the section.

DEANE J:  So really - do not be mistaken, I am just trying

to make sure I follow it - it is the correctness of what His Honour Mr Justice Jacobs identifies.

there which is the primary issue with.which

we. are concerned .

MR BORICK:  I think that passage encapsulates the problems

that Mr Justice Jacobs saw in the - or divergent
between.the way in which the Crown set about

proving its case from what was the reality and

what they were really saying.

AlT8/6/AC	20	24/8/88
Aylen

the Crown were presenting the case, with the

way in which the 1.4 million was to be taken

into account,meant that if the jury were satisfied

that some time within this period of two years

he intended to defraud some of the investors

then the jury could arrive at a conviction and

that led to a particular problem because the

Crown case was, he had the intent to defraud

from September 1978 through to March 1980

through the whole of the period and for each

and every sum invested.

If, therefore, Mr Justice Bollen was right

in directing the jury that just the intent to

deceive some would be sufficient then it may be

that the jury thought that as it got near to

a point of liquidation - let us say a month or
two months prior to liquidation - when the

applicant was aware that that may be something

he had to face - that his ~roup bf companies would have

to face -then at that point he became aware of
the risky nature of the transaction of the

business and to continue to put investors money
in could have been proved by that process.

In other words it was not the estimated

net loss which would be the problem for the accused
then, it was his knowledge that liquidation was

around the corner. So on the Crown case he had to

have had it all the time. On the direction of the trial judge it would have been sufficient

if he had had it in the last couple of months.

That could then;be highlighted by the - what
we put to His Honour, the problem on sentencing:
how could you ever know what the jury discovered
or even that the jury were unanimous on the question

because at the end of the day it was a majority

verdict which may have been 11:1 or 10:2, after

a very long retirement. Four of the jurors may

have thought that some of the investors, perhaps

the last lot, were defrauded. Others of the

jury may have thought that some of the investors

in a period in, let us say, January/February 1979

were the ones who were defrauded. But there

may never have been unanimity between the jury -

that is the jury as a whole, 10 or more of them -

that some particular investors were, in fact,

defrauded.

DEANE J:	Mr Barick, can I take you to page 479 which is
Mr Justice Jacobs' judgment. His Honour there
sets out what he obviously saw as the critical
paragraphs in the learned trial judge's summing
up.  Would you quarrel with what the trial judge
said in those two paragraphs?

AlT8/5/AC	21	24/8/88
Aylen

I have, in the course of answering Your Honours'

questions, I think proceeded through the submissions

that I wished to make with respect to this aspect

of our case. It comes down to page 5 of the

outline - you could say that ex post facto estimation

of liquidation losses are irrelevant. What matters

is the state of the applicant's mind at the material

time, not the value of the assets realized long

afterwards under crippingly adverse circumstances

of sale or assessment.

And the final point I deal with is that the Crown

has asserted that the moneys could not be traced.

For the purposes of the charge, it is submitted

that the Crown only needed to either identify

moneys paid into Swan Nominees or indentify moneys

paid out. I have dealt with that but then there

are some references to the exhibits which we

say - and one can only take Your Honour to it -

but we say by looking at those exhibits, those

documents that existed you could trace the money
coming into Swan Nominees and then coming out

again when it was required by individual investors.

I think in essence though that what the

special leave proposition is that if the judgment

of the Court of Criminal Appeal stands then, in

Justice Prier's judgmen~ that to identify the

lost trust moneys is to identify money appropriated

by the companies having the use of it, means

identify moneys misappropriated and that that

is incorrect and that Your Honours should give

special leave in order to consider that proposition.

And from practical terms it means that whenever

there is a loss, or an estimated loss of liquidation

that every company directly faced with that situation

is going to be in difficulties.

Your Honours, there are two other issues,

one which I can deal with probably relatively

shortly and one that may take a little longer.

I have prepared - because they are quite separate

issues - separate outlines of argument. I turn

first to our submission with respect to, that

a document which was prepared by a bank which

dealt with an application for a loan by this

company was tendered in evidence and that document

contained at the end of it an expression of opinion
by the bankers about the nature of the application

and, in effect, the nature of this group of companies.

And it was our submission that the expression

of opinion in a bank document is not part of

a bank document; that it was inadmissible and

it should not have gone before the jury. So

I hand up my outline of argument with respect

to that issue.

AlT8/7/AC	22	2418188
Aylen

The actual document is at page 442 of book 2.

I will first go to the - and I do not think

Your Honours need to read it all for present

purposes but I will go to the offending passage

which is at the end of the last page of that

document. It is headed "Managers Remarks".

WILSON J:  The last page of what document?

MR BORICK: It is, in effect, the second to last pa?.e of

book 2. The managers remarks were that 'we

enclose the company letter to us"; "preliminary

discussions have been held with the general manager";

~collateral to be gained are attractive but we

do not feel competent to make the recommendation

for the following reasons: 1. The nature of

the round robin transaction appears devioud'- - -

DAWSON J:	What page is this?
MR BORICK:	On my copy of the transcript it does not have a

number but it would be 445. It is the second

to last page in the - 443B it is.

WILSON J:	The last page in my volume 2 is 444 and it has some comments concluding "the Chief Manager 1 s
report".

MR RORICK: It is the Manager's Remarks. It is numbered

page 4.

DAWSON J:  We do not have it.

DEANE J: It is the one missing page is it?

WILSON J: Perhaps it was not admitted.

MR BORICK: It was certainly before the Jury.

WILSON J: If you read the comment and hand up a photocopy

later.

MR BORICK:  I could explain perhaps a bit of background

which will help, I think. The applicant company

had decided to engage in a transaction which

involved some investors in Western Australia

and that was a complicated set of arrangements.

The actual application is at page 439 of the

transcript. It is a letter from the group to

their bankers and for present purposes suffice
to say that if _ that proposition had come

good then there would have been an inflow of

about $3 million or so dollars into this group

of companies. For one reason or other the group

were wanting the bank to advance them for a short

period $850,000.

AlT8/8/AC	23	24/8/88
Aylen

MR BORICK (continuing):  The Bank considered that

application and rejected it and, in the course

of rejecting i½ they prepared this report which

starts at pa8e 443. And on the final page, under	the heading Managers Remarks", these comments
appear:

We enclose Company letter to us -

this is an inter-bank memorandum -

of January 11th which sets out that which

is proposed relating to the capital investment.

Preliminary discussions have been held with

Chief Manager, Mr Hinchcliff.

Collaterals to be gained are attractive but we do not feel confident in making a

recommendation for the following reasons:-

. the nature of the "Round Robin" transactions

appears devious.

