Chen v R
[2015] NSWCCA 122
•29 May 2015
|
New South Wales |
Case Name: | Chen v R |
Medium Neutral Citation: | [2015] NSWCCA 122 |
Hearing Date(s): | 23 March 2015 |
Decision Date: | 29 May 2015 |
Before: | R A Hulme J at [1]; |
Decision: | 1. Leave to appeal against conviction granted. |
Catchwords: | CRIMINAL LAW – appeal against conviction – obtaining a benefit by deception – attempt to obtain a benefit by deception – Criminal Code ss 134.2, 11.1 – whether trial judge erred in giving consciousness of guilt direction – potential for circular reasoning – consciousness of guilt direction not necessary – error established – no risk jury would engage in improper reasoning process – no substantial miscarriage of justice – appeal dismissed |
Legislation Cited: | Crimes Act 1914 (Cth) s 16A(2) |
Cases Cited: | Edwards v The Queen [1993] HCA 63; 178 CLR 193 |
Category: | Principal judgment |
Parties: | Julian Chen (Applicant) |
Representation: | Counsel: |
File Number(s): | 2010/12462; 2010/12505 |
Decision under appeal: | |
Court or Tribunal: | District Court |
Date of Decision: | 7 June 2013 |
Before: | Huggett DCJ |
File Number(s): | 2010/12462; 2010/12505 |
JUDGMENT
R A HULME J: Julian Chen ("the applicant") was found guilty by a jury on 14 March 2013 of 23 offences of obtaining a benefit by deception (s 134.2 of the Criminal Code (Cth)) and 4 offences of attempting to obtain a benefit by deception (ss 11.1 and 134.2).
Her Honour Judge Huggett sentenced the applicant on 7 June 2013 to a total term of imprisonment for 10 years with a non-parole period of 6 years.
The sole ground of appeal against conviction is that the judge erred in permitting the jury to use the applicant’s evidence as being evidence of consciousness of guilt if it concluded that his evidence was false, even though such a conclusion would invariably mean the prosecution had proven its case.
There is also an application for leave to appeal against sentence (to which I shall return).
Overview of the case
The Crown case was that the applicant caused 27 fraudulent business activity statements (“BASs”) to be lodged with the Australian Taxation Office ("ATO") for two companies he controlled: Allrange.com Pty Limited ("Allrange") and Sparktec Pty Limited ("Sparktec"). This occurred between December 2004 and June 2007. Each BAS falsely claimed a Goods and Services Tax ("GST") refund by including falsely inflated figures for non-capital purchases and export sales income.
The BASs were prepared by the applicant’s tax agent, Ms Candy Cheung. She simply accepted the accuracy of information on spread sheets the applicant provided her; it was not suggested that she was aware of any falsity.
The applicant arranged for an employee, Ms Tina Cheung, to make a number of withdrawals from and deposits to the company bank accounts in an endeavour to create entries that he could claim related to the non-existent purchases and sales. Cheques payable to cash were deposited into the account from which the cheques were drawn. The resulting debits and credits in the bank statements were then used to support figures provided to Ms Candy Cheung for preparation of the monthly BASs.
The ATO paid refunds on 22 out of the 23 BASs filed for Allrange and on 1 out of the 4 filed for Sparktec.
$1,785,833.10 was the total amount of refunds paid by the ATO out of which $1,396,285.76 was fraudulently obtained.
Refunds were not paid in relation to four BASs due to audit intervention by the ATO but the fraudulent component claimed in these totalled $163,544.45.
The applicant claimed that the figures for non-capital purchases included the cost of Allrange and Sparktec having purchased mobile phones mostly (that is, except for May 2005) from BJ Multilink Investments Pty Limited ("BJ Multilink"). It was the Crown case that such purchases had never occurred. In fact, the Crown contended that BJ Multilink never even traded with Allrange or Sparktec.
The applicant also claimed that phones purchased from BJ Multilink were exported, whereas the Crown case was that such exports could not have occurred without the phones having been purchased in the first place.
On the Crown case, the applicant provided false invoices and other documents in the name of BJ Multilink during an ATO audit in an endeavour to show that the purchases had in fact been made. During a later investigation by the Australian Federal Police ("AFP"), material was found which established that the applicant had created the invoices and other documents himself. He admitted this, and said that this was necessary because emails he had received which had attached the original documents had been stored by him on a USB storage device which he had subsequently lost.
At a later stage of the ATO audit, questions were raised about the multiple withdrawals from and deposits to the companies' bank accounts. From this point, the applicant advanced a complex explanation involving a need to create some form of record of purchases and sales because of a peculiar arrangement between his supplier, BJ Multilink, and his customers in Hong Kong. It was to the effect that BJ Multilink owed money to the Hong Kong customers so he was not required to pay BJ Multilink for the phones it supplied and he exported. The Hong Kong suppliers simply deducted amounts equivalent to what they would have paid the applicant's company from the debt owed to them by BJ Multilink. All the applicant had to do was to pay to BJ Multilink the GST component of the purchase price of the phones. Thus, he made the withdrawals and deposits to his company's bank account so that there would be a record of the value of the purchases and sales. He claimed that there was a differential between the withdrawal amounts and the deposit amounts and this represented the GST component that he was required to pay to BJ Multilink.
