Braysich v The Queen

[2010] HCATrans 268

[2010] HCATrans 268

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P32 of 2010

B e t w e e n -

JEFFREY JOSEPH BRAYSICH

Appellant

and

THE QUEEN

Respondent

FRENCH CJ
HEYDON J
CRENNAN J
KIEFEL J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON TUESDAY, 19 OCTOBER 2010, AT 12.28 PM

Copyright in the High Court of Australia

MR M.J. McCUSKER, QC:   May it please, your Honours, I appear with my learned friend, MR S.J. LEMONIS, for the appellant.  (instructed by Ainslie van Onselen)

MR W.B. ZICHY‑WOINARSKI, QC:   If your Honours please, I appear on behalf of the respondent with my learned friend, MS W.F. GILLAN.  (instructed by Director of Public Prosecutions (Cth))

FRENCH CJ:   Thank you.  We will sit through to 1 o’clock, Mr McCusker.

MR McCUSKER:   Thank you, your Honour.  May it please your Honour, this is an appeal brought pursuant to special leave granted on 30 July this year.  The notice of appeal and grounds of appeal are in volume 3 of the appeal books at pages 1504 to 1505.  My instructing solicitor, by letter of 13 October, did advise the Registry – I do not know if it was brought to your Honours’ attention yet – that ground 3 contains a typographical omission and that is the first line should read “further erred in law in not holding” rather than “in holding”.  So I would move to amend that ground so as to include the word “not”.

FRENCH CJ:   Yes, I do not think there is much room for misunderstanding there.  Thank you.

MR McCUSKER: I do not think so, your Honours. Your Honours, the question raised by this appeal, if I could put it shortly, is whether it is a breach of the appellant’s right to a fair trial by jury for the trial judge to have refused to allow him to call two witnesses whose evidence, as the defence contended, would have been relevant to the statutory defence available for charges laid under section 998(1) of the Code and further, whether it was a breach of his right to a fair trial to refuse to allow defence counsel to invite the jury, in closing, to consider whether that defence had been established and further, whether it was a breach of that right to a fair trial that his Honour the trial judge refused to direct the jury to consider that defence.

The appellant, as your Honours will see, was charged with creating a false and misleading appearance of active trading in shares in a company called Intrepid, which is an offence under section 998(1) of the Corporations Law.  I said Code – it is the law.  That legislation appears in tab 4 of the appellant’s bundle of authorities.  In section 998(5) there is a deeming provision, that is, “a false or misleading appearance” is deemed to be created if a transaction:

does not involve any change in the beneficial ownership –

The Crown case was that the deeming provision applied, that is that by virtue of the transactions in question involving no change in beneficial ownership, therefore there was deemed to be a false or misleading appearance created from which, of course, it would follow that there was an offence under section 998(1).

FRENCH CJ:   Your client’s position was that he believed that there was a change in beneficial ownership associated with the various transactions?

MR McCUSKER:   That is so, your Honour, yes.  He gave evidence, and it was to that effect, and he gave some evidence to explain why he thought that was so, and I will come to that.  The Crown case, again if I can encapsulate it, was that there were share sales which were made on behalf of a company called Walthamstow, which was controlled by Mr Masel - on the account of Walthamstow with Paul Morgan Securities, a broking firm of which the appellant was a member, and those sales which were made to Challiston on account of Walthamstow were in fact sales of shares which Walthamstow held only as security for loans made by it to Challiston, and that the sale to Challiston was therefore a sale of shares in which Challiston already held a beneficial interest.

The jury’s verdict must be taken as a finding to that effect, and a finding that Mr Braysich, the appellant, knew that to be the case.  So by acting as a broker to give effect to those transactions Mr Braysich was deemed to have created a false or misleading impression of active trading.  However, if the jury were to accept it, in executing the orders, that he probably did not have a purpose of creating a false or misleading impression or to put it in terms of the law itself, if a purpose of the transactions, or a purpose for which the person did the act was not made or did not include the purpose of creating a false or misleading appearance, that is a defence.  The onus, of course, was on the appellant to establish that.  Our submissions, as your Honours will have seen, is that that can be done both by direct or indirect evidence, that is circumstantial evidence.

FRENCH CJ:   On either basis would you accept that if there is no evidence to raise that defence, circumstantial or otherwise, it is appropriate for a trial judge not to direct a jury to consider it?

MR McCUSKER:   Yes, your Honour, but that would be ‑ ‑ ‑

FRENCH CJ:   You might say it is an extreme case, but I am just ‑ ‑ ‑

MR McCUSKER:   It is an extreme case, yes, but certainly if there is simply no evidence from which the jury could reach that conclusion to support the defence, then it would be appropriate in those circumstances, but only in those circumstances, and it would have to be a very clear case because the danger always is that in taking a particular view of the evidence the judge may be usurping the trier of facts function, that is, the jury.  The trial judge’s ruling ‑ ‑ ‑

FRENCH CJ:   Sorry, the function of the trial judge in doing that, though, is not qualitatively different, is it, from the function which a trial judge undertakes in determining whether there is a case to answer.

MR McCUSKER:   It certainly is a parallel, I think.

FRENCH CJ:   It is a similar sort of judgment.

MR McCUSKER:   A similar sort of situation but there must be some evidence.  It could bear in mind that although the onus is on the defendant, the accused, it is only necessary that he establish on the bounds of probabilities.  So it is different in that qualitative sense.  You may have evidence in a prosecution, just to elaborate, which might tenuously be said to support the prosecution but insufficient to establish beyond reasonable doubt the case.  Again, it is a very important step for a trial judge to take because again there is always the danger of usurping the jury’s function.  The trial judge refused to allow the defence to call two expert witnesses.  That was after the prosecution case had closed, of course, and also after the accused himself had given evidence‑in‑chief and cross‑examine - re-examination.

We say that if, in fact, as against deeming, the sales, the trades were, as a matter of fact, unlikely to have affected the market or to have created a false or misleading appearance, even though deemed to do so, that evidence would have been the basis for submitting to the jury that it was unlikely that Mr Braysich had a purpose in effecting the transactions of creating that impression.  We do not say that is conclusive, but it is some evidence to which the defence could point in support of the defence because the question would be why would he facilitate sales with that purpose if it was clearly unlikely that such a purpose would be achieved?

That is only one aspect of the evidence on which the appellant would have relied and, indeed, your Honours will have seen that we have filed a reply with annexed to it a page from the transcript of the argument before the Court of Appeal.  We have done that because his Honour Justice Buss, who wrote the lead judgment of the case, said at the top of that page, dealing with what our case was on appeal:

just to make sure I understand it, you say you had your two experts given evidence, there would have been a basis for the defence in subsection (6) along these lines –

He proceeded to explain and the answer to that was, yes.  His Honour said halfway down the page, “But in the end that evidence can only go” – he was talking there about other evidence can only go to the question of whether it did not, in fact, create a false or misleading appearance.  Is that right?  The answer was no.  There is other evidence which was then referred to.  Now, although his Honour clearly understood the nature of the submission as to what the relevance of that evidence was, in his judgment - and I refer to volume 3 appeal book at paragraph 151 at 1463, your Honours – he dealt with it, referring to Professor da Silva Rosa’s evidence, he said:

A consequence of the appellant not invoking the defence under s 998(6) -

and by that his Honour did not mean that it was contended that the defence should be put.  He simply was really categorising the failure of the accused to state in express terms what his purpose was.  He said:

to the extent that it related to the appellant, ceased to be relevant in that there was nothing for the Professor’s evidence to rebut.  If the jury was satisfied beyond reasonable doubt that the appellant had knowingly engaged in the activity described in s 998(5)(a), the transactions in question were deemed to have created a false or misleading appearance -

and then these are the words that cause somewhat of a puzzle given his Honours encapsulation of our contention in the course of argument -

The appellant was not entitled, by expert evidence or otherwise, to go behind the deeming provision once the prosecution had proved the conditions for its engagement.

The point – it was never contended on behalf of the appellant, of course, that the expert evidence could enable the appellant to go behind the deeming provisions.

FRENCH CJ:   You say it goes to purpose.

MR McCUSKER:   It goes to purpose, yes, and his Honour, in the course of discussion, before the decision was given, as I say at page 44 of the transcript that discussion clearly understood that, but has not dealt with that point in his reasons.

KIEFEL J:   When you say it went to purpose, do you mean that the expert evidence was relevant to inferences which might have been drawn objectively about purpose, or do you mean that it went to the question of the appellant’s knowledge of the unlawful purpose which is what you identify in paragraph 44 of your written submissions?

MR McCUSKER:   In a sense it goes to both, your Honour, but it is objective evidence which goes to purpose in that it goes like this.  If the evidence of the two experts – and they were eminent experts – had been accepted by the jury to the effect that these trades did not evince any market manipulation or were unlikely to affect the market ‑ ‑ ‑

KIEFEL J:   You mean they gave no appearance?  Is this the same issue?

MR McCUSKER:   They gave no appearance, I should say, and if that were the case, then it follows as a reasonable submission, we say, to the jury, if that were the case is it likely that he had the purpose of creating a false impression?  The argument, no doubt, from the prosecution would be, even if it did not give that appearance you cannot say that necessarily he did not have the purpose.  That is true, but again that is a jury issue for the jury to determine.

KIEFEL J:   The prosecution led this evidence about whether or not the transactions were likely to create a false or misleading appearance, although the deeming provision would not require that of the prosecution.  So it was led, supposedly, on the basis that it was in readiness for rebuttal.

MR McCUSKER:   Exactly, your Honour.  In fact it was expressly stated, both at the trial and on the appeal, that the sole purpose of leading the da Silva Rosa evidence was to rebut a defence.  There were green trades and yellow trades.  The green trades were the much smaller number relating to Mr Braysich’s transactions.  A very large number, as your Honour would have seen, of other trades were dealt with by da Silva Rosa in the same reports.  So da Silva Rosa’s evidence was led directly to rebut an anticipated defence based on 998(6) and that actually appears, I am reminded, in the reasons of Justice Buss in volume 3 of the appeal book at page 1461 at lines 10 through:

The . . . reason Prof [da] Silva Rosa was called was in the event that the defence was raised by either of the accused.

So it was evidence which, on the prosecution case, was directly relevant to the question of purpose and the question immediately is begged, if it were relevant to the question of purpose, why was the accused not permitted to lead similar kind of evidence?  Just going on from that, your Honour, when his Honour the trial judge – and I will come to his ruling – ruled that the defence could not call those two experts he also accepted that the question of a defence was no longer an issue for Braysich and for that reason it was agreed by prosecuting counsel to withdraw from the jury the evidence of da Silva Rosa relating to those 25 or 26 trades which involved Mr Braysich, the appellant.

FRENCH CJ:   Had Mr Scook raised the subsection (6) defence expressly?

MR McCUSKER:   Yes, he did.  He expressly raised it and so the evidence of da Silva Rosa remained, so far as his case was concerned.  But as your Honour the Chief Justice said a bit earlier, the way in which Mr Braysich ran his case was to strenuously assert that he did not know that there was no change of beneficial ownership.

FRENCH CJ:   He gave no evidence in relation to purpose within the framework of subsection (6).

MR McCUSKER:   He gave evidence as to purpose in a sense, and I will take your Honours to it.  He did not say in express words “It was not my purpose to create a false or misleading appearance”, but he did say - I will give you the exact words, but in effect he said, “I had no understanding or belief that the purpose or intention of the client was to create a false or misleading appearance”, and that was said in cross‑examination.