. the capability .of the proposed Board

is yet to be proven.

we have no way of really checking the

authenticity of the projected cash flow.

And then the next point was important -

. the Corporate Affairs Commission,

Investigation Branch (unknown to Company)

is enquiring into its affairs and has sought

information from us which we have declined

on the grounds of privilege.

And then deals with some other matters. So that

here was a statement of opinion that this application

for a loan was devious and that the company,

unknown to it, was being investigated.and that

was a damaging statement in the context of this

case because the applicant has put a lot of store

upon this particular transaction in order to

establish that he had no intent to defraud and

that he believed that the companies were in a

good financial position.

Our submission in relation to that is that the exhibit was not a banking record within the meaning of section 46 of the EVIDENCE ACT.

Section 46 refers to:

"banking records" means -

(a) books of account, accounts, and

accounting records (including working papers

AlT9/l/ND	24	24/8/88
Aylen

and other documents necessary to explain

the methods and calculations by which accounts

are made up);

(b) books, diaries, or other records used
in the course of carrying on the business

of a bank;

(c) cheques, bills of exchange, promissory

notes, deposit slips, orders for the payment

of money, invoices, receipts and vouchers;

and

(d) securities, and documents of title

to securities -

That was a matter which we raised on appeal.

We pointed out that the exhibit contained highly

prejudicial expressions of opinion, essentially

hostile hearsay, no witness was called that we

could cross-examine, it pointed to the very long

retirement by the jury, the fact that it was

a majority verdict, that it related to a key

element in the defence case.

Justice Prior dealt with that ground of

appeal and in his judgment he said, without being
dogmatic about it, that this was probably inadmissible,

this document, and then said that if that is so

he would apply the proviso. Mr Justice Jacobs

did not deal with the point at all because he

had no need to. He had allowed the appeal on

the other ground.	Mr Justice O'Loughlin did
not deal with that point at all.	So that in

the end result, of the three judges only one

dealt with this important ground of appeal and

said that it may well have been made out but

would have applied the proviso; the other two

judges did not consider it at all. And in those

circumstances the submission is that an injustice

has been suffered by the applicant because an

important ground of appeal in which one judge

who had considered it said the document was probably

inadmissible; it has just not been dealt with.

TOOHEY J: Mr Barick, how was the document tendered, through

a witness or some other way?

MR BORICK:  It was put in by way of an affidavit of a witness

who, I think, was unable to be there - the short

answer is tendered by affidavit and it was attached

to the affidavit.

WILSON J:  Was its admission -objected to by the defence?

AlT9/2/ND	25	24/8/88
Aylen

MR BORICK:  Yes, objected to very strongly, basically on

the ground that it just contained this expression

of opinion, that it was inadmissible but also

very, very highly prejudicial and that it should

not have been before the jury.

BRENNAN J:  Do we have the transcript of the passage in

which it was tendered?

MR BORICK:  Book I, at page 91 - it was between pages 91

through to page 93.

WILSON J:  Which exhibit is it in particular, Mr Borick?

There is exhibit 151 - - -

MR BORICK: Exhibit 153.

WILSON J: 

153~ so that is on page 93, is it?

MR BORICK: 

My learned junior just points out at the top

of page 94 - there was an adjournment or a luncheon
adjournment at the bottom of page 93. His Honour

had not really had a close look at it. After

lunch I renewed the objection and - I am not

sure that that reads exactly right there but

my recollection is that there was an adjournment

and His Honour did have time to read it more

carefully.  I renewed the objection but His Honour

still allowed the document to go before the jury.

BRENNAN J: 

What was the purpose of tendering this exhibit?

What is the issue to which it was relevant?

MR BORICK:  The purpose for the Crown tendering it was

to establish their point that the Western Australian

transactidn was basically a sham. It was a round robin, there was never going to be any real money come to the company, that it was really Swan

Nominees money being lent to the people in Western

Australia who would then purchase redeemable preference shares in a company and then that

money would go back to Swan Nominees and it was

the applicant's case that it was a real transaction

and to have it put before the jury in the opinion

of a bank manager as being devious and also to

be told that Corporate Affairs were investigating

at that stage was, in our submission, extremely

damaging to the applicant's case and I further

rely upon the fact that this was a majority verdict

after a very long retirement.

BRENNAN J: Is there anything to connect the present applicant

with the letter that was evidently attached to

the affidavit, being the letter from Mr Corner,

Director of Westland Finance Company?

MR BORICK:	I think the answer to that question is "not directly" because the letter had been sent in
by a Mr Corner, one of the officers of the company.

AlT9/3/ND	26	24/8/88
Aylen

BRENNAN J: At the moment, I am at a loss to understand

how any of this documentation could have been

relevant to an issue in the case. Was it said

that because these documents were bankers' books

the contents of them could be used by the jury

to prove the truth of the facts stated in them?

MR BORICK: 

That was the essence of it but what the Crown

was saying about this transaction, that it was
a sham and it was devious and here was an inter-
bank memorandum which was saying just that -

or the effect of it anyway, that is my understanding
of what the Crown were using it for and certainly
it was the way in which the jury could have used

it. And I rely also in this special leave application

for the fact that the matter was not considered

by the Full Court.

May I turn now to the third issue which

arose in this case and hand up the outline which

relates to this.

TOOHEY J: Mr Barick, just before you do, how much of

exhibit Pl53 do we have in these appeal books?

MR BORICK: It looks to me that we have two pages out of

four - pages 3 and 4. It may be that it could

be arranged that we could have those photostated.

BRENNAN J:  But Pl53 included also the letter from Westland Finance, did it not?

MR BORICK:  Yes. The actual documents were sent to the

Court on 8 August 1988. We will most certainly

provide the Court with the full document.

WILSON J: If you have copies there the easiest way 1s

to have them photocopied and provided, Mr Barick.

MR BORICK:  I apologize for that, I did not realize they

had not made the book.

WILSON J:  We have got your third point now, section 193.

MR BORICK: It may be that this point - if Your Honours

think that there is a special leave point in

it it would have to be treated as a special leave

application because depending on what view

Your Honours take of section 193 it would involve

a fairly careful evaluation of the evidence to

ascertain whether the applicant would take advantage

of it. Section 193(2) reads:

No person shall be liable to be

convicted of any of the misdemeanours

referred to -

AlT9/4/ND	27	24/8/88
Aylen

and one of them is the section 187 with which

he has been charged -

by any evidence in respect of any act done

by him if, at any time prior to his being

charged with the offence, he has first

disclosed the act on oath, in consequence

of any compulsory process of any court,

in any action or proceeding bona fide

instituted by any party aggrieved or if

he has first disclosed the act in a

compulsory examination or deposition before

any court on the hearing of any matter in

bankruptcy.