The investigation
In June 2005 the ATO conducted a compliance review in relation to the May 2005 BAS lodged by Allrange (count 8). The applicant was asked to provide various documents to verify the claim for a refund. Included in what was provided was a purported invoice from Easycom Pty Limited (“Easycom”) to Allrange in relation to the sale of 155 mobile phones for $62,000. This was handwritten on a pro forma invoice document numbered 54 and dated 5 May 2005 which contained a notation that it was paid by Allrange by a particular cheque on 4 May 2005. This compliance review was carried out in a relatively perfunctory fashion and resulted in the May 2005 BAS being accepted and a refund paid.
It was later determined during an investigation by the AFP that the applicant was the sole director of Easycom. During a later search of his office, a Spicers Olympic Brand Tax Invoice/Statement Book was found. It contained 100 numbered pages and invoice number 54 was the only page which had been used; all of the others were blank. The Crown thus contended that the applicant had fabricated this purported invoice from Easycom and that there was no such transaction involving a sale to Allrange of $62,000 worth of mobile phones.
On 4 September 2006 the ATO commenced a more wide-ranging audit of the Allrange BASs for July 2004 to August 2006. The applicant provided invoices purportedly issued by BJ Multilink to Allrange to substantiate the expenses claimed as non-capital purchases in the BASs from October 2004 to August 2006, except for May 2005. Many of these invoices included notations of the number of Allrange cheques that the applicant claimed had been used to pay the invoiced amounts. Bank statements were also provided to further substantiate the non-capital purchase expense claims and export invoices were provided to substantiate export sales figures.
Evidence from Westpac and the applicant’s former employee, Ms Tina Cheung, established that in nearly all cases the cheques referred to on the BJ Multilink invoices were payable to cash and had been deposited back into the Allrange account on which the cheques were drawn. However, the deposits were listed in the spread sheets the applicant provided to his tax agent, Ms Candy Cheung, as “Oversea” and they were included in the figure at item G2 on the BASs for export sales. The withdrawals were listed on the spread sheets as “stock oversea” and came to be part of the figure at item G11 on the BASs for non-capital purchases.
Files found on secure data cards ("SD cards") seized at the applicant’s home showed that in many cases the applicant had prepared the BJ Multilink invoices shortly before they were provided to the ATO.
Also found on the SD cards were twin export invoices the applicant had prepared. One was called “Real” or “Cash” whilst the other was called “Cargo” or “Air Cargo”. Those called “Real” or “Cash” were for significantly lesser amounts than the corresponding invoice called “Cargo” or “Air Cargo”. The “Real” or “Cash” invoices could be reconciled to telegraphic transfers in the bank statements. Those called “Cargo” or “Air Cargo” in the higher amount which could not be reconciled in the bank statements were the ones that had been presented to the ATO.
BJ Multilink never traded with Allrange or Sparktec
In 2004, Mr Shi (“Michael”) Gu wanted to start a business retailing mobile phones. He acquired an existing company (because it was cheaper than incorporating from scratch) from a friend, Jian Ting Zhu. The company was called BJ Multilink Investments Pty Limited. Documentation before the jury (Exhibit 46) showed that from 24 August 2004 Mr Gu became the sole director and company secretary. Mr Yu Che (“David”) Ou became a director from 10 August 2005 until he resigned on 7 June 2006.
BJ Multilink registered the trading name New Sky Communications through which it operated a mobile phone retail store in Ashfield. The store dealt with individual consumers. Its weekly trade involved sales of 10 to 20 phones. It was not profitable. It never traded in large quantities of phones. The company’s bank account was opened on 1 September 2004 and closed on 29 June 2006. The bank statements were in evidence (Exhibit 44) and confirmed the company’s very modest financial standing. Mr Gu’s evidence was to the effect that BJ Multilink (trading as New Sky Communications) went out of business in 2006 because of an inability to pay its debts.
Mr Gu was shown invoices that had been provided by the applicant to the ATO which purported to be from BJ Multilink. He confirmed they were fraudulent and that his company had never traded with Allrange (nor with Easycom, Smartphone Pty Limited (“Smartphone”) or Sparktec). Mr Ou’s evidence was to the same effect.
There was also evidence that the three main suppliers to BJ Multilink supplied only modest quantities of phones to it; nothing like the quantity that would have been necessary for BJ Multilink to supply Allrange or Sparktec with what appeared in the invoices provided by the applicant to the ATO.
Tak Yu (James) Chan
The purported “BJ Multilink” invoices found on the SD cards seized at the applicant’s home were all created after 13 October 2006 (the ATO audit having commenced a few weeks before). Tak Yu (“James”) Chan became the director of BJ Multilink from 13 October 2006.