KIEFEL J:   The prosecution had to prove knowledge on his part that there was no change in beneficial ownership.

MR McCUSKER:   Yes, and it must be accepted that by the jury’s verdict they proved that.

KIEFEL J:   So part of his defence was directed to that element.

MR McCUSKER:   Absolutely, yes, your Honour.

KIEFEL J:   But you say, as I understand it, that his knowledge in that regard is also tied up with his proof of purpose.  Is there an overlap there or am I confusing ‑ ‑ ‑

MR McCUSKER:   I do not think so, your Honour.

KIEFEL J:   They are distinct matters.

MR McCUSKER:   They are distinct matters.  He said “I did not know”, but he also said “I had no reason to believe that the people that I was dealing with had the purpose of creating a false or misleading impression”.  It must be borne in mind that - the jury convicted Scook and, therefore, did not accept the defence that he raised.   But Scook was in a different position.   Although it was a joint trial, Scook had vastly more charges laid against him dealing with other brokers.

KIEFEL J:   Do you say that the expert evidence that the defence sought to put forward which was excluded went to the question of his knowledge of there being no change of beneficial ownership?

MR McCUSKER:   No, your Honour, we do not.  No, we do not do that.  Just as the prosecution said da Silva Rosa’s evidence went to purpose, so we say the reason for our seeking to lead the two experts’ evidence would have been in refutation, which may or may not have been accepted by the jury, of course, but in refutation of da Silva Rosa’s evidence and going, essentially, to “well, did this have the effect” or would a person, I should say, would a person reasonably have thought that this would create a misleading impression.  It is that kind of evidence.  That goes directly to the question, as I said, where if the answer to that is no then it seems unlikely that anyone, and particularly an experienced broker, would have that purpose.  That was the proposition. 

Now, the trial judge’s ruling refusing to allow those two experts to be called appears in the first volume of the appeal book at pages 148 to 149.  The ruling followed a submission by prosecuting counsel that since Mr Braysich had not raised the defence in his evidence, that is the way it was put, and he interpolated “and it is easy to understand why because the position is he did not know there was no change in beneficial ownership, so we do not get to the stage of the defence arising for consideration”, the trial judge said at page 148 in the last paragraph:

In my view, having regard to the way the case has proceeded, there is no room in the evidence of Braysich or the other material adduced in the crown case and the case of the accused, Scook, from which the jury would be entitled to infer another purpose. 

If I can just pause there.  The question raised by the defence under 998(6) is not whether there was another purpose, the question fairly and squarely is did he have the offending purpose, the onus of which, of course, was on him to negate.

FRENCH CJ:   The premise of it being that he knew there was no change in beneficial ownership.

MR McCUSKER:   That is right.  The question then was does the defence arise, or at least arise for consideration, that is, although he knew there was no change in beneficial ownership as the jury found, nevertheless was the purpose of the transaction, or the purpose of this person, the accused, in effecting the transaction to create a false or misleading impression.

FRENCH CJ:   So putting it simplistically, perhaps, the position that you would want to have been able to take before the jury is “I believe there was a change in beneficial ownership.  If you do not accept that, it was not my purpose to create a misleading impression.”

MR McCUSKER:   That is right, to create a misleading impression, and I say that you must look at all of the evidence, and I will come to the bulk of it, although it has been fairly well summarised in the judgment of Justice Buss, as to what we say would have been put to the jury in an endeavour to persuade them, because the onus was on us, that the offending purpose was not held by the accused.  In the last sentence of that page incidentally, your Honours, at 148, his Honour said:

The case against Braysich stands or falls on the deeming provision.

That is, he was putting it this way, I think, that if the accused denied that he knew there was no change in beneficial ownership, then that is where the case stood or fell.  At 149, just to complete that reference, at line 30, I had raised on behalf of the accused the question of whether that meant his ruling there precluded the matter being put to the jury, a matter which his Honour said:

We can discuss that later but there is no – the case presented by – the evidence presented by Mr Braysich is otherwise –

which was a fairly clear indication that his Honour was going to take the view as he did that the defence could not be put to the jury.  The following day in the trial, and before defence counsel addressed, the question was raised – this appears at page 150, line 10 – and it was after the defence case had concluded, but before addresses, and the passage reads:

Your Honour, just before the jury comes in, there is one matter I would like to clarify, I did raise it yesterday.  My understanding from your Honour’s ruling yesterday is that I am not permitted to address the jury on the question of the statutory defence of “no purpose.”  It was on that basis that the two witnesses were excluded so I wouldn’t want to trespass on your Honour’s direction.

His Honour said:

They were excluded on the basis there’s no evidence of other purpose.

Just pausing there, their evidence would have been directed to the question of purpose.  I think his Honour was saying unless the defendant has actually given evidence of some other purpose, then no evidence can be given from which the jury might be invited to infer that it was not his purpose to create a misleading impression.  So that was his Honour’s ruling, which meant of course that the jury was not addressed on that matter, and his Honour said halfway down that page:

Anyway, consistent with the view I have taken, I will be telling the jury that that isn’t an issue.  So under those circumstances, it would seem that it ought to be left alone.

The response was:

I understand that, your Honour, I with respect disagree.

CRENNAN J:   His Honour must have meant, I expect, when he says there was no evidence of other purpose, he must have been referring to the fact that the appellant did not give direct evidence, and his purpose was not to create a false or misleading appearance.

MR McCUSKER:   One would infer that, your Honour, although the proposition – it seemed to be a bit ambiguous because one proposition that was put to his Honour in relation to the defence witnesses, which could not possibly be tenable, was that the accused had denied the purpose and therefore if he denied knowledge that there was no change in beneficial ownership, then the defence did not arise, is what was put, but that cannot be correct, and of course, the Court of Appeal said it was not correct.  In the trial judge’s directions to the jury, which appears at volume 3 appeal book at 1344, his Honour said at line 40, dealing with the statutory defence:

As I said to you yesterday, the defence of other purpose to which I made reference in respect of the created counts alleged against Mr Scook, is not applicable with Mr Braysich, who says that he at all times believed that there was a transfer of beneficial interest in respect to these transactions, so that defence is not a matter that comes up in consideration when looking at the counts against him.

Going back, I am sorry to jump around, but just to take the sequence, in volume 1 of the appeal book at page 151 the conclusion of his Honour’s directions to the jury, line 10, it was said:

Just for the record . . . we do maintain that the defence under sections 998([6]) is available to Mr Braysich.

So it was clear, unlike the situation referred to, I think, in Van Den Hoek where defence counsel had expressly disavowed reliance upon a particular defence, but nevertheless it was held it should be put to the jury, it was clear in this case that defence counsel was maintaining that the defence ought to be put to the jury. 

Now, the question is this.  One of the matters that seems to have permeated the Court of Appeal’s reasons is the proposition that unless the accused gives evidence of what was referred to as “some other purpose” then the defence cannot possible succeed.  Our submission is that when a broker carries out a client’s directions to buy or sell shares, it would be unusual for a broker to have any purpose in doing so other than to give effect to the order.

His usual purpose would be to give effect to the order and to earn a commission thereby, whatever the client’s purpose may be, and take, as an example of that, suppose – purpose of course means its aim or its objective or its intention – and as an example suppose a stockbroker is asked by a client to start selling a large volume of shares and the broker is told that the purpose of the client is to flood the market and thereby perhaps bring down the share price.  But when the broker effects the order, is that his purpose, or is it simply confined, as we would submit, to the ordinary course of business of a broker, so that the knowledge of a client’s purpose does not necessarily make it the purpose of the broker.

I hasten to say that in this case the evidence was that Scook had never told Mr Braysich that his purpose was to create a false or misleading appearance and that was evidence from Mr Braysich himself.  He never told him that, and furthermore, Braysich’s evidence was that he did not know Scook until these particular transactions but he did know the other party to the transactions, Mr Masel, the controller of Walthamstow, by reputation and it was a good reputation held in high esteem. 

FRENCH CJ:   Yes, I think that might be an appropriate point, Mr McCusker..  Can I just ask you one question before we adjourn?  I note that - and it is a minor matter - but there is an acquittal entered in respect of count 283 and the transcript seems to record a verdict of guilty.

MR McCUSKER:   Yes.  That was brought to my attention, your Honour, just recently because I had not bothered to skim through it, but it must be a misprint because – and that is agreed – a misprint in respect of that.  There was an acquittal and it related to the fact that one of the trades was said to have been authorised when in fact Mr Braysich showed he was on an aeroplane and could not have possible done ‑ ‑ ‑

FRENCH CJ:   Yes, okay.  All right, we will adjourn until 2.15.

AT 1.01 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.16 PM:

FRENCH CJ:   Yes, Mr McCusker.  Mr McCusker, I am right, am I, in saying that there is nothing in the record that shows us what the opposed – apart from a brief reference or outline or something of what the content of the proposed evidence for the appellant was going to be?

MR McCUSKER:   Not in detail, your Honour, no.

FRENCH CJ:   There would be reports that are not in there as MFIs or anything?

MR McCUSKER:   There are not, no.

FRENCH CJ:   No.

MR McCUSKER:   The case has proceeded on the basis, both at trial and indeed before the Court of Appeal, that that evidence went to rebutting, in effect, what ‑ ‑ ‑

FRENCH CJ:   It is in the same territory as ‑ ‑ ‑

MR McCUSKER:   It is the same territory, exactly, yes.

FRENCH CJ:   Professor da Silva Rosa did make some references to purpose, I think, in his evidence.

MR McCUSKER:   He did and he also referred indeed to some of the evidence of the witnesses proposed to be called for the defence because, of course, he had seen their reports.

FRENCH CJ:   Yes.

MR McCUSKER:   Could I ask your Honours to turn to our written submissions at page 7, paragraph (26).  In paragraph (26) we submit that although the appellant did not expressly state in examination‑in‑chief what his purpose was – I have said to you before he stated in cross‑examination that it did not cross his mind nor did he understand that Mr Scook had “an interest in creating a false appearance of active trading”.  That appears, your Honour, in appeal book volume 2, page 737, lines 14 to 17.  In fact, it is through to line 30, I think, where he says in response to a question in cross‑examination:

Did it cross your mind that Mr Scook . . . was a person that you must have understood would have an interest in creating a false appearance of active trading?‑‑‑No.

It didn’t occur to you?‑‑‑No, it wouldn’t have occurred to me there that he was a person who wanted to create false active trading.  We are talking about 29 or 30 January.

I note that in the respondent’s submissions they say that is only expressing a view as at that date, 29 or 30 January but, with respect, he is clearly talking about what he then understood back at the time of the trading as compared with what he much later has understood as a possibility.  When I am talking much later I mean years later.

Did you not know that he was a person who was taking a very active interesting trading in [Intrepid]?‑‑‑No, sir -

and so on.  It is not direct evidence but it is evidence that it did not occur to him that Scook was involved in the purpose of creating a false or misleading appearance.  In our submission, that evidence alone – or taken together with the other evidence, at least – is evidence from which it was open to a jury to infer that the purpose of the accused was not to create a false or misleading impression.

In paragraph (27) we refer to some additional evidence and unless your Honours wish me to I will not take you to all of the detail but essentially it goes he was a broker, he was acting in the ordinary course of business.  Indeed, Justice Buss said in his reasons for judgment that all of the evidence simply amounted in the end to evidence that he was acting in the ordinary course of his business.  That is the very point we make, that that was his purpose.

It is common ground he did not initiate any of these trades.  He acted only on instructions from the clients.  He gave no advice.  He was acting only as an execution service.  The source of the directions, instructions, were persons known to be reputable.  It was not suggesting that it told him the purpose of the trades was to create a false or misleading appearance.  He had no motive to do so. 