The applicant was, by a compulsory process in

section 249 of the COMPANIES CODE, required to

answer questions about this matter and it was

our submission that because in fact he had disclosed
his version of the events as a result of the
compulsory process that he could therefore take

advantage of section 193(2).

WILSON J: It was not his case at the trial, was it? No

mention was made of section 193 at the trial,

was it?

MR BORICK: It came about in this way: the Crown, at a

pre-trial conference at which the parties got

together with the judge prior to the hearing,

had considered section 193(2) in the context

of the situation that the Crown at that point

were intending - or had thought they were going

to put in the evidence that the applicant had

given on the section 249 examination and there

had been an objection and it was in that context

as to the admissibility of the section 249 examination

that section 193(2) was raised.

The Crown decided not to tender the evidence

and the point was not then taken further.

WILSON J:	So that it was not in issue at the trial?
MR BORICK:	Not an issue at the trial and it was not until

after the matter had been argued before the Court

of Criminal Appeal that the Court of Criminal

Appeal then asked for further argument with respect

to the meaning of section 193(2). That then

led to a consideration of the decision in SKEEN

AND FREEMAN where I think it was 15 judges sat

to consider a very similar piece of legislation

and nine of Their Honours had decided that in

that particular case on the circumstances that

the person charged there could not take advantage

of the section but the minority said that once

there had been a compulsory disclosure of any

AlT9/5/ND	28
Aylen	24/8/88

sort, or any sort of compulsory process, then
the applicant could take advantage of it because,

in effect, the investigators or the creditors

had decided to go one way, had decided to act

civilly and therefore were estopped from proceeding

on a criminal information .

From the majority judgment in SKEEN AND

FREEMAN there were three possibile ways in which

that judgment could be interpreted and they are

set out at page 2. And I think this is probably

common ground that there were, in fact, three

possible interpretations. Firstly, that at first

discovery of any information relating to an element

of the offence, includingrrens rea, and we are

dealing with the expression "first discovery";

secondly, a first discovery of an act or fact

that would not have been discoverable without

his evidence on oath; and thirdly, a first discovery

of an act or fact that would not have been

discoverable without his evidence of oath and

without which his misconduct and therefore guilt

could not have been proved.

The Court of Criminal Appeal held that the

majority judgment in SKEEN AND FREEMAN meant 6(iii)

In order for anyone to take advantage of

section 193(2) he had first to show that - there

had to be a first discovery of an act or fact

that would not have been discovered without his

evidence on oath and without which his misconduct

and therefore guilt could not have bee~ proved.

We conceded that we could not bring ourselves

within that meaning of the section 193(2).

Our position was that we could bring ourselves within particularly the first possibility that

it meant discovery of any information relating

to an element of the offence, including his

intention, because under cross-examination -

which the Crown could have used relating to his	the section 249 examination - we.would submit that the applicant did disclose evidence	intent and, similarly but not nearly as strong,
if the second interpretation had been accepted,
that the Court of Criminal Appeal adopted the
third possibility which we could not bring ourselves
within and there was basically the end of the
argument there.

The issue for this Court is whether the

majority decision is the correct law in Australia

as so indicated by Their Honours or whether -

BRENNAN J: Mr Barick, how did this issue arise before

the Court of Criminal Appeal?

AlT9/6/ND	29	24/8/88
Aylen

MR BORICK: It arose as a direct result of the judges of

the Court of Criminal Appeal requesting argument

on section 193(2).

BRENNAN J:  Was there some evidence of the evidence having

been given at this inquiry?

MR BORICK:	Not at the trial.
BRENNAN J:	How did it get before the Court of Criminal

Appeal?

MR BORICK:  As a result of the inquiry and then the

subsequent argument as to the meaning of

section 193(2) we were requested to submit to

the court whether we could bring ourselves within
section 193(2) if it meant the interpretation

placed upon it in 6(iii).

WILSON J: This happened after the entire argument on your

appeal to the Court of Criminal Appeal had concluded?

MR BORICK:	Yes.
WILSON J:	And decision reserved?
MR BORICK:	Yes.
WILSON J:	So the court really brought it into consideration

of their own motion?

MR BORICK:	Yes.
WILSON J:	I see.

MR BORICK: It came to their notice because of the reading

of the transcript of that_ pretrial hearing where

section 193(2) was raised in the context of the

admissibility - - -

WILSON J:  Of the transcript.

MR BORICK:  - - - because all counsel and His Honour the

learned trial judge had misread it and looked

at it in terms of admissibility rather than in

the broader terms. That is how it arose and

His Honour - - -

BRENNAN J: 

Has any evidence beenplaced before the Court of Criminal Appeal with reference to the examination?

MR BORICK: 

No, the court having heard preliminary argument

on the matter and there was a discussion about
what the majority judgment in SKEEN AND FREEMAN
meant and it was discovered it could mean one

of three things and the court asked us whether
we could bring ourselves within the meaning

AlT9/7/ND	30	24/8/88
Aylen

attributed to that section by the court, namely

whether we could show that there was any first

discovery of an act or fact without which his

misconduct and therefore guilt could not have been proved. And our answer to that question

was "No, we cannot,but if it does mean either

para~raph (i) or paragraph (ii) the other two

possible interpretations, then we could bring

ourselves within it".

The actual submission we made, I think,

appears in the transcript at·page 460 of book 3.

(Continued on page 32)

AlT9/8/ND	31	24/8/88
Aylen

MR BORICK (continuing):  I need not take Your Honours through

that, but that is the submission that we make. It

covers the matter that I have just raised with

Your Honours, and then it - - -

BRENNAN J:  You give references there to certain pages. Is

that pages of some document?

MR BORICK:  That is the reference to the pages in the section 249

examination, but Your Honours had no need - - -

BRENNAN J:	Which Their Honours did not have.
MR BORICK:	No, they had no need to look at it once we had made the concession that we could not bring ourselves
within the meaning attributed to it, so it was left
at that point. Would Your Honours turn to
Justice Jacobs' judgment at page 481.
DEANE J:	Mr Borick, why in (iii) do you need to add the end

"and without which his misconduct and therefore

guilt could not have been proved"?

MR BORICK:  That was a possible interpretation of what

the majority judgment meant in SKEEN AND FREEMAN.

DEANE J:  But it seems to have all the alternatives except

the obvious one from reading the section which would

be (iii) down to the word "oath". Then that ~uld be

the same as (ii), as Justice Wilson points out to me.