Ms Gina Bradley was assigned the task of carrying out the GST audit of Allrange on 4 September 2006. In mid-November that year she attempted to make contact with somebody at BJ Multilink and she ended up speaking to James Chan, the then director. She spoke with him by phone on a number of occasions between 15 November and 20 December 2006. She told him that she needed to verify invoices relating to sales to Sparktec, Smartphone and Easycom. He told her that he had made many sales to many entities on many occasions including to Julian Chen (Easycom, Smartphone, Allrange and Sparktec).
James Chan told Ms Bradley that he had worked for BJ Multilink for about a year before the owners decided they no longer wanted the business and offered it to him. He got the job because the former owners were his friends and he worked as a delivery driver at first but slowly got more involved in the business. Ms Bradley told him that she had invoices worth over $14 million for supplies of mobile phones to Allrange and he said he had supplied those invoices; he had to create them again based on paper based records of funds received.
James Chan explained to Ms Bradley that BJ Multilink would source phones and then ring clients to see if they wished to purchase them. It did not hold any stock; phones were traded immediately. He told her that Allrange paid for the phones in cash which it was taken straight to the supplier.
Ms Bradley asked who he had purchased $14 million worth of phones from and he nominated only one supplier, Home Zone PL. He could not name any others. All suppliers were paid in cash.
Despite repeated attempts between January and March 2007 Ms Bradley was unable to contact Mr Chan after her last conversation on 20 December 2006.
It was suggested to Mr Gu in cross-examination (T176 – AB4) that a man named James Chan or Tak Yu Chan took over BJ Multilink on 23 October 2006. Mr Gu said that he had a recollection of a young man by the name of Chan having done so; he met him at the accountant’s office when the paperwork was signed. But Mr Gu said that this man had not worked previously for the company.
Federal government records showed that James Chan was born in Hong Kong in 1984 and was in Australia in the following periods:
29 January 2004 to 12 October 2005 (age 19-20; occupation on incoming and outgoing passenger cards: “student”)
11 June 2006 to 13 December 2006 (age 22; occupation: “student”)
6 March 2007 to 11 April 2007 (under the alias Hugo Wong; age 22-23; occupation: “student”)
31 December 2010 to 28 February 2011 (as Hugo Wong; age 26; occupation: “sales”)
12 June 2011 to 29 August 2011 (as Hugo Wong; age 27; occupation: “sales”. No record of any subsequent return)
The jury would have been well-entitled to reject what Tak Yu (James) Chan told Ms Bradley as lies, particularly having regard to (a) the evidence of Mr Gu and his suppliers about the modest business affairs of BJ Multilink; (b) Mr Gu's evidence refuting the claim that Chan worked for the company prior to when he took it over in October 2006; and (c) the immigration records that showed that Chan was in the country for only 4 of the 12 months prior to October 2006 when he claimed to have worked for BJ Multilink.
A Notice of Amended Assessment issued
In April and May 2007 the applicant made a number of representations to the ATO to conclude the audit and to release refunds that he claimed were due and payable to him. He complained of experiencing cash flow problems as a result of the delay.
On 26 June 2007 the ATO wrote to the applicant to give notice of an amended assessment in respect of the period 1 July 2004 to 30 September 2006. Whereas previously Allrange had been assessed as entitled to GST refunds totalling $1,801,564, it was now considered that the company was only in fact entitled to refunds totalling $330,367, the difference of $1,471,197 being now payable to the ATO. The applicant's response, through his accountant, was to inquire about an appeal process.
The ATO queries the deposit and withdrawal activity in the Allrange bank account
On 30 August 2007 the ATO wrote to the applicant about the movements of cash and cheques in the Allrange bank account finding it had been done "to create an appearance of inflated export trade by creating fictitious transactions to support [the applicant’s] claims made for refund via BAS". It continued, "Our findings in respect of this issue resulted in a $1,468,488 GST shortfall". It quoted the following example (omitting irrelevant entries):
| Date | Transaction | Description | Debit | Credit | Austrac Data (cash out) |
| 30-Jun-06 | Deposit | Haymarket NSW | $42,000.00 | ||
| 30-Jun-06 | Deposit | Haymarket NSW | $45,000.00 | ||
| 30-Jun-06 | Deposit | Haymarket NSW | $46,000.00 | ||
| 30-Jun-06 | Deposit | Haymarket NSW | $46,500.00 | ||
| 30-Jun-06 | Deposit | Haymarket NSW | $47,000.00 | ||
| 30-Jun-06 | Withdrawal | Cheque | $50,000.00 | $15,000.00 | |
| 30-Jun-06 | Withdrawal | Cheque | $46,000.00 | ||
| 30-Jun-06 | Withdrawal | Cheque | $48,000.00 | ||
| 30-Jun-06 | Withdrawal | Cheque | $49,500.00 | ||
| 30-Jun-06 | Withdrawal | Cheque | $48,000.00 | ||
| $241,500.00 | $226,500.00 |
By way of response to this letter, in October 2007 the applicant, through Ms Candy Cheung, provided the ATO with copies of contracts he had with Hong Kong customers. For example, there was a purported "Contract for Sale of Goods" between Allrange Pty Ltd and Dynamic Tech Development. It commenced with a statement that it was an "agreement made and entered into this 2nd January 2006" and concluded with a statement that "this agreement has been executed in duplicate, whereby both buyer and seller have retained one copy each, on 20th August 2007". It included the following:
"Buyer has nominated that the source of the stock be given by BJ Multilink as an act of repayment of outstanding balance from their account.