I pause there to say that in the Court of Appeal his Honour Justice Buss dealt with this question of motive and said, well, there was a fee, a brokerage fee paid on the placement for which the firm, Paul Morgan Securities, had been engaged and so there was a placement fee of $52,000 and there were some shares, and that is true and it no doubt would be put to the jury, if the matter had gone before the jury, as some evidence of a possible motive.

But as against that, it has to be considered that the evidence of Mr Braysich was that these transactions were very small transactions in the scheme of the total trading which was done on a monthly basis by this firm – very small, indeed.  The question of motive is one which could have gone to the jury, albeit with a contention by the respondent, no doubt, that maybe there was some motive but as against that the evidence was that the shares in respect of which it might have been suggested, well, the motive is to get the share price up.  The shares, in fact, on the evidence of Mr Braysich, were never sold and ultimately their value dwindled, as sometimes these things do, to virtually nothing.

FRENCH CJ:   So how does the logic of your argument work?  Do you say that the evidence – you would have to go this far, would you not?  You would have to have a case at least that the evidence completely explains his purpose in terms other than the purpose referred to subsection (6) and is inconsistent with the existence of that purpose, or maybe just the latter?

MR McCUSKER:   Just the latter, I think, your Honour.

FRENCH CJ:   Yes.  Because the first does not necessarily get you there.

MR McCUSKER:   It is simply not consistent.  We say that it was open to the jury based on all of this material - and I will come to one other aspect of the material which I think is important and was not really, in my submission, fully addressed.  That is the character evidence.  But it is not incumbent upon an accused who raises this defence to establish some other purpose.  The onus, of course, is to satisfy the jury as a matter of probability that the purpose of creating a misleading appearance was not his.  It might have been some other persons but it was not his purpose.  His purpose, if we had to put a purpose out, would simply be the purpose of any broker acting in the ordinary course of his business, that is, to give effect to the trades and receive the brokerage ‑ ‑ ‑

FRENCH CJ:   Well, as a matter of practical advocacy that is what you would be putting to the jury, is it not ‑ ‑ ‑

MR McCUSKER:   Exactly, your Honour.

FRENCH CJ:   His conduct is explained by that legitimate purpose and the evidence is inconsistent with the illegitimate purpose?

MR McCUSKER:   Quite, your Honour, yes.

KIEFEL J:   What was the legitimate purpose?  What does one infer from the evidence was the legitimate purpose?

MR McCUSKER:   The legitimate purpose was simply to carry out his client’s instructions.  It starts and stops there.  His purpose was not the client’s purpose, whatever that may have been.  So if a broker receives instructions to sell shares, it may well be that the purpose of the seller is, perhaps, to take over a company or whatever it might be.  That is not the broker’s purpose necessarily.  The broker’s purpose is no more than the purpose of a normal agent or broker which is to do what his client instructs him to do.  You do not have to have some further purpose.

There is another aspect I mentioned, your Honour, of good character honesty.  There were six witnesses called for the defence.  Their evidence - and I will not take you to it, your Honour, because it is common ground that their evidence was all on impeccable character, reputation for honesty and their evidence, those six witnesses, appears in 2 appeal book 705, 791, 797, 803, 807 and 813.

Now, it is well established, of course, that evidence of good character and honesty is relevant for two purposes.  One is to – it can be taken into account when the jury is determining whether the witness in respect of whom character evidence is being given is credible, whether he is likely to be telling the truth.  The other, very important in this case, is whether this is a person who is likely to do something dishonest.  It is often said by the prosecution in answer to these kind of submissions, yes, but there is always a first time for everyone.

But nevertheless, the character evidence was, in our submission, very important evidence going to the question of purpose.  It would have been put to the jury - coming back to your Honour the Chief Justice’s question about practical advocacy - in strong terms.  Here is a man who had no real motive to do something, the purpose of which was to create a misleading appearance, which is a criminal act.  No prior convictions, reputation impeccable, good character and honesty, and the jury were asked to conclude from that and the other evidence I have referred to that it was probable that the criminal purpose was not his purpose.

CRENNAN J:   How does the knowledge of the financial relationship and rebooking fit into that analysis?

MR McCUSKER:   The evidence of Braysich, dealing with the question about whether he knew that there was no change of beneficial ownership may well have, in a sense, sunk in the eyes of some jury members because he said, “I did understand that there was some lending arrangement”.  There was a series of lending arrangements between Walthamstow, which was the Masel company, and Challiston, which was the Scook company.  He said he knew that and that may have been enough for the jury to say “Well, if he knew that, even though he did not know the exact terms of the arrangement, that is enough for us to infer that he must have known that the shares were being held simply as security and not actually owned by Walthamstow”, when they were booked to Walthamstow and subsequently sold to Challiston.  That they were, in reality, merely held as security.

The jury may well have thought well he ought to have known that, but that does not impinge upon the question of his purpose in carrying out the transactions.  In our submission, there is a great deal of evidence which supports our proposition that this was a case which should have gone to the jury for the jury to determine whether they were satisfied that the accused did not have the purpose.

I think I have really traversed all of the grounds in that way.  But can I just point out a few matters.  Ground 1 deals with the question of whether the statutory defence – this is at page 5 of our submissions – should have been taken away from the jury.  I think I have sufficiently covered, both in my oral submissions and the written submissions, the reasons why I say it should not have been taken from the jury.  It was a jury question.  It is said against us the evidence was capable of being considered in another way and that again is a jury question.  All of these things are matters for a jury unless it could be said there is no evidence whatsoever. 

Ground 2 which we deal with on page 10 and following - if I could just take you – this ground is that in the absence – it was said by the Court of Appeal – in “the absence of any direct evidence” then that was a “critical omission” and that:

the circumstantial evidence was not sufficient to require the learned trial judge to leave the defence –

That is what his Honour Justice Buss said at paragraph 126 in 3 appeal book, 1458.  Our submissions to that, your Honour, are that the court, having accepted as it must, with respect, that the jury could infer that his purpose was not the impugned purpose - from circumstantial evidence alone they could reach that conclusion - then it is an error in law to say that there was a critical omission in that he did not give direct evidence in the terms of “This was not my purpose”.

FRENCH CJ:   I wonder whether he is saying anything more than that absent sufficient circumstantial evidence the absence of direct evidence was critical, not as a matter of law but simply as a matter of fact and inference.

MR McCUSKER:   Fact.  It may well be an interpretation of it, your Honour, but in our submission then that comes back to the question of is the Court of Appeal usurping a function of a jury when it says this is not sufficient evidence to go to a jury.  It seems to have been linked up, however, very strongly with the so‑called critical omission.

FRENCH CJ:   You accept that there was no direct evidence, so your contention ultimately has to be there was sufficient other evidence.

MR McCUSKER:   Other evidence, yes.  There was direct evidence that he did not for a moment believe or understand, et cetera.

FRENCH CJ:   I understand, yes.

MR McCUSKER:   But, he did not say “that was not my purpose”.  However, we say that if a matter such as this was to go before a jury and the accused gave no evidence whatever, it would still be open to put to the jury “Look, this is a man who had no reason to create a false or misleading impression.  This was a man who had good character evidence.  He did not initiate any of these trades.  He did not stand to gain anything from it.  Do you think in those circumstances that his purpose was the dishonest purpose of creating a misleading impression or, was his purpose merely to carry out the orders or directions of a client to buy and sell shares in this way?”

Could I take your Honours to volume 3, appeal book page 1449.  His Honour there set out the appellant’s submissions at the foot of that page and his summary of those submissions appears through to page 1452.  He then proceeds to deal with the merits.  Your Honours at 1455, paragraph 125, his Honour said, dealing with the first point:

The defence under s 998(6) may be available to an accused who denies knowledge that transactions within s 998(5)(a) involved no change in beneficial ownership -

because that was an issue, and it was accepted, of course, that that, with overwhelming logic, must be so because the defence is there to meet that particular contingency.  That is where it is held that a person does know that there is no change in beneficial ownership.  Therefore, the deeming provision applies.  The defence under section 998(6) is made available to meet that particular contingency, as I have said.  His Honour said:

It would, ordinarily, be necessary for there to be some direct evidence as to the accused’s subjective purposes, including the absence of the proscribed purpose, in entering into or carrying out the transactions in question.

That is a statement that must be direct evidence ordinarily, in our submission, that perhaps not absolutely wrong, but it tends to suggest that it is only in the rarest of cases that circumstantial evidence could be relied upon and that certainly cannot be the case.  His Honour said at the top of page 1456:

It may not be essential, in a particular case, that there be direct evidence as to the accused’s subjective purposes, including the absence of the proscribed purpose; that is, it may be possible, in a particular case, for the absence of the proscribed purpose to be inferred –

With respect, that must clearly be the case.  But his Honour held, coming back to what your Honour the Chief Justice put to me, that this is a case where it was not sufficient that there should be inferred from the circumstantial evidence that he did not have that purpose.  Now, he then went on to deal with the matters that were put to his Honour…..the court in (b):

The fact that the appellant was a stock broker and, in the ordinary course of his business, executed the trades in question on instructions from his clients, conveyed to him by a SEATS operator with Paul Morgan Securities, does not address the appellant’s subjective purpose or purposes.

Our submission was that what he was doing was simply acting on instructions as a broker and that, with respect, it does address the appellant’s subjective purpose in that the jury might well find that whatever the intentions or purpose of the client, nevertheless this person was in a different category.  He was the broker simply carrying out directions with no motive.  There is no suggestion, of course, that he was in league in some way with Scook and there was no suggestion that there was any common purpose to achieve an unlawful objective.  In (c) his Honour said:

The absence of any evidence that either Mr Scook or Mr S Masel ever told the appellant that the purpose of either of them was to create a false or misleading appearance of active trading, and the appellant’s alleged belief that they were reputable people, does not address the appellant’s subjective purpose or purposes.

In our submission it does because it is circumstantial evidence from which the jury could conclude that it was unlikely that the appellant had the given purpose.  Paragraph (d) already touched on the question of motive.  His Honour dealt with the submission in that regard at some length.  Suffice to say, that was all matter which could have – there is no suggestion that it could not be put to the jury that he lacked any significant motive so it is simply a question of putting to the jury “Well, there were possible arguments that he might have had some motive despite what I have said about that”. 

Then we agree with (e).  Scook’s evidence, of course, is not evidence from which any inference could be drawn.  Then we go to page 1458, the evidence as to the appellant’s good character.  His Honour simply said it:

does not address his subjective purpose or purposes.

It does not address it in one sense, but it is relevant to it, in our submission.  Then, there is in (h) cross‑examination on the topics listed:

including his knowledge of the ASX business rules . . . and not to his subjective purpose or purposes, including the absence of the proscribed purpose -

but all of that, the evidence that the appellant gave was “I knew what the requirements were.  I knew that there should not be anything done which would create a false or misleading impression”.  So that coupled with his good reputation and character is a lack of motive.  We say it is a cumulative effect of evidence from which a jury could quite reasonably have inferred that he did not have that purpose.  At paragraph 126, line 30, his Honour said:

The evidence to which I have referred at [112] above is, at best, circumstantial evidence from which an inference could be drawn that at all material times the appellant was acting in the ordinary course of his business as a stock broker in carrying out the relevant transactions.