MR BORICK:	As I understand them that the first would mean a first discovery of any information relating to any
element of the offence including the intention; so
that if he gave evidence about matters, what he thought
why something had happened or not happened and there was no other way of discovering that because it was entirely coming from him, then he could bring himself
within section 193(2).  That was not the case - - -
DEANE J:	But then it would be only evidence of the

particular act which he had disclosed which would be

inadmissible so one would then have to go and see what

particular act would be excluded and what effect that

would have on - - -

MR BORICK:  Yes.

DEANE J:  Then you really come bacK to my question. In a

case such as this, what is the difference between (ii)

(iii) because unless the act or fact which could not be

proved would have the effect set out in (iii), the

section would have nothing to say, would it?

MR BORICK:	With respect, it may be that Your Honour is right, but I would - - -
DEANE J:	Or perhaps you would say (ii) would be the same

AlTI0/1/HS	32	24/8/88
Aylen

as (iii) except "could" should read "would" if one

was looking at a new trial.

MR BORICK:  I would have seen the difference in this way,

that there may be a discovery of an act or a fact which

was an important part of the Crown case but not

necessary to prove conviction, something that they

could link in with something else. If, however, there

was a first discovery of a fact and that his guilt or

misconduct could not have been proved without the

discovery of his - if a bank teller takes $10 out of his till at lunch time, hares off to the races,

backs the winning horse and is back by 2 o'clock and
the money is back in the till, there is no possible way that

he could be discovered until he mentioned it, so

something of that sort is encompassed in (iii).

DEANE J:  So what you would say is if it is (ii) it would

suffice if one went on and instead of "could not have

been proved", said something like "without which the

jury might not have been satisfied of his guilt"?

I mean, ( ii) is no good unless you identify a particular

act and can then go on and say if evidence of that had

not been led the jury might not have been satisfied of

his guilt.

MR BORICK:	Yes, certainly I would accept that, Your Honour. Yes, there would have to be a point of that sort, (a)
before the jury, and one that the jury certainly used.
DEANE J:	Then, have there been any identification of

particular acts of which evidence should not have

been ledZ

MR BORICK:	No - - -
DEANE J:	We would need them, though, would not we?
MR BORICK:	- - - not in the context of the way this was

argued at the end. Once we have made the concession

that we could not bring ourselves within the third

meaning then the point dropped away although

His Honour Justice Jacobs and also His Honour

Justice Prior who dealt with the point - certainly

His Honour Justice Jacobs - referred to the

extraordinary difficulty that would occur in trying

to ascertain this during the course of a trial,

whether or not an accused could take advantage of

section 193(2), and His Honour Justice Jacobs came to

the view that firstly it would have to be a decision

by the trial judge and not the jury, and secondly it

would have to be a decision made when all the evidence

was in, in order to ascertain the impact of it which
would make it at extremely difficult task.

WILSON:  And it really is a bit late in the day, is not it,

to consider it even at the level of the Court of

Criminal Appeal? If the accused person does not make

AlTl0/2/HS	33	24/8/88
Aylen

any objection at the time the evidence is sought
to be tendered at the trial, which would be the
ordinary time at which to determine - for the trial
judge to make a decision and to determine whether
or not the evidence goes in, if there is no objection
to the admission of the evidence at that time surely

that ought to be the end of it.

MR BORICK:  I would respectfully submit not always, but

certainly I would have to concede that that is a problem

if we wish to raise the matter at the end of the

Court of Appeal or now. I prefaced what I had to say

about this issue by saying I saw it as a real special

leave point because of th~ ... .. difficulties

in which it comes before you.

WILSON J:  If it was properly raised it obviously is,

Mr Borick, but in the light of the history of the trial there is a powerful case for saying this case is not an appropriate vehicle in which to consider it.

MR BORICK:  My submission would be that since, if our view

of it was right, or the minority view in SKEEN AND

FREEMAN was right, it would be a bar to conviction.

So that this Court may, in those circumstances, be

prepared to consider whether they would grant special

leave to appeal to have the matter fully argued.

WILSON J:  Well yes, but that would only be the beginning then.

Presumably there would have to be a new trial at which

the matter could be properly explored.

MR BORICK:  There would have to be a fuller inquiry by the

Court of Criminal Appeal if Your Honours came to a

different view of the meaning of section 193(2).

WILSON J:	Yes.
MR BORICK:	And if they came to the view then, in the light of

what Your Honours had to say about section 193(2), had

an inquiry and said, "Here's what's happened.

There's a bar to conviction", that obviously

would be of importance.

WILSON J:  Of course, it is not a bar to conviction in this

case, the point not having been raised at the trial.

MR BORICK:  I accept that, Your Honour, but it is in that

context that the applicant raises it as a special leave point in the strict sense. In combination, however,

our real case for asking this Court to interfere is

firstly, the first matter argued; that in caribination with the other, we would submit, is a very strong case for

this Court to give special leave.

WILSON J:  Yes. Thank you, Mr Borick. Yes, Mr Lindsay.

AlTl0/3/HS	34	24/8/88
Aylen

l"1R LINDSAY:	Your Honours, may I hand up a written surrnnary.
WILSON J:	Yes, Mr Lindsay.
l"1R LINDSAY:	Your Honour, the other matter is a Crown

chronology of events which I hope Your Honours have got.

It was forwarded some time ago and the Crown chronology

of events sets out the essential evidence the Crown

relied upon at the trial.n

WILSON J: Yes we have that chronology, Mr Lindsay, thank you.

l"1R LINDSAY:	Your Honour, perhaps I could start with the appropriation point raised by my learned friend and
examine first the nature of the Crown allegation in
respect to appropriation and linked to that question is, of course, the calculation of the sum charged,
and if Your Honours would look at exhibit P88 which is on page 426, which is book 2, that sets out
the formula, as it were, with the total there of
$1,453,760 - page 426 - which is the sum referred to
in the information.
WILSON J:	We take the amended figures, I take it?

MR LINDSAY:  Yes, Your Honour, $1,453,760. Your Honours,

the essential position was that from 15 September 1978,

the opening date referred to in the information, up

to 7 March 1980, the date of liquidation, on the

liquidator's figures some $7 million approximately

was received from the public by Swan Nominees. component A of just over $5 million because it was

only for the sum of $5 million that the Crown witnesses,

Crown accountants, could verify a deed of trust, and under section 130 it was a requirement, of course,

that the trustee was under the terms of a written

deed of trust. That is why, in component A, there

is that figure of $5,036,183.

The moneys received by Swan Nominees were used

effectively in one of four different ways; first,

they were applied to the Swan companies, companies
the Crown said which were associated with the

applicant.

WILSON J:  Excuse me, when you refer to section 136 what Act

are you speaking of?