The Buyer will then be responsible to compensate the account balance for BJ Multilink account and to notify the Seller when the deal terminates." (AB2 408)
A purported "Contract for Sale of Goods" between Allrange and Gammacomm Technology Ltd was in identical terms.
Invoices purportedly issued by BJ Multilink to Allrange were also provided but they included endorsements of which one appearing on an invoice dated 14 September 2005 was typical:
"For this invoice we use stock to OFFSET the outstanding amount plus the GST. We only get the GST from Allrange. We got the balance from our oversea client."
This was the first time the ATO had been informed of a purported offset arrangement involving BJ Multilink.
The evidence of Mr Michael Gu included that BJ Multilink never had any dealings with any businesses in Hong Kong; particularly with Dynamic Tech Development, Gammacomm Technology Limited, or Klenebon Limited. Ms Belinda Dudzaiak, an officer with the Australian Customs and Border Protection Service, gave evidence that she conducted a search and found that there was no record of BJ Multilink importing or exporting anything in the period October 2004 to April 2007.
The last allegedly fraudulent BAS for Allrange was lodged in respect of August 2006. (The ATO audit commenced in September 2006.) Four such BASs for Sparktec were lodged from that time up to April 2007. They were also subject to auditing and police investigation. The applicant's methodology and explanation was along the same lines as it was in respect of Allrange.
When the applicant's residence was searched by police on 26 February 2008 a notebook was found and seized. It contained three pages of handwritten notes which the Crown asserted comprised a rehearsal of explanations and excuses that would be, or were, given to the ATO. (Exhibit 51)
Ground of appeal against conviction
As indicated earlier, there is only one ground of appeal against conviction:
“Her Honour erred in permitting the jury to use the applicant’s evidence as being evidence of consciousness of guilt if it concluded that his evidence was false, even though such a conclusion would invariably mean the prosecution had proved its case.”
Counsel for the applicant acknowledged that leave pursuant to r 4 of the Criminal Appeal Rules was required because the point had not been taken at the trial. The point is not without merit and I consider that leave should be granted.
The direction
The learned trial judge gave a direction about using lies as evidence of consciousness of guilt in conventional terms (in accordance with Edwards v The Queen [1993] HCA 63; 178 CLR 193) and it is not suggested that there was any legal error in that respect. The ground is concerned with whether a direction should have been given at all in relation to some of the asserted lies.
The applicant admitted in his evidence that he had told lies to his accountant, Ms Candy Cheung, and to the ATO auditor, Ms Gina Bradley. Those lies were to the effect that deposits and withdrawals in the bank accounts of Allrange and Sparktec represented payments to suppliers and receipts from customers. He explained in his evidence that they were in fact simply transactions that were made in order that there would be a record of invoices for phones supplied to overseas third parties. He needed such a record because of the offset arrangement whereby he did not need to pay BJ Multilink anything for the phones except for the GST component and in return, he would not receive payment from the overseas third parties who instead would reduce the debt that BJ Multilink owed to them.
The applicant takes no issue with those lies being the subject of a consciousness of guilt direction. Her Honour dealt with them in one portion of her summing up (SU 19-21) before immediately proceeding to the impugned direction (SU 21-25):
“The Crown further asserts that the accused told lies in court in his evidence. The accused stated in his evidence that the real reason for the grouped or structured transactions in each relevant company account was because these transactions, the withdraw, deposit, withdraw, deposit, withdraw, deposit and so forth transactions, that [sic] represented his method of recording offset transactions. The accused told you that in any given month, and I think the structured transactions commenced about count 6, prior to count 6 they are individual transactions, as reflected in exhibit 108, the Crown says that even though they were not structured or grouped in counts 1 to 5, they were fabrications. They were not really for the purchase of phones for export overseas and therefore they are included by the Crown in counts 1 to 5.
The accused said that the structured or grouped transaction system commenced to enable him to record the total amount of the invoices for phones supplied in a particular month by BJ Multilink to overseas third parties via the accused’s companies, purportedly because James Chan owed overseas entities approximately $15 million in unrelated debt. The accused said in his evidence that these grouped or structured transactions would provide him with a surplus because the withdrawals exceeded the deposits, and that the surplus represented the GST component that Allrange or Sparktec had to pay BJ Multilink locally because BJ’s stock had been locally supplied to those companies and therefore it was liable to pay the GST component.