I pause there to submit that may be what the jury in the end would have been invited to conclude, that he was simply acting as a stockbroker with no secondary purpose other than doing that.  His Honour said:

However, on the evidence as a whole in the present case, the absence of any direct evidence as to the appellant’s subjective purpose or purposes, including the absence of any direct evidence that he did not enter into or carry out the transactions for the purpose of creating a false or misleading appearance . . . was a critical omission.  In my opinion, the circumstantial evidence was not sufficient to require the learned trial judge to leave the defence -

One of the problems with that, your Honours, is that part of the circumstantial evidence which was proposed to be led to put to the jury was the evidence from the two expert witnesses whose evidence was excluded.  But quite apart from that it is our submission that ‑ ‑ ‑

FRENCH CJ:   That was evidence which would simply go to the likely effect of the trades?

MR McCUSKER:   Therefore the likelihood that follows from that, and the likelihood or unlikelihood of the purpose of the appellant being to create a false or misleading appearance if ‑ ‑ ‑

FRENCH CJ:   That would be the inference.  That would not be a conclusion offered by the expert obviously.  The expert could only go to likely effect and appearances created.

MR McCUSKER:   I accept what your Honour says, yes, that is right.

KIEFEL J:   What is the connection for the defence between objective evidence of effect in the market and his subjective purpose?

MR McCUSKER:   It goes this way, that if the perception of a reasonable person was that it was unlikely, these trades, to have any effect on the market then it makes it unlikely that it was his purpose to create a misleading effect.  It is a question of ‑ ‑ ‑

KIEFEL J:   You mean it would not have occurred to him?

MR McCUSKER:   It would not have occurred to him and in fact he said in his evidence that if that was the purpose of Mr Scook then he did not see how it could work.  In short, to answer your Honour’s question, if the jury accepted evidence that these trades did not have the effect and were unlikely to have the effect of affecting the market it would be put to the jury that it follows from that that it was unlikely that he had that purpose.  If he had the purpose you would think he would do something more than carry out trades which did not fulfil that purpose.  That is the way it goes, your Honour.

KIEFEL J:   In relation to the extent to which the section requires proof of in relation to another purpose, do you accept that a mere denial that the proscribed purpose is not his purpose may not be sufficient?

MR McCUSKER:   In a given case it may not be, your Honour, but it does depend, as Justice Buss said - each case turns on its own facts - a mere denial may not suffice, although if the jury hears that denial they may simply accept it.

KIEFEL J:   I am thinking more in terms of the section.  If it was simply put that there was a denial that the proscribed purpose was not one that he held, that would, to an extent, cut across the efficacy of the deeming provision, would it not?  It would be as if to say you cannot accept that the deeming provision has effect in relation to me because that was not my intention or purpose to create this false impression, whereas the defence is a requirement that comes in after that, after the deeming effect has taken.

MR McCUSKER:   That is so, your Honour, so whatever the actual in real life, as it were, result of a particular transaction may be, whatever its effect may be, if it is a transaction involving no change in beneficial ownership it is deemed to create a misleading impression.  In this particular case the evidence relied upon by the Crown was that, in effect, the sales by Walthamstow to Challiston were of shares which Walthamstow simply held as security for loans made to Challiston by it.  The deeming effect of that cut in which meant that unless the defence under subsection (6) could be established on the balance of probabilities then there was a conviction under subsection (1) as an offence.

KIEFEL J:   The impression being created was that there was a real transaction between the two, whereas Walthamstow held it by way of security and the beneficial interest never passed.

MR McCUSKER:   That is right.  It might have been perhaps an arguable change in beneficial interest in one sense, but because Walthamstow held shares as security and it ceased to hold those shares as security, but the fact is that the beneficial interest did not change, as found by the jury.

FRENCH CJ:   The operation of the deeming provision is to deem an effect of the transactions, is it not?  In other words, you are taken to have created a false or misleading appearance, and logically, the question of purpose is distinct from that or may have had that outcome - that was not my purpose.

MR McCUSKER:   Yes.

FRENCH CJ:   I suppose a question which arises in relation to the expert evidence which was excluded is whether in order to get to the proposition that that was not my purpose you are allowed to challenge the factual effect of the trades.  I mean, is this deeming effect, in fact, a finding of fact which is unchallenged or it is simply a tag that gets you into the offence?

MR McCUSKER:   We say the latter, your Honour, because you take an extreme example.  Suppose there is a trade of 100 shares which goes on market for some reason and it is a transfer by a trustee to a beneficiary of shares.  That is deemed to create a misleading appearance.  But the question then is, in that situation, did the person intend - did he have the purpose of creating a misleading appearance?  The purpose of creating a misleading appearance is separate from the deemed effect.  So you are looking at two ‑ ‑ ‑

KIEFEL J:   But in a way the whole giving of the expert evidence seems to have assumed there is a blurring of the lines between the two and that the effect somehow can be used in relation to purpose, as indeed you have put forward.

MR McCUSKER:   Yes.  Your Honour, I do not know about a blurring ‑ ‑ ‑

KIEFEL J:   They do not seem so distinct then.

MR McCUSKER:   I do not know about a blurring of the lines, your Honour.  The evidence of Mr da Silva Rosa was led for one purpose only, and that was to rebut a defence under subsection (6).  Of course, it was otherwise irrelevant because the Crown case was it deemed to have the effect for the purpose of subsection (1).  But that does not mean that is irrelevant for consideration of purpose.  It is irrelevant to look at what the transaction actually was and did. 

Perhaps I can put it another way to the Chief Justice, responding to his earlier question.  The transaction may have been deemed to have created a false or misleading appearance, but the question is then did it affect, was it likely to affect in any way the market, so that those two propositions are distinct.  If it was unlikely to have affected the market in any way because of the relatively small insignificant number of trades, then it could be said why would he have the purpose of creating a misleading appearance when it would not affect the market and it was unlikely to affect the market at all.  So that is the way we would ‑ ‑ ‑

FRENCH CJ:   Well, certainly, Professor da Silva Rosa had a number of questions to answer, I think, and they are set out at 499 in the appeal book:

The fourth question was, “Did those transactions create an appearance of active trading in Intrepid shares?

The logic of that – I suppose it is going to be a question for Mr Woinarski to answer, but the logic of that seems to be that if it is brought in rebuttal to anticipate a subsection (6) defence, it assumes the relevance of effect.

MR McCUSKER:   It does, yes.  It assumes the relevance of effect, perhaps, or another way of putting it is even if there was a deemed misleading appearance the question still is what was the impact on the market because a misleading appearance does not mean that it has any impact whatsoever on the market.  It may be a misleading appearance to have, as I said, 100 shares transferred from a trustee to a beneficiary, but that does not mean there is no impact on the market and therefore was the purpose to create a misleading appearance.  So you are really saying if the purpose, putting it backwards or reasoning backwards, if the effect of the transactions was not to affect the market in any significant way, then the question is why was it done?

KIEFEL J:   The professor, I take it, is looking at the transactions at a whole - at the completion of all of the transactions?

MR McCUSKER:   Yes, he was.  But he looked ‑ ‑ ‑

KIEFEL J:   What does that have to do with a person’s state of mind as they are effecting each transaction as they go through the process?  They do not know that the second, third, fourth and fifth transactions are coming up, do they?

MR McCUSKER:   Your Honour, he dealt with it in some detail.  His report actually dealt with on a daily basis looking at the trade in comparison to the total volume of trades, the prices each day, and so on.  So it was all set out and it was not just, well, at the end of the day this is my view as to the effect of all those transactions.

KIEFEL J:   But in relation to the accused, would you not have to ask the question in relation to his purpose concerning each individual transaction?  They are charged separately, are they not?

MR McCUSKER:   They are changed separately, your Honour, but there are several ways of approaching it.  The accused could get up and say, “I did not have that purpose” – are you talking about professor ‑ ‑ ‑

KIEFEL J:   I am sorry, unless he knew at the outset that there was a bundle of transactions to be put forward, but if he did not know that I just do not understand how the expert evidence gives you much about his purpose.  It tells you in market terms what an effect is which is very interesting for regulators, but it might not tell you very much about subjective intention of an individual effecting one transaction at a time on his evidence on instructions about that particular transaction.

MR McCUSKER:   Yes, but if the evidence were that none of those transactions had had or was likely to have – and I will put it this way – any significant impact on the market as distinct ‑ ‑ ‑

KIEFEL J:   It would have to be each individual transaction.

MR McCUSKER:   Yes, it would be, but if that is the evidence and the jury accepts that, then it would be open to the jury to infer from that, and I hasten to say it, other material, that it is not likely that his purpose was to create a misleading appearance.  Why would he do it?  The only realistic purpose behind creation of a misleading appearance is to somehow effect the market and if the transaction does not effect the market, even though it is deemed to create a misleading appearance, then it is a short jump from there to putting to the jury ‑ ‑ ‑

KIEFEL J:   I suppose putting it in more individualised terms, could not have possibly have affected the market.

MR McCUSKER:   Yes, could not have possibly affected the market, and ‑ ‑ ‑

KIEFEL J:   I am sorry to interrupt you, is that what the expert evidence on his behalf was intended to address?

MR McCUSKER:   Your Honour, I hasten to answer that in absolute terms.  My recollection is that the evidence was to the effect that it was unlikely to have affected the market.

KIEFEL J:   Perhaps as far as it could be taken.

MR McCUSKER:   I think that is as far as it can be taken.

FRENCH CJ:   I think we need to have a clear reference on the record to precisely what is said about that evidence.  You mentioned earlier that ‑ ‑ ‑

MR McCUSKER:   Your Honour, attached to our submissions at annexure 1 - there is no page number, but you will see it is a transcript and the transcript of page 1171 where Mr Hall, SC, who was the Crown Prosecutor was making his submissions as to why these two expert witnesses should not be called and of course he had advance information; he had the reports, and he said, in the second large paragraph:

I need to acquaint you with what the evidence, as I understand it, is to be from these two gentlemen.  Mr Aitken has qualifications in finance and business and he has been provided with the trading insofar as it relates to Mr Braysich and both of these witnesses only deal with what I might call the green trade.  Your Honour will recall that Prof De Rosa Silva (sic) looked at the green trades and the yellow trades.  The green trades are the ones that only relate to Mr Braysich.  He has analysed them using a computer system.  He then offers a critique of Prof De Silva Rosa’s report and then concludes that the price or the changes in price and the volumes of shares traded can have other reasonable explanations than that there was some attempt to manipulate the share trading in the shares of Intrepid.

Mr La Page is an investment analyst, formerly a geologist and he considers a different set of questions.  He looks at what factors can affect the value of shares.  He looks at how junior mining companies can be valued.  He is asked to give consideration to what the nickel market was in 1997, 1998 and then goes on to consider whether there could be other factors affecting the price of Intrepid shares, that is other than some effort to manipulate the trading of Intrepid.

It was not put on the basis of, well, that evidence does not go far enough; that was put on the basis of, that evidence is sought to be introduced to deal with the defence which the prosecution’s ‑ ‑ ‑

FRENCH CJ:   Is that the full extent of what his Honour had before him when he made the ruling?

MR McCUSKER:   Yes, your Honour, it was. 

FRENCH CJ:   He did not have a copy of the reports?

MR McCUSKER:   He did not have a copy of the reports.  That is so; he did not have the reports.  Of course, it is impossible to say what further evidence may have come out in the oral evidence of those two witnesses. 

CRENNAN J:   In terms of the expert evidence, does anything turn on the fact that Mr Braysich seems to have been charged in terms that he created a false and misleading appearance of active trading, whereas, a lot of the – that is looking at the indictment at appeal book 76, whereas, Mr Scook, in a number of the charges has been charged with doing something that was likely to create a false or misleading appearance of active trading?