MR LINDSAY:  Sorry, section 130 of the CRIMINAL LAW

CONSOLIDATION ACT, and that has a definition,

Your Honour will see, of "trustee" in it.

WILSON J:	Thank you.
BRENNAN J:	Can we just go back to that point that you

mentioned before.

AlTl0/4/HS	35	24/8/88
Aylen

MR LINDSAY:	Yes.
BRENNAN J:	$7 million was received by the trustee?
MR LINDSAY:	According to the liquidator's figures, but that

was not the figure which the Crown used for the purpose

of the calculation. The Crown used the figure referred

to in component A which was some $2 million less,

or $5 million, the reason being that it was only for the

figure of $5 million that the Crown could prove a

verifiable deed of trust.

BRENNAN J: You mean that only $5 million was received by the

trustees under the deed of trust?

MR LINDSAY:  Probably more, but there were some problems in

that other moneys had got into the trust account of

Swan Nominees and therefore the Crown, because of section 130 and the need to prove the existence of a

written instrument, looked to establish a verifiable

deed of trust in respect of each deposit and when all

those deposits were added up it came to that figure

of $5,036,183.

Of the moneys then received by Swan Nominees

throughout the full time of the scheme, that is from

15 September 1978 to liquidation on 7 March 1980 the

moneys were applied essentially in one of four ways by

Swan Nominees, the Crown said at the direction of the

application. First, there were applications of

substantial sums to the Swan Group of companies,

which the Crown proved those companies had an

association with the applicant by virtue of his

family shareholding. Secondly, some of those moneys -

and may I say in regard to the Swan moneys, that

essentially was, of course, the sums which the Crown

was saying had been appropriated, the moneys which

were paid to the Swan Group of companies.

TOOHEY J:	Mr Lindsay, you used the expression "the Crown was saying" are you implying that evidence was adduced
to support that proposition?
MR LINDSAY:	Yes, Your Honour, and evidence was adduced to support that proposition, and I submit, too, that the
summing up was consistent with that proposition in that
the issue put to the jury by the learned judge was
whether there had been appropriation for use or benefit
other than that of the investors in making these
payments to the Swan Group of companies.
BRENNAN J:	Is there any indication of how much was involved

in the payment from Swan Nominees to the Swan Group

of companies?

MR LINDSAY:  According to the liquidator's figures contained in

a report as to affairs which was tendered, $4.3 million

was paid to the Swan Group of companies.

AlTl0/5/HS	36	24/8/88
Aylen

BRENNAN J:  So at least some of the amount that was paid to the

Swan Group of companies must have been money included

in the $5 million which was received?

MR LINDSAY:  That is right, yes, a large proportion of it.

The second disposition, or application of moneys, was the payment of interest by Swan Nominees to

investors. There was evidence that sane payment of

interest to investors had been made out of principal

deposits received by Swan Nominees from the public,

and that is the figure referred to in component C

of the calculation. That also includes in it a

collection fee which, under the terms of the deed of

trust, the trustee company was entitled to reserve.

So that was the second way in which the moneys were

applied.

A third way in which the moneys were applied was

advanced to outside entities on secured mortgage and

the Crown took, of course, no objection to that and
that is the sum referred to in Dl, $2,750,009, and

those were arms-length mortgages	made by
Swan Nominees to outside identities.	Then the

fourth way in which the moneys were applied by

Swan Nominees in fact was within the Swan Group or

either "cash at bank". "Cash at bank" is referred to

in D3, and D2 the figure of $583,660, were moneys which

had been paid by Swan Nominees to Westland Finance,

another company within the group, and had in fact

been recovered at liquidation.

The Crown did not necesarily concede that the

applicant was entitled to a deduction for such sums

but it was envisaged that pending placement on first

mortgage their moneys might be deposited with a

financial institution and it was contended by the

applicant that Westland Finance was such a financial

institution. So, in effect, when the reckoning

took place on 7 March 1980 an allowance was made for

moneys still within the group which it might arguably

be said were still there pending placement on first

mortgage security. That is, Your Honour, the rationale

behind the calculation of the sum charged.

BRENNAN J:	Was not the $4 million also paid to Westland Finance?
MR LINDSAY:	Yes, it was not precisely $4 million, but a

substantial amount in the millions was paid by Swan

Nominees to Westland Finance, was then dissipated within the group either by Westland Finance or by companies within the Swan Group to whom Westland

Finance made payment.

BRENNAN J:  Does that mean the prosecution case distinguished

between payments made by Swan Nominees to Westland

Finance saying that some of those payments were

misappropriations within the statute and others were

not?

AlTl0/6/HS	37	24/8/88
Aylen
MR LINDSAY:	It was put to the jury, Your Honour, on the basis that there was no cornmitmmt	for position merely

because a credit had been given to Westland Finance;

that that was a legitimate use of the moneys. But,

in order to avoid the argument that moneys with

Westland Finance,which, according to the applicant_

was a legitimate finance company, were there	pending
placement on first mortgage, the Crown made an allowance for that amount.

TOOHEY J: Mr Lindsay, as you have just painted the picture,

and leaving aside the question of general deficiency,

it would seem that it is only moneys falling into

misappropriation; is that right? category one that are likely to.be the subject of

MR LINDSAY:	Yes, that is so.
TOOHEY J:	And as to those moneys, was evidence adduced in

relation to specific amounts, both by way of payment

in and payment out. to one of the Swan Group of

companies?

MR LINDSAY:  Yes, Your Honour, indeed. The first three weeks

of the trial was taken up by the tendering of

books and records of the company, of the various

companies, of then having accountants attached

to the Corporate Affairs Corrmissioner called, who examined those

books and records, matched the entries there for

the receipts and payments against what was contained

in the bank._ statements and deposit slips for the

particular companies.and from that preparing

schedules which showed receipt an4 payments into.

and out of each of the companies. From those

schedules was then prepared the charts, exhibit P85

and exhibit P86, which showed the receipt and

distribution of trust moneys throughout the full

period. Those charts are on pages 423 and 424,

Your Honour.

In effect, the basis for these charts - the first

one Your Hono~s _ will see on page 423 covers the period from

15 September 1978 to 30 June 1979; the basis for

that chart, as indeed for the next one, was the
schedules of the accountants who had~ analysed, on

to companies within the group.

a monthly basis, receipts, first of all by by Swan Nominees

TOOHEY J: Because without something like that, the allegation

of a general deficiency would tell you nothing.

It is conceivable on that basis that moneys have

been all properly invested, but that the bottom had

fallen out of the market, and the moneys could not

be recovered. But no element of misappropriation

would be involved.