In cross-examination the Crown put to the accused that this explanation for the structured transactions as being a method of recording transactions was fictitious, made up, and further that if one does the sums, on occasions the surplus was vastly inadequate to meet the GST component owing on a particular transaction. To that the accused replied that the offset arrangement was such that when the surplus was inadequate to meet the GST due on a particular transaction, the overseas buyer would factor that shortfall in and would then deduct the shortfall from the debt BJ Multilink or James Chan purportedly owed to the overseas supplier. The accused also said that from time to time he would borrow money from James Chan to purchase stock.
The Crown submits that you would find that the accused’s evidence is all lies, is just made up. The Crown submits that if these structured transactions occurred in fact to record the total value of the invoices, the surplus should equal the GST which on occasions it did not. The Crown also submits that the accused is lying when he says that the overseas companies would make up the difference or offset the difference and then he would borrow money from James Chan. The Crown submits that you would find the accused lied in Court when he told you that the BJ Multilink Investment invoices were genuine and reflected real commercial transactions.
Additionally, the Crown submits that the accused lied when he contended that there was a complex offset arrangement involving the accused’s companies, BJ Multilink or James Chan and overseas buyers.
This leads to a direction that I am required to give you regarding lies. At law, a lie is to say something which is untrue, knowing that at the time that it is said it is untrue. If a person says something one day which is untrue but does not realise at the time of saying it that it was untrue, then it is not a lie. The person could have been mistaken or confused. To be a lie the person must say something that the person knows at the time of making the statement is untrue.
If you find that what the accused said in Court regarding the transactions in exhibit 108 being genuine transactions with BJ Multilink Investments and that what he said regarding any offset arrangement were lies because at the time he said those things he knew that what he was saying was untrue, then I must give you a direction about the care with which you must approach your task of deciding what significance this has.
You may take a lie into account as evidence of the accused’s guilt, but you can only do that if you find proved two further things, which I will come to in a minute. Should you find that the accused told a lie [or] lies, when I say that you can take that into account as evidence of the accused’s guilt, I am not suggesting that a lie or lies alone could prove the accused’s guilt. What I mean is that it can be considered along with all of the other facts the Crown relies upon and which you find established on the evidence, in considering whether the Crown has proved its case beyond reasonable doubt.
So before you can use a lie as some evidence of the accused’s guilt you must find matters proved. Firstly, you must find that what the accused said was deliberate and that it relates to a significant or material circumstance or event connected with the alleged offences.
The Crown asserts that the connection or the involvement of BJ Multilink Investments is significant or material because that connection underpins the reason the accused gave for the offset arrangement. If there is no debt by James Chan, there is no need for an offset. The Crown submits that what the accused has said in court and outside of court regarding his involvement with BJ Multilink is very significant because the Crown case is that the BJ Multilink invoices, as represented in exhibit 108, are all fictitious.
Secondly, you must find that the reason the accused told the lie, or lies, was because he feared that telling the truth might reveal his guilt in respect of the charges he now faces. In other words that he feared that telling the truth would implicate him in the commission of the offences for which he is now on trial. You must remember that people do not always act rationally, and that conduct of this sort, that is telling a lie, may sometimes be explained in other reasons apart from trying to conceal one’s guilt. A person may tell a lie out of panic, a person may tell a lie to protect some other person, or to protect some other interest that they have. A person may tell a lie to escape an unjust accusation, or to avoid some consequence totally unrelated to the offence.
In this regard the accused has provided an explanation for his out of court lies, that is the lies that he now agrees he said to Gina Bradley and Candy Cheung. He said the reason he told these lies was because he was concerned that these persons would not be able to understand or comprehend the third part offset arrangement. But the accused asserts that what he said in court regarding the offset arrangement and his dealings with BJ Multilink is the truth.
If you think that the accused may have told a lie, or lies, for some reason other than to avoid being implicated in the commission of the offences for which he is now on trial then you cannot use the lie as evidence of the accused’s guilt. In that case you must put it to one side and focus your deliberations on the other evidence. So to repeat, you can only use it, lie, or lies, as being some evidence of the accused’s guilt, if you find that it was deliberate and that it relates to some significant, or material event or circumstance connected with the alleged offences.
Secondly, you must find that the reason the accused told the lie or lies was not because of panic or fear or worry about protecting other persons, but because telling the truth might reveal his guilt in respect of the charges that he now faces.” (Emphasis added.)
Submissions for the applicant
The trial judge identified for the jury “the real issue” in the trial as being whether the accused was being deceptive or dishonest by purporting to claim that his companies had the various transactions with BJ Multilink. She said:
“The real issue, you might think, is whether or not the accused in having the business activity forms submitted, was being deceptive or dishonest by purporting to claim that his consequence [sic] had these transactions with BJ Multilink, transactions that the Crown says had not in fact occurred. That you might think is the main issue in this trial. There is no dispute that the forms were lodged and in relation to the attempt charge, that the accused did attempt to lodge the forms by submitting them through to the ATO. The issue is whether he engaged in deceptive or dishonest conduct, whether he fraudulently attempted or did in fact obtain financial advantages to which his relevant company was not entitled.”