MR McCUSKER:   Yes, well, I think that is because ‑ ‑ ‑

CRENNAN J:   In other words, the expert evidence might have been more important to Mr Braysich than to Mr Scook in respect of the charges where Mr Scook was charged with the likelihood?

MR McCUSKER:   Yes, that is so, your Honour.  I accept that.  The Crown case began and ended with the deeming provisions.  You knew - you must be taken to have known – you knew, rather, that these shares involved no change of beneficial ownership.  Therefore, you are deemed, unless you can provide the defence, and he was not permitted to raise the defence.  Your Honours, I referred earlier to evidence of Mr Braysich about the question of what the purpose was.  It appears in volume 2 at page 760 and goes through to 761 and 762.  At 760, he is asked:

Did it not occur to you that Mr Scook in placing that order with you might have been concerned not only to set the price for the next day but to increase the impression of volume that was being traded in these shares?‑‑‑If that’s what he was trying to do, he did it wrong.

He goes on to explain why he did it wrong on the next page:

if you’re a broker and you’re looking at stocks with volume, you’re looking during the day, so if someone was trying to do that, they’d do it in the morning.  Do it in the afternoon, it’s got little consequence.

He goes on between lines 30 and 40, he is asked a question:

So?‑‑‑It’s far better if the volume has been in the morning.

Why?‑‑‑Because that’s when they’ll all be looking.  That’s when brokers will get interested.

He is speaking from the experience of a broker and at 762 there is more to the same point between lines 20 and 30.  He is asked:

But the fact that there are both buyers and sellers for this stock, that there’s volume changing hands is something would give them comfort, wouldn’t it?‑‑‑Marginal.

By comfort, he is clearly – the question clearly referring to the possible impact on the share market of these trades.  So his evidence, which would probably have been, perhaps, because we do not know the final wash up, would have been probably supported by the two experts’ evidence, was that these trades would probably not have affected the market or the market perception, even though they were deemed to create a false or misleading appearance. 

It is one thing to say that it is a false or misleading appearance because there is no change in beneficial ownership.  It is quite another to say that that false and misleading appearance would have had any impact on the market.  If it was unlikely to have had any impact on the market then the question is well, what was the purpose of doing it unless it was intended to have an impact on the market and Braysich says, “Well, I do not think it would have had any effect, or marginal”.

HEYDON J:   Mr McCusker, if this is a convenient moment, could I ask you a question about a line of reasoning which I do not think Justice Buss employed.  It is this.  Assume this case had been a civil case in which there had only been an attempt to get a penalty or some civil remedy.  In a civil case, a party who bears the burden of proving something who has, as it were, unique knowledge of a particular fact who does not give evidence, is at risk of having an inference drawn that the evidence would not have favoured that party, not that it would have been against the party but it would have favoured the party and that may lead to the extent to which other inferences from other evidence are strong or weak.

MR McCUSKER:   Yes.

HEYDON J:   Your client, of course, on this particular issue, bore the burden of proof.  If it had been a civil case, would it have been open to the court to say, well, he did not give any evidence as it were expressly answering the terms of subsection (6).  There is some other evidence from which an inference favourable to him might be drawn but because he did not support those inferences himself, the inferences become weaker.  Is that legitimate in a civil case?

MR McCUSKER:   I would not have thought so, your Honour, because that rule applies where the witness who might have been thought to give relevant evidence is not called at all.

HEYDON J:   But there is a decision, is not there, of Mr Justice Handley’s that if a witness is called and gives some evidence‑in‑chief but does not give evidence‑in‑chief on another issue, then the inference operates in that qualified way on that particular issue by itself?

MR McCUSKER:   It may arguably weaken ‑ ‑ ‑

HEYDON J:   I think there is an authority in Wigmore that supports that, for example.

MR McCUSKER:   It may weaken the inference to be drawn but it does not necessarily exclude or preclude the inference from being drawn, bearing in mind that the thrust of Mr Braysich’s evidence was that he did not think that Scook had any purpose of creating a misleading appearance.  So he has given that evidence.  Now, it is somewhat awkward for a person who says, “Well, I did not think that these trades did not affect” – I have a double negative – “a change in beneficial ownership.  However, in any event, I did not think these trades which did not change beneficial ownership would have created a misleading appearance.”

HEYDON J:   It is an alternative type of posture that has to be adopted, yes.

MR McCUSKER:   It is an alternative, yes, your Honour, it is.

HEYDON J:   Whatever the position in a civil case, is it the same in a criminal case?

MR McCUSKER:   In my submission, no. 

HEYDON J:   What authority says that?

MR McCUSKER:   I do not have ready to hand, but I would not accept that there is in a criminal case a lesser – because put it this way, if an accused gives no evidence at all it cannot be ‑ ‑ ‑

HEYDON J:   That is where the Crown bears the burden of proof.  Here, we are talking about an instance where the defendant, on this particular issue, bears the burden of proof and the Crown has no burden.

MR McCUSKER:   It would still be open, in my submission, to an accused not to give evidence at all, adduce evidence which points ‑ ‑ ‑

HEYDON J:   Yes, open, but not the best course, perhaps.

MR McCUSKER:   Perhaps.

HEYDON J:   Your client ‑ ‑ ‑

MR McCUSKER:   Did not give that direct evidence.

HEYDON J:   He put his best foot forward on many fronts, but not this front.

MR McCUSKER:   Yes, that is true.  I accept that, your Honour.  He did not give that evidence.  That may be said to weaken the inference available, but the question still is, at the end of the day, open to the jury to draw that inference.

HEYDON J:   I think also this is not something you have stressed, but it needs to be borne in mind when one is looking at a “no case” submission one takes the evidence at its highest, in other words the evidence in favour of the defendant at its highest, just as if it is the accused who is making a “no case” submission the prosecution is entitled to have its evidence considered at its highest.

MR McCUSKER:   Yes, true and, in this case we say that the defence was entitled to have its evidence relating to the question of purpose taken at its highest for the purpose of deciding whether or not the defence should be excluded from consideration of the jury. 

HEYDON J:   Yes.

MR McCUSKER:   Your Honours, unless there are any further matters that your Honours wish to raise with me I think I have traversed as much as I could.  Perhaps I could just take you to some further references that my learned junior has raised for my attention dealing with or relevant to, we say, the question of purpose.  At page 748 in volume 2, this does get it in context.  He is asked at the top of the page:

Did you try to determine harking back to the business rules whether there was a legitimate commercial reason for the trading that Mr Scook was engaging in?‑‑‑I didn’t perceive a problem so I didn’t think about the rules . . . 

But did it raise any concerns on your part that this was a large volume of trading that was going through your stockbroking
firm?‑‑‑No.  In this 18‑month period, we turned over about 1.6 billion dollars.  So we’re turning over something like 100 million dollars a month.

So it puts it in context, the comparatively insignificant number of the trades –

I don’t mean relative to your turnover as a whole, I mean relative to this particular stock.  Looking at the amount of volume as it were trading in this stock on any particular day, did you not think that some of the orders that you were placing were comparatively very large?‑‑‑Are we referring ourselves to the last week or the ‑ ‑ ‑

The last week, in particular?‑‑‑No, because Lance –

That is Lance Masel –

had told me that he wants out –

So this is Walthamstow.  He is telling Mr Braysich that Walthamstow wanted out –

and therefore I saw a straight commercial basis for – Lance was a trader, he’d made a good profit, he was moving on.  Mr Scook was a believer.

HEYDON J:   What does that mean, that Mr Scook was a believer?

MR McCUSKER:   He believed in the future of Intrepid at that stage, yes.  “Believer”, I think, is short jargon for someone who has confidence in it.

HEYDON J:   Confident.

MR McCUSKER:   Yes.  Then at page 754, line 20:

Right, but surely you suspected – I accept that Mr Scook wasn’t telling you that he was making any arrangements on the other side of these transactions, but did you not come to suspect that he was?‑‑‑No, sir.

You didn’t?‑‑‑No.

Then he is taken through some detailed information.  At 757, line 15:

So you thought there was nothing out of the ordinary about this, nothing unusual about it?‑‑‑I didn’t see anything out of the ordinary to it.

On 758 at line 10 – it starts at the previous page:

They could have, but it must have occurred to you that in placing that order so late in the day that he might be wanting to set the price -

something which is dealt with in the other evidence I have referred to –

Didn’t it?‑‑‑For 20,000 – I wouldn’t have thought so.

Why?‑‑‑I wouldn’t have thought so at the time.  If I had thought so at the time I would have said something.

But why didn’t you think so –

He goes on to give some answer to that.

The problem is, 10 years later, what you can’t tell me at the moment and we don’t know was have Anaconda had a jump?  Has there been something happen in the general market?  Has there been something happen on the Dow Jones last night?  Has the gold price gone up?  Am I buoyant?  There are a number of factors that need to be considered as to why you may pay a cent or 2 cents higher than the rest of the market -

on a particular day.  So the effect of his evidence was he saw nothing to alert him to any intention to create a false market or to affect the market.  The time at which the trades were done was a time which he said was a time unlikely, in his view, to have had any impact on the brokers.  There is that kind of material from all of which we say the jury could properly have been invited to infer that his purpose, whatever the purpose of Scook was, his purpose was not to create a misleading impression.  May it please your Honours.

FRENCH CJ:   Thank you, Mr McCusker.  Yes, Mr Woinarski.

MR WOINARSKI:   If your Honours please.  Perhaps, your Honours, if I may just take this slightly out of the sequence I had intended, just in view of a numbers of matters that transpired towards the end of what my learned friend had had to say.  Your Honour Justice Heydon inquired about whether as in civil cases there is some ability to draw an inference against Mr Braysich, given his failure to deal with the issue directly in the evidence.  I do not have the names of the authorities, your Honour, to hand, but certainly this Court has in a number of recent decisions made comments along the lines that it should not – the rule in Browne v Dunn and like matters should not be drawn adversely against either an accused or in most circumstances the prosecution.

The other case that does spring to mind that does have some relevance, your Honour, and again I do not have, and I apologise, the citation, is Weissensteiner which of course was the murder case involving the murder of two people on a yacht and the one person was found and the question of whether a jury could be directed that they could take into account the failure of the accused to give evidence.  In that case, the High Court, as I recall it, said to the effect that normally, no, but there are some cases where the facts are so much in the peculiar knowledge of the person concerned that it may be appropriate to give a direction of that type.  I think those are the areas that may be of assistance to the question your Honour was asking.

HEYDON J:   The cases where the burden of proof rests on the prosecution and the reasoning of the Court other than in the exceptional cases says that if you could freely draw inferences from silence you would be destroying the right of the accused.  To say to the prosecution, “You prove your case, I’m not going to help you”.

MR WOINARSKI:   That is basically right.

HEYDON J:   Is it the same, though, where the burden of proof rests on the defendant?

MR WOINARSKI:   I agree with that, your Honour, but I cannot assist your Honour any further than by reference to those cases.

BELL J:   My recollection is that in one of those cases, and we are talking, I think, about Azzopardi, RPS and was it Dyers ‑ ‑ ‑

MR WOINARSKI:   Thank you, your Honour.  Dyers’ Case is the one I was thinking about, particularly for the prosecution, if I recall.

BELL J:   That is the aspect.  I think there was some discussion but I do not think it commanded a majority suggesting that one would not draw such an inference against the Crown which would suggest a very different approach with respect to criminal cases not depending on the onus aspect that Justice Heydon just raised with you.

MR WOINARSKI:   I agree with that, your Honour, but I am just not now completely au fait with those cases to take the matter any further but it is just the issue as best I can deal with it so far as Justice Heydon is concerned.