MR LINDSAY:  Yes, Your Honour, and it was never the Crown's

contention at the trial that the, in effect,

AlTll/1/VH	38	24/8/88
Aylen

appropriation was being proved by the mere fact

of the deficiency at liquidation and I take issue,
obviously, with my learned friend and, indeed,
with His Honour Mr Justice Jacobs, in so saying.

The Crown proved, as I say, the first three weeks was taken up with showing the receipt and

distribution of trust moneys by the Swan Group of

companies to - - -

DEANE J:  How would the Crown case have been affected if
clause 3(iii) - if there had been one - of the trust
deed had read, "by investment by loan to other
companies in the Swan Group"?

MR LINDSAY: Well, Your Honour, I submit that clause 3, which

certainly is in wide terms, was merely permissive

of the different forms of investment. There still

remained the duty upon the trustee and the director

of the trustee company.- to apply those moneys

honestly, not in a manner in which there was a

potential conflict of interest, because another part of the Crown case, which a considerable

amount of time was devoted to, was establishing

that Aylen was associated with each of these

companies to which ~ayments Nere made; that is, exhibit P59b, which is to be found at page 246 -

another chart.

DEANE J:	Is the answer that it would not have been affected?
MR LINDSAY:	The answer, Your Honour, is that it would not

have been affected even if there was such a

permissive - - -

DEANE J:	Such an express power.
MR LINDSAY:	Such an express power in the - because it was

not entirely reliant upon the fact that the payments

were made to companies with which the applicant was

associated.

TOOHEY J: Could I just ask you one more question on this

topic, Mr Lindsay? The moneys that were paid that

fall within your category one were, I take it, in

the form at any rate of unsecured loans?

MR LINDSAY: That is correct, Your Honour, and indeed, the

position was that those payments which were made

by Swan Nominees to Swan companies were, with just

one exception, that of Platypus, a. sum of $50,000,

made unsecured and whereas where advances were
made to outside entities, the figure referred to

in Dl of exhibit D88, they-were all secured.

TOOHEY J: Do you say that that fact of itself, that is,

the making of unsecured loans, constituted a

misappropriation?

AlTll/2/VH	39	MR LINDSAY	22/8/88
Aylen

MR LINDSAY:  I say, Your Honour, that I am not and never did

rely entirely upon that to prove the misappropriation.

The other limb to the Crown case which was

extremely important was, of course, the financial
condition of those companies and going on from that,

the applicant's knowledge of the financial

conditions of those companies.

DAWSON J:  So the battle lines were clearly drawn. On the

one hand, the defence was that these were merely

investments, albeit imprudent investments, perhaps.

But the Crown said no, from the totality of the

circumstances, you can see this was not merely

imprudent investment but misappropriation.

MR LINDSAY: Yes, exactly, Your Honour, yes.

DEANE J: Do you have to say misappropriation?

DAWSON J:	I meant that as a shorthand term, appropriation in - - -
MR LINDSAY:	Yes, for -

WILSON J: Well, dishonesty, I mean, they were made dishonestly.

DAWSON J: Well, in accordance with the section.

MR LINDSAY:  Yes.

DAWSON J: It is appropriation with intent to defraud.

MR LINDSAY: That is right; appropriation for use or benefit

other than that of the investors with the intent to defraud. There was a considerable amount of proof led as to the condition of these companies

with which the applicant was associated and that

they were, in fact making losses. The figures

which would have been available to the applicant

at the commencement of the scheme on 15 September 1978

showed a loss collectively in the group of some

$50,000 or $60,000. By March 1979 he had further

figures available to him, those of the figures

for the Swan Group of companies for the year ending

30 June 1978, which now showed a collective

loss in the region of half a million dollars, and

assets of the group mortgaged to the tune of

$2.3 million.

So there was considerable evidence, in my

submission, to show that the state of those companies

was precarious and, indeed, according to the

evidence of Mr Moen, the chief accountant attached

to Corporate Affairs, collectively the group was

insolvent as at 30 June 1978 before the trust scheme

commenced.

DAWSON J:  Did the trial judge put these issues compendiously

to the jury at any particular point in his charge?

AlTll/3/VH	40	24/8/88
Aylen

MR LINDSAY:  He put the issues as to the need for them to

be satisfied that there had been appropriation for a

use of benefit other than the investors' several times to the jury. He put that issue and he, of course, also put very much to the jury the issue

of the applicant's knowledge of the financial

condition of the companies and the need for the

Crown to establish that.

DEANE J: While we are interrupting you, Mr Lindsay, could

I ask you this? Are there any authorities which

establish that for a trustee to lend money

recklessly to someone who may not be able to repay

it is an appropriation of the use of those moneys

to that person with intent to defraud for the

purposes of a section such as this?

MR LINDSAY; I know of no case which precisely states that.

·1 know of cases which state that, notwithstanding

the width of an investment clause, there is still

a duty upon the trustee to act honestly and not in - - -

DEANE J:	Well, there are two parts of the question I asked
you.
MR LINDSAY:	Yes.
DEANE J:	One is, is to lend money to somebody and creating
a liability in that person to repay it, an appropriation to the use of that person? And second, is lending
money in those circumstances, with the hope but not
the expectation that you will get it back, an
appropriation with intent to defraud?
MR LINDSAY:	In my submission, it very well may be and, as to

that element of appropriation in the. charge, Your Honour

will see that the thrust of Mr Justice Prier's

judgment on this was to take the analogy of the

company director in South Australia, under provision

section 189, the duty ig, upon the officer of the

company to -	apply property of the company not
for his own use or benefit.	On the analogy of that,
he argued the meaning of appropriation in section 187.

I submit, too, in accordance with what His Honour was

there saying, that appropriation on its own is not

a term of art. It means, in effect, an application

for a use or benefit other than that of the beneficiary;

in effect, just as in section 189 it means an

application for use or purpose other than that of
the company.

In some circumstances, that may well be the

case with a loan. If a loan is made to a man of straw,
or someone who cannot properly - - -

DAWSON J: Well, to take what Justice Deane has said a little

further, if you established an intent to defraud,

would you necessarily establish an appropriation

for purposes other than the true beneficiary?

AlTll/4/VH	41	24/8/88
Aylen

MR LINDSAY:	Your Honour, I see them as two separate elements so I acknowledge that, in a particular case, there may be an overlap. First, one asks oneself the
question, was there an appropriation for a use or
benefit other than that of the investor? And
secondly, if there was an appropriation for use
or benefit other than that of the investor, was it
done with an intent to defraud?
DAWSON J:	I can see you can ask it that way, but why cannot

you ask, was there an intent to defraud, if there

was, it was necessary an appropriation for some

illicit purpose? And, you go on, since you had

to prove the intent to defraud, you necessarily,

in proving that, proved the other.