In summarising the Crown case, her Honour identified this issue as a prerequisite to the Crown proving its case beyond reasonable doubt:
“I must emphasise that the Crown case relies upon you accepting beyond reasonable doubt that there were no genuine commercial business transactions between the accused’s companies and BJ Multilink Investments Pty Ltd or James Chan acting on behalf of that company. Or, at the very least, that you would reject that as being reasonably possible based on all of the evidence that has been placed before you. The reason that the Crown must prove beyond reasonable doubt that there were no genuine commercial business transactions between the accused’s companies and BJ Multilink Investments is because such a finding would be a prerequisite if you like to the Crown being able to prove that the accused’s conduct was deceptive and that he acted dishonestly.
In other words if you consider that there were, or that it is reasonably possible that there were, legitimate, genuine, commercial business transactions between the accused’s company and BJ Multilink Investments Pty Ltd and that goods were exported, then there has been no deception or no attempt to deceive the ATO because the accused’s companies would then have been entitled to claim the refund.”
The essence of the submissions made in support of the ground by counsel for the applicant is stated in the ground itself. Put shortly, in order to prove that the lies had been told the Crown had to prove its case. If the Crown proved its case, there was no point in the jury then considering whether the lies were indicative of consciousness of guilt. The jury were invited to engage in what has been described in the authorities as “circular” or “bootstraps” reasoning. Counsel referred to a number of authorities, principally R v Zheng (1995) 83 A Crim R 572, but others as well including R v Lane (No 13) [2010] NSWSC 1540; R v Lane [2011] NSWCCA 157; 221 A Crim R 309; R v Mercer (1993) 67 A Crim R 91; and R v Laz [1998] 1 VR 453.
Submissions for the Crown
The Crown submitted that R v Zheng was distinguishable in the same way as it was found to be distinguishable in R v Lane (2011). This was said to be on the basis that even though proof of lies was essential to a finding of guilt, proof that lies had been told did not require proving guilt. It was submitted that, as in R v Lane (2011), the case that proved that the accused had lied was part of but not completely coextensive with the case that proved guilt, or, as Simpson J put it (at [61]), “a circumstantial case within a circumstantial case”.
The Crown submitted that the following evidence was available to prove the lies:
(1)provision by the applicant to the ATO of the first set of BJ Multilink invoices during the Allrange audit
(2)provision by the applicant of the Allrange Westpac account records
(3)evidence from Tina Cheung and Westpac of the structured “churning” transactions involving Allrange cheques referred to in the BJ Multilink invoices
(4)the electronic files found on the SD cards seized from the applicant’s home showing that in many cases he prepared the BJ Multilink invoices shortly before they were provided to the ATO
(5)provision by the applicant to the ATO after the completion of the Allrange audit of BJ Multilink invoices that for the first time referred to the offset arrangements
(6)evidence of the directors of BJ Multilink, Messrs Gu and Ou, as to its limited trading activities; lack of any dealings with Allrange or Sparktec; and that James Chan never worked for BJ Multilink
(7)evidence of the lack of any BASs of BJ Multilink that might correspond with the applicant’s asserted dealings between it and Allrange and Sparktec
(8)evidence from the Customs officer that BJ Multilink had no exports during the indictment period
(9)evidence of the modest supplies of phones to BJ Multilink by its three main suppliers
(10)evidence of the ATO’s audit contact with Tak Yu (James) Chan and the contradictory evidence of his travel movements
Two further matters relied upon in the Crown's closing address to the jury might be added to this list:
(11) the inherently improbable proposition that a 19 year-old student, James Chan, or BJ Multilink itself, had amassed a $15 million debt to the Hong Kong companies
(12) the implausible proposition that the applicant derived no profit from the complex offset arrangement he ascribed to his dealings with BJ Multilink and the Hong Kong companies.
The Crown submitted that this evidence was capable of proving that the applicant had lied about the genuineness of the BJ Multilink invoices and the existence of the offset arrangements but the evidence could not, on its own, prove the applicant’s guilt of the offences charged. It could not prove the essential elements of dishonest deception by causing false BASs to be lodged with the ATO, nor that the applicant obtained (or attempted to obtain) a financial advantage. Even though there might not have been issues raised by the defence about those elements, it was still necessary for the jury to consider whether they had been proved beyond reasonable doubt. And, the body of evidence to prove all of the essential aspects of the Crown case was broad and complex; far greater than that which was necessary to prove the applicant had lied about the genuineness of the BJ Multilink transactions.
So, the Crown submitted, the body of evidence from which the asserted lies were proved was not co-extensive with the overall Crown case that proved guilt. The direction did not invite the jury to engage in circular reasoning. It was also submitted that the judge’s clear directions as to the need for proof beyond reasonable doubt as to each essential element of the offences, a matter about which she reminded the jury at the very end of the summing up, removed any potential for confusion (if there was any potential at all).