HEYDON J:   But you do not rely on that line of reasoning?

MR WOINARSKI:   No, we do not rely on it, but it is a fact that he left the issue alone and it is a fact that cannot be ignored given that it is a case where he chose to give evidence.

FRENCH CJ:   But the proposition that has been discussed with you by Justice Heydon does not get you to the position that you can conclude that there is no case to go to the jury from such an omission.

MR WOINARSKI:   Correct, your Honour, and indeed we would say that the general proposition of the Court of Appeal as expressed by Justice Buss that you do not have to have direct evidence, you can get it from circumstantial evidence, is correct, and I think our submissions make it very clear that we do not argue about that.  What we do say – I want to come back to one other matter, if I may, that my learned friend dealt with very close to the thing, but what we do say while I am on that point is that, as Justice Buss said, this is very much a case that turns upon its own factual circumstances. 

Now, the other matter that I just wanted to take the Court to is my learned friend took you to a portion of some material in his supplementary material.  I have forgotten exactly how he described it, but he took you to page 1171 of the trial. 

BELL J:   It is annexure 1 to his submissions.

MR WOINARSKI:   Thank you very much.  For some unknown reason I just do not seem to have received it, so I do apologise, but it was page 1171 of the trial before Judge Wisbey and before I do that, you have been addressed on a number of occasions today that the experts that they wanted to call were experts who would express an opinion that it was unlikely these trades would have had any effect on the market.  That is the way it has been put to you quite constantly.  What was put by Mr Hall at page 1171, and I am looking in particular to the second paragraph and about halfway through the second paragraph is that Mr Hall says:

Your Honour will recall that Prof De Rosa Silva (sic) looked at the green trades and the yellow trades.  The green trades are the ones that only relate to Mr Braysich.  He has analysed them using a computer system.

I do not know that this is actually referring to Mr Aitken who was one of their experts.  He – meaning Mr Aitken –

has analysed them using a computer system.  He then offers a critique of Prof De Silva Rosa’s report and then concludes that the price or the changes in price and the volumes of shares traded can have other reasonable explanations than that there was some attempt to manipulate the share trading in the shares of Intrepid.

He then goes on to talk about Mr La Page, and at the end of that next paragraph he says:

He is asked to give consideration to what the nickel market was in 1997, 1998 and then goes on to consider whether there could be other factors affecting the price of Intrepid shares, that is other than some effort to manipulate the trading of Intrepid.

We simply say it was said below that the wrong question had been asked of the experts but we do say that is very different from expert evidence that it is unlikely the trades would have any effect on the market, as has been submitted to you by our learned friends today. 

Now, just while I am there, if I may, your Honour the Chief Justice raised a question with Mr McCusker and said it was possibly something that I would have to deal with in relation to what was the relevance of the evidence of Professor da Silva Rosa so far as Mr Braysich - so far as the appellant was concerned.  I do not know whether, your Honours, the additional material in annexure A takes you to page 1174 of the trial.

FRENCH CJ:   No, it does not.

MR WOINARSKI:   I can, if the Court wishes to have this provided.  Pages 1173 and 1174, and in part this raises another question I think your Honour Justice Crennan asked.  Professor da Silva’s evidence, I am summarising from 1173, is relevant because he addresses what the appearance of transactions were.  That is only, of course, one part.  The jury would have to be satisfied about Scook’s conduct.  Professor da Rosa dealt directly with transactions where the deeming provision did not apply because quite a number of the transactions involving Mr Scook did not rely on the deeming provisions and Professor da Silva dealt with that directly.  Then at page 1174 – and this is relevant for what I want to take in answer to the question asked by the Chief Justice:

The second reason Prof De Silva Rosa was called was in the event that the defence was raised by either of the accused.

By that he means the defence under 998(6) –

If the defence was raised by either of the accused on those counts where the deeming provision does arise of course the jury would have to consider what the purpose of the person was and the fact that there may have been movements in the price and that there were large volumes trading that were relevant to considering what their purpose might be.  It was relevant to rebut him.

That is the reason that was given - I, of course, was not at the trial, as your Honours probably well understand, but that is the reason that was given by the prosecutor for the relevance of the expert’s evidence so far as the appellant is concerned.  We can arrange for that to be provided to the Court if ‑ ‑ ‑

FRENCH CJ:   I just wanted to link this to – at page 499 of appeal book volume 2 there is a reference to a number of questions in respect of a particular period, which I think includes the period February 1998 when the green trades took place and the question I mentioned to Mr McCusker was, I think, the fourth question, among other things:

“Did those transactions create an appearance of active trading –

et cetera.  Then, when I go forward to 517, just in the light of what you have said ‑ ‑ ‑

Have you then gone on to consider in your report the questions that were raised by the Securities Commission with you?

This has now reached focusing on the green trades.

MR WOINARSKI:   Which are the appellant’s trades, yes, your Honour.

FRENCH CJ:   Yes, the appellant’s.  What I want to know is, do those questions which were put to Professor da Silva Rosa, they were applicable to the green trades?

MR WOINARSKI:   Correct, your Honour.

FRENCH CJ:   Yes.  So there is no exclusion of any of those.

MR WOINARSKI:   No, your Honour.

FRENCH CJ:   So I suppose the question I was asking then was all right, take it that those questions are asked in relation to the green trades.  How does it work in terms of the logic of the prosecution?

MR WOINARSKI:   Your Honour, as I understand it, what Mr Hall was doing was making sure he did not fall foul of trying to split his case, so he led evidence from Professor da Silva Rosa in anticipation that the appellant may raise the defence, and then ‑ ‑ ‑

FRENCH CJ:   The subsection (6) defence.

MR WOINARSKI:   The 998(6) defence, yes, your Honour, and that assuming that the defence was raised – and I must say, I can only suspect that Mr Hall anticipated that there would be direct evidence given – he would, apart from any cross-examination of the appellant, seek to use the evidence of da Silva Rosa to argue to the jury that they should not accept the evidence of Mr Braysich as to his purpose.

FRENCH CJ:   Because of the actual effect of the transactions.

MR WOINARSKI:   Viewed objectively, yes.

FRENCH CJ:   So that notwithstanding the deeming provision, which for some purposes, so far as you are concerned, would preclude exploration of that question it remains valid as an answer – exploration of that question is a valid line of inquiry in relation to purpose.

MR WOINARSKI:   Yes, your Honour, because the prosecution would be arguing that despite any evidence of purpose the jury could not be satisfied on the balance of probabilities ‑ ‑ ‑

FRENCH CJ:   If exploration of the question of actual effect is relevant to the defence of purpose why was not the evidence of the experts to be called by the appellant relevant to that defence?

MR WOINARSKI:   Because, your Honour, the question of the sufficient evidence for the defence was not made out.  I can anticipate your Honour is going to say how could you come to that conclusion without hearing ‑ ‑ ‑

FRENCH CJ:   This might be part of it.  This might be part of what is sufficient.  That is the question I am asking you.  How do you say that it is not part of what might be a sufficient case?

MR WOINARSKI:   I follow that, your Honour.  The answer to that is this.  The 998(6) defence is a subjective defence that focuses on the lack of the relevant purpose of the accused, or in this case, the appellant.  Expert evidence in isolation could never provide that evidence of the subjective purpose.  It had to be attached to something which you could say leads us to say that bit of evidence, together with the experts, can lead a jury to say he did not have the prescribed subjective purpose. 

On the totality of this evidence, we say – and I am not going to go through it all because it is all in our submissions and I would be wasting the Court’s time – the evidence at the close of Mr Braysich’s evidence was such that there was no piece of evidence sufficient for any expert’s evidence to attach to for the defence to be made out.  In that situation, then to call the experts could take the case no further, because they had nothing to attach to.

FRENCH CJ:   This exclusion occurred prior to the calling of character witnesses or after?

MR WOINARSKI:   As I understand it, and my learned friend will correct me I am sure, but I think one of the character witnesses was called before the cross‑examination.  I can check this but I am pretty sure one of the character witnesses was called before the cross‑examination of the appellant commenced and the other character witnesses were called after the cross‑examination had concluded.

BELL J:   Does your submission carry with it that, in a circumstance in which the accused chooses to give evidence and does not give direct evidence of purpose, that really does conclude the issue?  The way you suggested that at the conclusion of his evidence there was nothing, as you have put it, for the expert evidence to attach to, seems to carry with it that was so because he had not, in terms, given evidence of his purpose.

MR WOINARSKI:   We would say, your Honour, in this case that is so.  As Justice Buss sets out in the judgment in the Court of Appeal, there may be, in the appropriate case, evidence of the type that I am saying upon which it can attach from a different source such as a record of interview or such as some statement that had been made to somebody else that gets into evidence.  But in this case, there was no evidence from anybody, including the appellant himself, as to his purpose or purposes.

BELL J:   But there you are assuming evidence of purpose needs be direct.  It can be direct but not given in evidence at trial if it is a statement by way of a record of interview that is admitted in the Crown case or, conceivably, evidence of an out‑of‑court statement made by the accused which for some reason gets in.  But you are looking to direct evidence of purpose as opposed to inferential reasoning from circumstances as to purpose.

MR WOINARSKI:   Yes, your Honour.

BELL J:   Why would that be so?

MR WOINARSKI:   Because this is something that attaches to the subjective purpose of the individual.  Perhaps I have overstated it and I am prepared to concede that, but there has to be something for it to attach to and I am not going to repeat myself, but in the absence of that something here, and I do want to take the Court briefly to one or two pieces of evidence that you have been taken to, we just say you cannot get to the situation where a trial judge could say, in this case, that there was sufficient evidence for a jury properly instructed to conclude – did not have to – but to conclude the defence could be made out.  That, if I may just move away from that, Justice Bell ‑ ‑ ‑

BELL J:   Just before you do move away, may I ask you this?  Why could not the expert evidence attached to the evidence that is referred to on page 7 of the appellant’s submissions in‑chief at paragraph (26) to which we were taken - we looked, as I think as I recollect it, at appeal book 737. 

MR WOINARSKI:   Page 740?

BELL J:   Page 7 of the written submissions, paragraph (26).  I just do not understand why the expert evidence could not attach as you are putting it to that evidence, about it not occurring to him that Mr Scook was a person who wanted to create false active trading.

MR WOINARSKI:   This is at a paragraph (26), your Honour?

BELL J:   Yes.

MR WOINARSKI:   Your Honour, I was going to take you to that very piece of evidence and I am happy to do it now if it would assist your Honour.

BELL J:   Take it in whatever sequence you like.

MR WOINARSKI:   I will perhaps do that in one moment.  There was one other question that was asked about, and I think it was Justice Kiefel.  Please forgive me if I have wrongly named you, but I think you asked – one of the members of the Bench anyhow – asked a question about whether the evidence of Professor da Silva Rosa was presented in a global sense or whether it focused on each trade.

As I understand it, he was asked to consider each trade individually but he gave his opinion about the total effect at the end, and he was taken and I cannot give the Court the references to this off the top of my head, but he was taken to one or two specific trades where he gave specific evidence about those trades, some of the trades towards the very end of the trading pattern.  Your Honour, my learned junior correctly reminds me the reports did not go to the jury in the end so far as the green trades were concerned.

FRENCH CJ:   They had them flashed up on the screen, I think, did they not?  It was being addressed by the witness and is being referred to the screen.

MR WOINARSKI:   Correct, your Honour.

HEYDON J:   Your point is whatever the position as against the other defendant, they were withdrawn against the present appellant.  However unsatisfactory that may be as a procedure that is what happened.