MR LINDSAY:  Yes, well, there is certainly an overlap between

the two.

DAWSON J:	But a complete overlap.
MR LINDSAY:	For instance, take the fact that these moneys

are applied to companies with which the applicant

is associated; that may, given the conflict of

interest which arises, fulfil the ingredient of

appropriation for use or benefit other than the investors

and also go to the issue of the intent to defraud.

BRENNAN J:  Do you contend for a construction of 187 which

draws a complete dichotomy between the use or

benefit for the beneficiary and the use or benefit

of any other person? In other words, if it is for the use or benefit of both, but with the intent to defraud, is the offence made out?

MR LINDSAY:  I submit that what one must establish that it

was appropriation for a useful benefit other than

that of the investor. If, however, it had the
incidental effect of benefiting the investor as

well, then none the less the offence, in my submission,

is committed and, indeed, as His Honour Justice Prior

said in the learned trial judge having put it on

the basis that you must be satisfied that it was for

the use or benefit of the Swan carpany only, he was

perhaps giving a direction too favourable to the

applicant.	So I submit one does not have to go that
far.	·

Your Honour, if I can come back to the question

of the charge, the case of GOODALI; a :South: Aastraltan

Court of Criminal Appeal decision, Your Honours may

be aware, held that there might be an appropriation

couched in terms of a general deficiency. Perhaps

I can take Your Honours to that case, REG V GOODALL,

(1975) 11 SASR 97. Just a couple of passages there

of Chief Justice Bray, first reading at page 97,

about four lines down:

42

AlTll/5/VH	24/8/88
Aylen

In England, unlike South Australia, the charging

of a general deficiency was not made the subject

of any statutory provision and the decision of

the question was left to the common law. The

state of the authorities was fairly evenly balanced,

although perhaps with a slight preponderance in
favour of the propriety of charging a general
deficiency in appropriate cases, until the

decision of the Court of Criminal Appeal in

REG V TOMLIN. There it was held that in a case

of embezzlement where it is impossible to
trace individual items of property or sums of

money it is proper to charge the embezzelernent of

a general balance of some t~between specified

dates.

And then His Honour, in the next paragraph says:

The principle, however, is subject to an important

qualification, namely that "where it is possible

to trace the individual items and to prove a
conversation of individual property or money,

it is undesirable to include them all in a

count alleging a general deficiency."

And then at the end of that paragraph, His Honour says:

If it were otherwise, the more complicated the

web of fraud woven by the marauder the more

powerless would the law be to punish him. In

most cases where it is impossible to disentangle

the defendant's dealings with the money or

property entrusted to him, it is because he

has created the impenetrable entanglement, and,

as was said by Mr Justice Jacobs during the

course of the argument, it does not become the

maker of the omelette to demand the separation·

of the eggs.

One final passage, Your Honours on the next page, 98;

GOODALL's case was concerned with fraudulent conversion

under section 184, but says - this is about ten lines

from the bottom: 

It could well have done so without turning its

mind beyond larceny and conversion to other

crimes, particularly the comparatively new

crimes of fraudulent misappropriation by persons

in a fiduciary capacity. I think that the proper

implication is that it was content to leave the

form of charge in such crimes to be dealt with

by the common law and the common law is now

equipped to deal with it appropriately.

So, in my submission, that is authority for the charging,

in effect, on the general deficiency principle, under

section 187. In this instance, Your Honour, there

were considerable difficulties, in that the Crown

AlTll/6/VH	43	24/8/88
Aylen

could not say in regard to particular applications

of moneys by the trustee company whether, in
individual cases, they were pure trustee property
or mixed with other moneys. Secondly, after

March 1979, the moneys were paid to Westland Finance, and Westland Finance also carried on trading activities

quite apart from receiving investors' moneys, and

the investors' moneys were paid into this same
trading account as all other moneys. Thirdly, no
proper books and records were maintained recording

loans made by Swan Nominees to companies within the

group.

But I submit again that what, in fact, the Crown was doing in using this as a basis of calculation

was merely quantifying and identifying the sum

appropriated and was not purporting to prove by the

mere fact of there being a deficiency at liquidation

that there had been appropriation.

(Continued on page 45)

AlTll/7/VH	44	24/8/88
Aylen

MR LINDSAY (continuing):  The trial judge, in my submission,

correctly directed on this matter, that the issue

is whether the application of trust moneys to the investors. Onpage 3 of the written summary, under

paragraph 7 I have given the page references in

the summing up of His Honour to the directions

which he gave the jury on that point and, secondly,

of the need which he fully explained to the jury,

in my submission, for an intent todefraud to be

established. Again, the references are there given.

So I submit, Your Honour, that it is not an

appropriate case for special leave on the point

of appropriation because, to a large degree, the

differences inapproach as between Mr Justice Prior

and the Acting Chief Justice depended upon differing

perceptions and, I would submit, in the case of Mr Justice Jacobs, erroneous perception of what

in fact the evidence was and how it was the Crown

went about establishing the appropriation element.

For those reasons, I submit that this case would

not be an appropriate vehicle for determining that

issue.

In regard to the matter of section 193 of the

CRIMINAL LAW CONSOLIDATION ACT, Your Honours have

already raised very largely the points which I would

have raised, namely, that no evidential foundation

was laid at trial for this issue and, for that

reason, I submit that it ought not to be entertained

at this stage. Unless Your Honours wish to hear me

on the detailed argument on section 193 itself,

I will just limit myself to saying that would be the essential reason for me contending that special leave

ought not to be granted on section 193. In the case

of SKEEN AND FREEMAN, the majority view expressed by

Chief Justice Campbell, there has been consistently

followed - of course, it is not in any sense binding

on Your Honours - but it has been consistently followed

in England, the case of GUNNELL ,	and I am not aware
criticism of the majority view as to what first	that there has been in this country either any
disclosure means.

On that view, as I understand it, my learned friend

is conceding that he could not bring the applicant

within section 193.

WILSON J: Perhaps we will acknowledge what you have just said

and leave it open for the time being as to whether we

want to hear you in greater detail on that.question.

MR LINDSAY:  Thank you, Your Honour. I might say, in regard to

appropriation, again I have not referred Your Honours

to authorities on the meaning to be attached to

appropriation. There are authorities and I am, of

course, prepared to enlarge, if Your Honours wish it.