Submissions in response
Mr Lange indicated that there was no dispute that, if the Crown proved the falsity of the applicant’s assertions that the BJ Multilink transactions were genuine then, all of the essential elements of its case would be established. He submitted that the same could be seen in R v Zheng where proof of the lie did not establish all of the essential elements; the focus was on what was the real issue between the parties. In the present case there was really only one issue: had the Crown proved beyond reasonable doubt that the BJ Multilink transactions were not genuine.
This prompted a question from the bench as to whether there was any miscarriage of justice arising from the direction having been given if proof of guilt and proof of the lie was one and the same thing. Mr Lange submitted that it invited confusion for the jury. Lies were not something that had to be proved beyond reasonable doubt. The jury could be satisfied that the accused lied about the BJ Multilink transactions being genuine; infer that he lied out of consciousness of guilt; and then use that to conclude beyond reasonable doubt that the BJ Multilink transactions were not genuine.
Consideration
During the course of argument, counsel for the applicant indicated he was content for the lie the subject of this ground to be characterised simply as being that the applicant said the BJ Multilink transactions were real and genuine. There were components to that lie but, broadly speaking, that was the essence of the Crown’s contention. I will confine my references accordingly.
The applicant's submission that the direction should not have been given should be accepted. The practical reality of this case was that if the jury accepted that there were no genuine commercial business transactions between the applicant's companies and BJ Multilink they would inevitably find that the offences were proved. Once the jury were satisfied of the falsity of the applicant's account concerning this issue, there was nothing else in dispute. It is inconceivable that the jury might have had any doubt about the other essential aspects of the Crown case once they were satisfied of such falsity.
There was no need for a consciousness of guilt direction concerning the applicant's claim that the BJ Multilink transactions were real and genuine. Hoeben CJ at CL observed in Gall v R; Gall v R [2015] NSWCCA 69 at [86] that:
"the rationale behind the need for a consciousness of guilt direction by a trial judge is that the particular conduct relied upon by the Crown, while being capable of allowing a legitimate inference of guilt, may also be readily explained by another innocent or less culpable motivation."
In that case, it was held (at [90]) that a less culpable explanation of post offence conduct was available but it constituted the appellant's defence (that he was acting in self-defence). The issue for the jury was whether the Crown had excluded that explanation which was described (at [92]) as "the fundamental question for the jury to decide". A ground asserting error by the trial judge in not giving a consciousness of guilt direction was rejected.
The "fundamental question for the jury to decide" in the present case was whether the BJ Multilink explanation was false.
This case is factually similar to R v Wang, (Court of Criminal Appeal (NSW), 11 February 1994, unrep) in that proof that an assertion was a lie was coextensive withy proof of guilt. Wang was alleged to have murdered his two flatmates but he gave an alternative version in a police interview and in his evidence in the trial that a group of four men had come to the home, killed the flatmates and forced him to assist with dumping the bodies. The Crown asserted that this account was a lie and the trial judge directed the jury in accordance with R v Lucas (1981) 1 QB 720 about using lies as evidence of a consciousness of guilt. Finlay J (with whom Hunt CJ at CL and Allen J agreed) said that the direction was an error. He continued:
"The appellant's story of the gang of four being responsible was inextricably interwoven with the appellant's denial of his own guilt. In the circumstances of this case it was necessary for the jury to find that the appellant had committed the murders in order to find that his ‘Gang of Four’ statement was a lie. To suggest that his story in that regard was false was to suggest that his denial of his guilt was false. Any suggestion that the denial by an accused person of his guilt can in some way be found to be a lie which may assist a jury to find him guilty is obviously a circulatory argument and is erroneous."
So too in the present case; the assertion in the applicant's evidence that the BJ Multilink transactions were real and genuine was "inextricably interwoven with the applicant's denial of his own guilt".
Notwithstanding the error, the Court in R v Wang applied the proviso in s 6(1) of the Criminal Appeal Act 1912 (NSW), it being held that there was no substantial miscarriage of justice.
Lane (2011) is distinguishable. In that case it was essential to proof of the respondent's guilt that the Crown establish that she had lied when she claimed that she had given her child into the care of other people. (If that was possibly true, then she could not have killed the child.) As Simpson J observed (at [59]), "while that was a necessary condition for conviction, it was far from a sufficient condition for conviction". Her Honour said (at [61]-[62]) that the circumstantial case relied upon by the Crown to establish that the claims were lies was not entirely co-extensive with the circumstantial case relied upon to prove the murder. There were other circumstances in the Crown's circumstantial case on murder that were independent of the lies; for example, tendency evidence relating to the respondent having given away to adoption children born before and after the birth of the baby allegedly murdered.