MR WOINARSKI:   What actually happened, as I understand it, was that the prosecutor below said that he would withdraw the reports so far as the appellant was concerned and thereafter nobody made any reference to it in final address or in the charge to the jury.

FRENCH CJ:   So the judge did not tell the jury to disregard what Professor da Silva Rosa had said about green trades?

MR WOINARSKI:   I think I am correct in saying he did not.  I know that was dealt with in the Court of Appeal below.  Perhaps if I can now deal with your Honour Justice Crennan’s question.  This is at appeal book volume 2, page 737 and may I say this, your Honour.  We were going to take the Court to this because it does seem to be both in the Court of Appeal and here very much something of a lifeline upon which the appellant seeks to hang his hat.  May we just start by saying this, that what the appellant believed may have been the purpose of Mr Scook is really irrelevant because it is the appellant’s purpose that is important and I will come back to that, if I may.

Now, at page 737, the Court was taken to this and you were taken to the passage just opposite line 20 where, having been asked whether it crossed his mind that Mr Scook was a person he must have understood to have an interest in trading he says:

It didn’t occur to you?‑‑‑No, it wouldn’t have occurred to me there that he was a person who wanted to create false active trading.

He then added and volunteered:

We are talking about 29 or 30 January.

It is our submission that that is of some importance, the identification of that date.  Very briefly, if I can just say this, the chronology indicates that on 20 January 1998 there was the commencement of the Challiston trades.  Ms Simpson, in her evidence, in volume 1 of the appeal book, appeal book page 414, just below the “20” mark is asked – she is shown a form and she identifies the handwriting as being that of Mr Braysich and:

That’s a form for 20 January 1998 for 43,753 Intrepid Mining shares.

Then, a little bit further on at 40, there is some amending to the previous shares, so that we have a transaction in Mr Braysich’s handwriting on the 20 January.  If I may then just take the Court back to appeal book 2 and the evidence of Mr Braysich and ask the Court to go to page 695.  Now, at the bottom of 695 Mr Braysich gave evidence that he opened an account for Challiston and then the next page, 696, opposite 20, he gives evidence that subsequent to the opening of the account for Challiston, Mr Scook purchased shares in Intrepid and the order was filled.  Then, line 40, there is a question:

Did you rebook the buy order that he made or two buy orders that he made to Walthamstow?‑‑‑Yes, I did but that ‑ ‑ ‑

How did that come about?‑‑‑About four or five days after he bought the stock, he told me he wanted to sell the shares and I sold a parcel of shares for him in Challiston . . . 

Right?‑‑‑He then contacted me to say that that’s not the way he wanted to do his trading and what he would like to do was he would like to have the purchases rebooked to Walthamstow and the sales to come from Walthamstow.

FRENCH CJ:   What does that term “rebooked” mean precisely?

MR WOINARSKI:   As I understand it, your Honour, and I apologise for that phrase, but all of these shares were actually bought in a nominee account of the sharebroker, Paul Morgan Securities, and what then happened was that in the books of Paul Morgan Securities the name of the – Christian Nominees was the nominee account.  They were then within that account said to be, or booked to, for example, Challiston, because it was holding them on behalf of Challiston, and when it said “rebooked” what it means is that instead of Challiston being shown as holding them on behalf of Challiston ‑ ‑ ‑

FRENCH CJ:   Instead of Christian holding them on behalf of Challiston.

MR WOINARSKI:   Yes, it is then holding them on behalf of Walthamstow.  That is where that comes from.

BELL J:   Was there not some evidence that rebooking was relatively unusual and occurred in the case of an error?

MR WOINARSKI:   That is the generality of the evidence, yes, your Honour, and indeed the number of rebookings in this case was unusual and the reasons given were unusual.

CRENNAN J:   The reason was for security purposes.

MR WOINARSKI:   I was going to take you to a couple of these later, but the reasons that were given on the initial forms were - indeed, I am just about to take you to them, but was “wrong client” or “client wrong” and thereafter, after the discussion with Mrs Simpson the reason given was “finance” or “financing”, or words to that effect.  So that we have this evidence here of these trades and then, still within appeal book 2, if your Honours could go to page 871 of the appeal book, and your Honours will see at pages 872, 874 and 876 three rebookings from Challiston to Walthamstow.  The second one, the one at 874, I just want to highlight because it goes back to the evidence of Ms Simpson that I took you to.

You have the trade for 43,753 shares, you will see the quantity being rebooked is 43,753.  If your Honours go back to 872 you will see that the date is 28 January 1998 and that is, in fact - your Honours may be aware that a settlement occurred on “T+5”, which is transaction plus five days, but of course this appears to be “T+8”, but it is not because there was a weekend and there was Australia Day, so you get “T+5” being the 28th and your Honours will see 28 January, and the reason for rebooking, which is just down the bottom of the page, is this one has “Wrong A/C given by client”.  Then the next one, 874, “different account” is the reason given.  The final one, 876, is “Client gave different A/C”, and of course there you have two buys and one sell.

If I may then go back to the appellant’s evidence at page 699 of the appeal book, we are still in the same volume.  I have already taken you to 696 where he asks for them to be rebooked because he does not want to trade that way, and then at page 699, about line 14, a question was asked:

After you had done these rebookings that you were requested to do by Mr Scook, did Carol Simpson speak to you about them?‑‑‑Yes, she did.

Then we have the evidence that follows thereafter; they had a discussion about line 30:

Carol and I had a discussion and she came to me and she said words to the effect of this is an unusual transaction.  I have not seen this before and she asked me the background to the transaction and I said it was a request from the client.

The earliest that can have happened is either 28 or 29 January because we know the rebooking did not occur until 28 January.  There is no exact date, but certainly it could have happened on the 28th but may well have happened on the 29th.  One can then see, in our submission, why his qualification – and I will take this further – that I took you to that he was talking about his understanding of Mr Scook at 29 January is of importance because what then happens is that he then spoke to Mr Scook and Mr Scook told him about the financing and that they were being financed and there was the discussion with Ms Simpson about the need to ensure that there was no trade which did not result in no change in beneficial ownership.  He had to make sure that there were trades that resulted in changes of beneficial ownership ‑ ‑ ‑

CRENNAN J:   That is all at 700, I think.

MR WOINARSKI:   Yes, I am grateful to you, your Honour, I was trying not to take you to all of it, but that is right, “she wanted me to ensure”.  That is exactly right.  Thank you, Justice Crennan.  We then have the appellant creating this situation where he says that on the contract notes he would put either “Dean”, indicating Dean Scook’s shares, or “Lance”, indicating the Masel’s shares on the order form and if ‑ ‑ ‑

FRENCH CJ:   Is this all said to go to the credibility of what appears at 737?

MR WOINARSKI:   This is all said to go, your Honour, not simply to the credibility, but to demonstrate that the appellant cannot rely on that as being his state of mind thereafter.  We say that it is quite misleading for the appellant to say that what is said there had any relevance to what happened with respect to the charged trades which, of course, commence on 2 February.

BELL J:   Can I just take this up with you?  On 737 he is pressed about whether, on a date after 29 or 30 January, he had had the realisation.  I read him at 31 and following to be saying no in the period covered by the indictment.

MR WOINARSKI:   With respect, your Honour, if one reads that evidence, we say, correctly what happens is that he is asked firstly the bit that our learned friend has taken you to and I have taken you to.  He is then asked:

Did you not know that he was a person who was taking a very active interest in trading in IRO?‑‑‑No, sir.

Did you ever come to that realisation?‑‑‑In what period please, sir?

What happened thereafter was the question changes, not from whether he was trying to create a false appearance:

At any time did it occur to you that Mr Scook was a person who was doing a lot of trading in Intrepid shares –

That is what is there followed after –

It never occurred to you even at the end, towards 27 February, that Mr Scook was doing a lot of trading in these shares?‑‑‑No.

His attention is being drawn to the volume or quantity of trading that Mr Scook is doing, not back to the question that is asked at the top of page 737.  So that is why we do say, in a slightly longer answer than I would have liked, your Honour Justice Crennan, you cannot attach the expert evidence to this piece of evidence.  Apart from the fact that it does not tell us what his purpose is, it only tells us what he thinks somebody else’s purpose may have been.

The relevance of that, your Honours, is this.  If I may ask your Honours to go to the legislation to the section itself, section 998?  Subsection (5), of course, is a deeming provision and subsection (5)(a) is the one that we are interested in.  It refers to a person who:

enters into, or carries out, either directly or indirectly, any transaction . . . that does not involve any change in the beneficial ownership -

Then you have the deeming part at the very end –

shall be deemed to have created a false or misleading appearance –

Subsection (6), of course, as we all know provides the defence.  But it is interesting to note what subsection (6) concentrates upon:

it is a defence if it is proved that the purpose or purposes for which the person did the act was not –

et cetera.  Now, the act of Mr Scook is quite different to the relevant act of the appellant.  The relevant act of the appellant is in his role as a broker in effecting the trades.  I suppose the simple way of putting that act is to say that he was the person who instructed the SEAT’s operator to place the order, be it a sell, be it a buy or be it a cross.  It is that act which one has to concentrate on, not upon Mr Scook’s seeking to buy or sell.  It is that act and the circumstances known to the appellant that that attaches to. 

BELL J:   But if the appellant is acting as a broker on the instructions of a client who he believes is not engaging in any wash trades, surely that bears on the question of his purpose in doing the act?

MR WOINARSKI:   Of itself we would submit no, your Honour, because he may take the view that Mr Scook is not doing that, but his own understanding is that these will.  It does not help to say what he believes Mr Scook may or may not be doing.  What we need to do for evidence to identify his purpose is to find out what he thinks.

BELL J:   But if we are finding out what he thinks by a rational process of inferential reasoning then it is, one would think, relevant to look to what his understanding was of the purpose of the trades in respect of which he was taking instructions.

MR WOINARSKI:   With respect, your Honour, we would say no because it is the purpose of what he is doing at the time that is relevant, and the fact that his view, rightly or wrongly, is that Scook is not trying to achieve something does not establish his purpose, and we would say cannot even inferentially establish that purpose.

BELL J:   Have I missed something about the Crown case?  Was it being put other than that Mr Scook was engaged in wash trades and this appellant well knew it and was facilitating it?

MR WOINARSKI:   The point I should have made very early on is there was certainly – and I think my learned friend Mr McCusker made the point and we would not be in dispute with him about this – no suggestion of complicity between the parties.

FRENCH CJ:   There is no attribution of Mr Scook’s purpose to him?

MR WOINARSKI:   To the appellant, no, your Honour.

BELL J:   But that is merely that they were not acting ‑ ‑ ‑

MR WOINARSKI:   There was no complicity for the purposes of criminal law.

BELL J:   No common purpose.  Accepting that - was the Crown identifying Mr Scook – quite independently of anything Mr Scook was on about, there was a purpose that this appellant had, presumably thought to provide some benefit to him or his firm, in what was taking place independently of the circumstance that the client was said to be engaging in wash trades?

MR WOINARSKI:   Certainly my understanding – and I simply say that because I was not there and what I have read was that the cases were run as separate cases and the Crown did not rely upon what Scook did in any way to impose liability upon the appellant.

FRENCH CJ:   Let us suppose then we assume adversely to the appellant that he knows that these trades will have the effect of creating a false or misleading appearance and that that is Scook’s purpose.  He is only in it for the brokerage fees.  Is the existence of that knowledge enough to defeat a defence under subsection (6)?