A1T12/l/VH	45	24/8/88
Aylen

That brings me to the question of the admissibility

of exhibit Pl53. Again, I have a point of difference

with my learned friend as to the purpose for which

the Crown led that evidence. In effect, the Crown established,

wished to establish that an application had been

made for a loan by Westland Finance and that it had

been rejected and, indeed, that was a loan for a sum

of $850,000. The significance of that was that it

was a necessary first step if this deal was to be consummated by the applicant with these parties

in Western Australia, Caratti and Pierce, and what

the crime, in effect, was saying in common parlance

was that the deal was a non-starter because the
application was rejected by the bank for the initial

amount of $850,000. There, in fact, had to be a

good deal more paid under the terms of the proposed

arrangement to Caratti and Pierce.

WILSON J: But, as I understand the submission, it was simply

that the expression of opinion that concluded the

bank's statement was inadmissible.

MR LINDSAY:  Yes.

WILSON J: Not the statement itself, not the bank record itself,

apart from that. ·

MR LINDSAY:  Yes. I merely make that point in that Your Honour

will see that the Crown really never sought,

intended to place any emphasis in any event upon

those passages but, in regard to that point, the fact

that there was contained in that memorandum this

comment about the round robin being devious, so there

was no evidence to associate the applicant in any

way with the mechanics of that transaction. Indeed,

on the previous page, unfortunately again it is a

page which Your Honours actually I do not think have

got in the book, but the comment is actually made on

the previous page, that:

We assess Aylen to be honest and capable, but

are unable to express the capabilities of an

as yet unproven and unknown .....

So that was actually a comment which was made on the page earlier.

DAWSON J:  I am not sure that I understand the significance

of this deal in the whole scheme of things.

MR LINDSAY: Well, it is a difficult deal. It was essentially

a matter raised by the defence at trial and, first, it was put on the basis that Caratti and Pierce, as
a result of this transaction, would inject funds into

the Swan Group, thus enabling in due course the

investors to be repaid.

DAWSON J:  So it went to the financial stability of the group,

yes, I see.

AlT12/2/VH	46	24/8/88
Aylen

MR LINDSAY:  Yes. That was the essence of it. The Crown

contended that, in fact, in real terms, there was

not going to be an injection of funds; that it was

just a round robin of cheques and no real funds

would be injected into the group in consequence.

Another point, in fairness, I should mention, that

they intended that, also as a result of this deal, certain property of the investors which previously

had not been secured would be secured as a result

of collateral provided by Caratti and Pierce. But

the Crown said, look, this deal in objective terms

was commercial nonsense, and indeed, this affidavit

exhibit, Pl53, went to prove the issue that in fact

it stood no chance of proceeding in any event.

So I submit that no pos,sible prejudice could be

caused in consequence of the admission of exhibit P153
and also adopt~d the arguments of Mr Justice Prior

in regard to exhibit Pl53 in that, in my submission,

it is admissible, not only under section 47 - the

provision dealing with the admission by affidavit of

banking records - and that it is a banking record

within the definition given in section 45b and
that also it would admissible under the Business

records provision, section 45a.

TOOHEY J: Mr Lindsay, was anything made of that part of the

document either by counsel in their addresses, or

by the trial judge in charging the jury?

MR LINDSAY:  I made no comment on it at all. Mr Barick referred

to it in his closing address. His Honour did not

refer to it at all. That was the position.

TOOHEY J:  Thank you.

WILSON J: Thank you, Mr Lindsay. Well, perhaps before we

call on Mr Barick to reply we will retire for a

moment to consider whether we wish to hear you at

greater length on the matters you have referred to.

AT 4.19 PM SHORT ADJOURNMENT

UPON RESUMING AT 4.33 PM:

WILSON J: Mr Lindsay, we will defer hearing you further for the moment until we have heard Mr Borick in reply. Mr Borick, the Court would like to hear anything you

have to say in reply.

MR BORICK:	I would distinguish GOODALL's case, on the basis that there it was clearly established that the
investment funds could not be traced at all. In

AlT12/3/VH	47	24/8/88
Aylen

this case the Crown could trade the money and,

in fact, Mr Lindsay has told you they spent three

weeks telling the jury where the money came in

and how and when it went out and, if they had kept

with the first information and they had obviously

identified the amounts, then that would have been

a much clearer case on which to identify the

battle lines in the situation.	So my next point is
that the battle lines were not identified.	The

Crown say to this Court now that they did not rely

upon the net loss on liquidation, but that is not

the way in which it was presented to the jury,

particularly because of the particulars.

In relation to the question asked by Mr Justice Deane

·as to whether, in a paraphrase of "reckless

lending" it is in itself an appropriation with intent

to defraud, · it appeared to me that that may be,

depending on the circumstances; for example, I

said that the books of this company were in a mess but I perhaps did not make it clear that the issue

at the trial on that - the accused or the

applicant said he did not know that. That was

an issue for the jury. If they decided that

issue against him well then, maybe, that would indicate

a degree of recklessness pointing towards misapprorpiation.

With respect to the banker's opinion, I had to

mention that opinion because it was before the jury,

and I suggest my friend did not mention it because he

knew the risks involved with it and I had to mention

it to make the point that we had no chance to

cross-examine on it, and it was mentioned in that

context. I would just indicate to the Court that

no argument has been presented by my friend as to the

question of the failure of the other two judges to

deal with that issue, particularly as my friend says

he relies upon what Mr Justice Prior had to say about

it, but, as I understand Mr Justice Prior, he thought

that it should not have been admitted, but applied
the proviso and, as I said earlier, there was no

mention of that at all by the other judges, and I

rely upon that as a special leave point.

WILSON J: The Court will not need to hear you any further,

Mr Lindsay. The Court is not persuaded that the trial

miscarried on the question of appropriation. The central issue between the Crown and the applicant

was clearly drawn, the Crown case being that the
applicant procured the company, R. W. Swan Nominees Pty

Limited,to appropriate a large amount of trust funds belonging to investors to the use of its associated

companies and did so with intent to defraud and that

the .iury for its determination. issue was clearly presented by the trial judge to

A1Tl2/4/VH	48	24/8/88
Aylen

With respect to the second point, the admission of the banker's opinion, the Court is of the opinion that even if that

admission was in error, it was not of such

significance when viewed in all the circumstances
of the case as to warrant the grant of special
leave. Finally, with respect to the proper
construction of section 193 of the CRIMINAL LAW

CONSOLIDATION ACT, we do not think that the question

arises, having regard to the fact that no reliance

was placed on the section at the trial and no

evidential basis had been laid for it to be pursued.

We therefore conclude that special leave should be

refused. That is the order of the Court.

AT 4.38 PM THE MATTER WAS ADJOURNED SINE DIE

A1Tl2/5/VH	49	24/8/88
Aylen