This is not a case in which there was a risk of "bootstraps" reasoning in the sense explained by Neave JA in R v Sirillas [2006] VSCA 234. Her Honour said:
[19] Bootstraps reasoning occurs when the jury must assume that the accused has committed the offence with which he or she has been charged, for the purpose of deciding whether the statement they have made is a lie (See for example R v Laz [1998] 1 VR 453 at 466; R v Gionfriddo (1990) 50 A Crim R 327; R v Smith [2002] VSCA 219 at [109]). This is to be contrasted with the case where an assertion of fact is not a general denial of guilt but relates to a material issue which is relevant in determining the accused’s guilt. In the latter situation a lie told by the accused may permit an inference to be drawn that he or she lied to conceal guilt, which, when that inference is combined with other evidence, may be sufficient to justify conviction (R v Lam & Ors (Ruling no. 18) [2005] VSC 292 at [26], per Redlich J).
In the present case, I do not see any way in which the lies issue went to the jury could have invited the application of such an illegitimate process of reasoning. A substantial amount of the Crown case was devoted solely to proof that the BJ Multilink version of the accused was false. The whole focus of the way in which the parties presented their respective cases was on that issue. An assumption of guilt and then application of it to determine the falsity of the accused's account would have been so perverse and irrational that I cannot contemplate the possibility of it having occurred.
Counsel for the applicant's contention that the jury could have been satisfied that the accused lied about the BJ Multilink transactions being genuine, inferred that he lied out of consciousness of guilt, and then used that to conclude beyond reasonable doubt that the BJ Multilink transactions were not genuine is not borne out as a realistic possibility either for the same reason.
As I have said, the principal focus of the evidence and submissions was the applicant's BJ Multilink explanation. The vast majority of the case was devoted to it. The evidence upon which the Crown relied, succinctly summarised by the points made in its submissions in this Court (see above at [53]), in my assessment, was overwhelming. There was no substantial miscarriage of justice.
Accordingly, while leave to appeal against conviction should be granted, I would dismiss the appeal.
Application for leave to appeal against sentence
The sole ground of appeal against sentence is:
Her Honour erred in referring to the offences having involved innocent third parties
When dealing with the objective seriousness of the offences the sentencing judge said:
“In summary, each offence individually and looked at in total:
1. took place over a lengthy period of time;
2. involved sustained deception involving the submission of 27 false Business Activity Statements’ such that even when some of these statements were queried by the ATO, at which time the offender had the opportunity to desist had he wished to do so, the offender continued his fraudulent activities ultimately switching from using Allrange to using Sparktec in order to exploit the ATO for his own benefit;
3. involved significant planning and significant sustained efforts to avoid detection;
4. was motivated by greed;
5. breached the trust inherent in the self-reporting of taxation liabilities;
6. involved innocent third parties, namely Ms Candy Cheung and Ms Tina Cheung, in their implantation;
7. in the case of counts 8 to 18 and 20 to 22 involved significant sums of money and these counts alone would call for a significant term of imprisonment;
8. the amount of money involved in counts 1 to 22 and 24 totalling $1,396,285.76 has not been recovered; and
9. the offending ended only upon the arrest of the offender.”
(Emphasis added.)
Her Honour immediately expressed her conclusion: "the offences committed by the offender are objectively very serious".
Counsel submitted in this Court that there was no evidence that either Ms Candy Cheung or Ms Tina Cheung did anything other than what they were advised to do by the applicant. No interest of theirs was prejudiced in any way, and the offences were not more difficult to detect because of their involvement. As a consequence, it was wrong for her Honour to take into account the involvement of these third persons in assessing the objective gravity of the offences.
Her Honour did not explain how it was that the involvement by the applicant of these two people was relevant to the objective seriousness of the offences. There are a number of ways in which it could have been. It could be indicative of brazenness on the part of the applicant to risk exposure if either or both of them discerned any illegality or impropriety in his conduct. It could be indicative of the complexity of his fraudulent scheme. It might reflect a degree of callousness in that the applicant was prepared to use innocent agents to do his bidding in furtherance of his scheme. These types of matters may be regarded as part of "the nature and circumstances of the offence" and of the applicant's "course of conduct consisting of a series of criminal acts"; matters required to be taken into account by s 16A(2) of the Crimes Act 1914 (Cth).
What was most significant in an assessment of the objective seriousness of the offences was that they involved a sustained period of repeated fraudulent claims as part of an elaborate scheme to derive (or attempt to derive) large sums of money in a contemptuous manipulation of the self-reporting GST/BAS scheme solely for the applicant's own enrichment.
I do not regard the sentencing judge's inclusion of the impugned subject in the list of matters she regarded as relevant to the seriousness of the offences as erroneous. Even if it was, it pales when compared to more significant matters such that this complaint can be regarded as hypercritical nit-picking.
I would refuse leave to appeal against sentence.
Orders
I propose the following orders:
1. Leave to appeal against conviction granted.
2. Appeal dismissed.
3. Leave to appeal against sentence refused.
DAVIES J: I agree with R A Hulme J.
BELLEW J: I agree with R A Hulme J.
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