MR WOINARSKI:   Alone it probably is, but other evidence may be able to nullify it so far as the onus of proof is concerned.  But you would have to be able to prove that he knew that was the purpose of Mr Scook and in the absence of any evidence from the appellant that he did not have the prescribed purpose it would seem that the defence must fail.

FRENCH CJ:   If Mr Scook’s purpose is immaterial to him – he has a purpose of earning brokerage fees – the question then arises whether he can establish on the balance of probabilities that his purpose did not include the purpose of creating a false or misleading appearance.  If you are only focusing on his purpose, and there is no complicity case, no attribution of Scook’s purpose to him, no common purpose, then surely the question of his motive for having such a purpose and questions of character and so forth would come into it, would they not?  You would ask the question what point is there in him having that independent purpose?  That goes to the question of the sufficiency of all this circumstantial evidence.

MR WOINARSKI:   Your Honour, may we answer it this way.  We do not suggest, and I would have hoped that our written submissions and what I have said today, we do not suggest that what Mr Scook thought or what the appellant thought Scook was up to really had any relevance here.  It is his purpose that we concentrate on.  We simply say, and it is in our written submissions, that even if one does have regard to the question of motive, and one has regard to the question of good character, and one has regard to those other matters, you still have no evidence that properly can be left to the jury as to his purpose not including the prescribed purpose, or his purposes not including the prescribed purposes, and the jury simply cannot on the basis of some good character – or the fact that he was going to get some fees out of it for brokerage – say he had no other purpose because the evidence just does not take it there.

BELL J:   That is a submission that it was necessary for him to, either in evidence or from a source such as an interview, give direct evidence of what his purpose was.

MR WOINARSKI:   I do think we have ever resiled from, in this case, that there needed to be some evidence of his purpose.

BELL J:   What is it about this case that introduces that requirement, namely that one cannot infer a person’s purpose, their state of mind being a fact capable of proof ordinarily one would think, by means including circumstantial evidence?

MR WOINARSKI:   But normally not just mere objective evidence in isolation.  Part of this case – the problem perhaps associated with this case is something that my learned friend identified this morning, the problem of the knowledge that the jury must have found beyond reasonable doubt that he knew these trades involved a change in beneficial ownership.

Can we just briefly say this, that so far as ground 2 is concerned, at paragraphs (30) to (39) of the appellant’s submissions, and I do not really think that the Court needs to go to those, but particularly at paragraphs (34) to (37) which deals with this suggestion that there was borrowed stock coming from Walthamstow and the like, what the appellant really seeks to re‑agitate is a factual matter that was found against it in the court below.  All that issue was dealt with and dealt with at great length in the Court of Appeal and that is to be found in volume 3 of the appeal book.  At page 1477 commencing about paragraph 205 Justice Buss turns to:

the evidence relating to the shares allotted to Walthamstow –

This is an argument that the appellant ran below and ran at the trial to the effect that he did not know that some of these – I am sorry, that the Crown could not prove that some of these shares were in fact Walthamstow shares and they were being borrowed and things like that.  Justice Buss from page 1477, paragraph 205 to page 1487 at paragraph 223 deals with that at quite some extent and indeed goes through the various loan facilities.  If it assists the Court, I can give you references to the loan facilities by page reference - if that is of any assistance to the Court.

FRENCH CJ:   This is dealing with ground 4, is it not, which was the adequacy of the judge’s direction in relation to the defence case on whether there was a change in beneficial ownership and the appellant’s knowledge of it?

MR WOINARSKI:   Correct, your Honour.

FRENCH CJ:   So how does it bear on the grounds we are concerned about?

MR WOINARSKI:   Well, your Honour, in the appellant’s submissions, starting at ground 2 on page 10, there is the reference to direct evidence of “Purpose” required and if one then goes to paragraph (34) through to paragraph (39), there is an argument based on whether or not Walthamstow borrowed Intrepid stock from Challiston “basket” and so on.

FRENCH CJ:   I see.  So, are you referring to these as answers to that?

MR WOINARSKI:   That is the answer to that, your Honour, and indeed, it is taken through completely by Justice Buss there.  I do not know that I need to take you to the actual facility agreements, but his Honour deals with it completely there and I do not propose to say anything more about that.

HEYDON J:   It is really outside the grounds of appeal in this Court.

MR WOINARSKI:   It is outside the grounds of appeal in this Court, but it is a factual argument which was clearly lost before the jury and clearly lost before the Court of Appeal and we just simply say that it is a factual argument that the Court should ignore here.  If I may just briefly conclude by taking you to one other matter.  Of course, after the conversation with Miss Simpson and the conversation with the appellant, there were a large number of other rebookings which the appellant’s handwriting is all over.  Perhaps if I just take the Court to one of those which is in volume 2 at page 935.

Your Honours will see at page 935 – sorry this is not really a rebooking.  I have misidentified, but this is a trade where on 26 February there is a total of 340,000 shares sold and your Honours will see just underneath there is a reference to “90K” and “250K”.  There was an admission from the appellant that the 250K was a crossing and this, of course, is at a time when Mr Braysich said that he had this system whereby if they were Lance’s shares, then he wrote “Lance” in the contact and one can see that he has, in fact, written “Dean” in the contact there, rather than if his system was, as he said, he would have written “Lance” because that is a crossing between Walthamstow and Challiston for 250,000 shares and the admission about that is found in the first appeal book at page 97.  At page 97, the very last transaction, 26 February, you can see a buyer by Challiston, a sale by Walthamstow of 250,000 shares at the same time.  So, there is the admission of that particular trade. 

Your Honours, there are quite a number of rebooking forms.  I have already taken you to some of those, but if one just goes on in volume 2 to page 947 as an example, and I am simply using this as an example, you will see another example of a rebooking form Challiston to Walthamstow and the reason given here is “Financing” and there follow thereafter a variety of other forms where in each case the reason is given either as “Financing” or “Refinancing” and they all seem to be in the handwriting of the appellant so that the appellant’s handwriting is all over the rebookings and clearly he knew what was going on.

Unless there is some other issues – just excuse me for one moment.  The issues of evidence we have dealt with in our written grounds, and I do not propose to replay this, but what we say this comes down to is that the Court of Appeal did get the test right as to whether there was sufficiency of evidence and that in this case there was no evidence other than – I am sorry, I will rephrase that.  The only evidence upon which purpose could be looked at was circumstantial evidence and that circumstantial evidence was objective evidence.  It was not evidence that actually could go to the actual subjective intention of the appellant himself and that being so, in our submission, the Court of Appeal, we say, was correct in saying that it was appropriate for the defence here to be taken away.  Those are our submissions, if the Court pleases.

HEYDON J:   Could I just ask you this?  In the Court of Appeal there was some consideration given to the proviso in relation to ground 1.

MR WOINARSKI:   Yes, your Honour.

HEYDON J:   Does the proviso play any role in your argument to this Court.  There are many possible respects in which you could suffer a reverse.  For example, arguably the trial judge should not have entertained

the application made until the whole of the character evidence had been in.  Now, if that were a mistake, do you have a proviso submission or not?

MR WOINARSKI:   May I put it this way, your Honour.  I do not think that we would seek to maintain the proviso, and I will explain why.  The proviso was applied by the Court of Appeal after they had concluded that ground 1 failed, but then went on to say even if we are wrong about ground 1, the proviso applies.  If they are wrong about ground 1, then arguably the evidence of their experts and the defence should have been left to the jury and having regard to what this Court has had to say in Weiss’ Case and other recent decisions, we do not feel confident that we could say there had been no substantial miscarriage of justice.  If our learned friends are right about ground 1, we do not see how the proviso can apply.  Does that make sense, if I can put it that way?  If the Court pleases.

FRENCH CJ:   Thank you, Mr Woinarski.  Yes, Mr McCusker.

MR McCUSKER:   In matters in reply, your Honours.  As to the evidence of what the expert and what the experts would have said on evidence, there is a passage in the judgment of Justice Buss at appeal book 3 page 1422, but it is in very generalised terms, at line 20.  The short point to be made is that if the evidence of Mr da Rosa, which of course is before the Court, was evidence relevant to rebut the defence, then surely the evidence of the two experts, in similar terms, would have been relevant to support to defence. 

My learned friends said that the expert evidence, unattached to anything else, would be insufficient.  We would submit that the expert evidence standing alone would arguably have been sufficient but, in any event, it was attached to a number of other things, including lack of motive and good character.  The character evidence, your Honours, Mr Hartnell, a former head of ASIC, as it happened, gave evidence at appeal book 2 at 785 to 789.  He was.....evidence of Mr Braysich had been completed.....certainly given before the ruling was made.  I think that the other evidence of experts, except for one, Christopher Daws, was also made or given ‑ ‑ ‑

FRENCH CJ:   You are talking about character witness.

MR McCUSKER:   Sorry, did I say experts?  I am sorry, it is late in the day.  Character evidence was given before the ruling was made, although no reference was actually made to it by his Honour.  My learned friend referred to page 737 at appeal book 2 with an interesting mixed metaphor of the lifeline on which we seek to hang our hat, it would be a fairly wet hat.  Page 737 at lines 20 to 30, in our submission, clearly shows that although he was talking – he said, “We are talking about 29 or 30 January”, his understanding is something which extended to what Scook was doing throughout the period and it did not occur to him that there was anything

untoward.  That is to be read with the other evidence to which I have taken your Honours.

I think we have dealt with this actually, at paragraph 11 of our reply we have addressed the proposition which is advanced by the respondent, that is, that the knowledge or understanding by the appellant of Scook’s purpose is nothing to do with the evidence of the subjective purpose of the appellant, and we have addressed that.  In our submission, it is highly unlikely that a jury, unless it thought that Scook’s purpose, as it obviously did find, or rejected the proposition, I should say, that Scook’s purpose was not to create a misleading impression.

Unless it found that the purpose of Scook was known to the appellant, or probably known to the appellant, perhaps, it is unlikely it would have found that, independently of that as my learned friend has put it, the broker had some other collateral purpose outside that of Scook.  My learned friend referred to the problem – I think in answer to a question posed by the Court – which was, why cannot purpose be proved by circumstantial evidence in this case without direct evidence being given – referred to what he said was the problem the defence had that there was evidence which gave rise to the deeming provision.  But the answer to that is the statutory defence is based on the premise that the deeming provision in the statute, subsection (5), applies.  You then go on to consider whether nevertheless the defence has been made out. 

Paragraphs 34 to 39 in our submissions, your Honours, we do not press those as being relevant to the matters raised by the appeal.  I note that my learned friend conceded that if we are right on our ground, substantial ground, the proviso has no application.  Your Honours, what has to be addressed in the end is whether in this case it would be unreasonable for a jury to reason this way.  Mr Scook we think had the relevant purpose, an improper purpose.  He had motive and there was abundant evidence of a large number of transactions in which he was involved.  There is no evidence that Mr Braysich knew of anything of that.  His evidence was he did not know anything of Mr Scook’s purpose to create a misleading impression. 

There was no evidence that he knew – in fact there was evidence that he did not know.  There is evidence that he did not know of the other transactions, the numerous transactions in which Mr Scook had engaged.  That being so, and given the evidence of his good character, and that evidence that I have just mentioned, we are satisfied on the balance of probabilities that Mr Braysich did not have a purpose because there was no motive for him to create a misleading impression.  Your Honour, they are our submissions in reply.

FRENCH CJ:   Yes, thank you, Mr McCusker.  The Court will reserve its decision and the Court adjourns until 10 o’clock tomorrow morning.

AT 4.16 PM THE MATTER WAS ADJOURNED