Clark & Forge v The Queen - [2004] WASCA 217

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : COURT OF CRIMINAL APPEAL

CITATION: CLARK & FORGE -v- R [2004] WASCA 217

CORAM: MURRAY J
MILLER J
JENKINS J

HEARD: 2 & 27 AUGUST 2004

DELIVERED : 29 SEPTEMBER 2004

FILE NO/S: CCA 37 of 2004
CCA 38 of 2004

BETWEEN: PETER JOHN CLARK
Appellant
AND
THE QUEEN
Respondent

FILE NO/S :CCA 41 of 2004
CCA 84 of 2004

BETWEEN :WILLIAM ARTHUR FORGE
Appellant
AND
THE QUEEN
Respondent

ON APPEAL FROM:
Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA
Coram   :MARTINO DCJ
File Number            :  IND 1153 of 2002

Catchwords:

Criminal law and procedure - Knowingly making improper use of position as officer of a company - Corporations Law of Western Australia, s 232(6) - Evidence - Admissibility of acts and declarations of others - Criminal enterprise - Whether evidence that appellants had joined such an enterprise - Whether admission of evidence of criminal enterprise a miscarriage of justice - Whether verdict of jury could be supported having regard to evidence - Adequacy of trial Judge's directions - Whether jury properly directed as to the use to which evidence of criminal enterprise appellant said to have joined could be put - Whether sufficient direction as to the particular knowledge, belief or intent alleged to have made the actions of the appellants dishonest - Whether evidence sufficiently separated and singled out in relation to each accused person

Criminal law - Sentence - Whether sentences manifestly excessive - Whether sentence of imprisonment only disposition open in each case

Legislation:

Corporations Act 2001 (Cth), s 1401(2)

Corporations Law of Western Australia, s 232(6), s 1317FA(1)

Result:

Appeals against conviction dismissed
Applications for leave to appeal against sentence refused

Category: A

Representation:

CCA 37 of 2004

CCA 38 of 2004

Counsel:

Appellant: Mr W S Martin QC & Mr S G Scott
Respondent: Mr S D Hall SC & Ms E Needham

Solicitors:

Appellant: Stables Scott
Respondent: Commonwealth Director of Public Prosecutions

CCA 41 of 2004

CCA 84 of 2004

Counsel:

Appellant: Mr M T Trowell QC, Mr J A Davies & Mr S D Freitag
Respondent: Mr S D Hall SC & Ms E Needham

Solicitors:

Appellant: Peter Marks
Respondent: Commonwealth Director of Public Prosecutions

Case(s) referred to in judgment(s):

Ahern v R (1988) 165 CLR 87
Chew v R (1992) 173 CLR 626
Festa v R (2001) 208 CLR 593
He Kaw Teh v R (1985) 157 CLR 523
Hoy & Ors v R [2002] WASCA 275
Krakouer v R (1998) 194 CLR 20
Lowndes v R (1999) 195 CLR 665
M v R (1994) 181 CLR 487
Mraz v R (1955) 93 CLR 493
Peters v R (1998) 192 CLR 493
R and Attorney‑General (Cth) v Associated Northern Collieries (1911) 14 CLR 387
R v Bilick & Starke (1984) 36 SASR 321
R v Byrnes & Hopwood (1995) 183 CLR 500
R v Byrnes (1995) 183 CLR 501
R v Davidovic (1990) 51 A Crim R 197
R v Dinh (2000) 120 A Crim R 42
R v Gouroff (1979) 1 A Crim R 367
R v Masters (1992) 26 NSWLR 450
R v Minuzzo & Williams [1984] VR 417
R v Pektas [1989] VR 239
R v Romeo & Ors (1987) 25 A Crim R 80
R v Zorad (1990) 19 NSWLR 91
Tripodi v R (1961) 104 CLR 1

Case(s) also cited:

Nil

MURRAY J: In this matter I have had the advantage of reading in draft the judgment prepared by Miller J. It is a comprehensive document which deals thoroughly with the issues raised in these appeals and applications for leave. I wish only to add a few comments to make clear my reasoning in coming to the conclusions, as Miller J did, that the appeals against conviction should be dismissed and leave to appeal against the sentences should, in each case, be refused.
As to the appeals against the convictions, I wish to start by noting briefly the nature of the offences with which the appellants were charged. The counts on the indictment have been dealt with in detail by Miller J. They related to different factual matters and transactions, but they were in common form, alleging the commission of an offence against the Corporations Law of WA, s 1317FA(1), included, with other provisions of that Law, into its successor, the Corporations Act 2001 (Cth), by s 1401(2) of that Act.
Section 1317FA(1) is an offence‑creating provision. The offences created are contraventions of civil penalty provisions of the Law. One such provision, the one relevant to these cases, is s 232(6). That provision imposes a duty upon an officer of a corporation, relative to this case, not to make improper use of his or her position as such, "to gain, directly or indirectly, an advantage for himself or for any other person or to cause detriment to the corporation." It will be observed that the way in which the duty is formulated requires no specific intention to be established to constitute a contravention of the subsection, but that mental element is imported into the definition of the offence by s 1317FA because the contravention must occur knowingly, intentionally or recklessly (as to which see generally He Kaw Teh v R (1985) 157 CLR 523) and, relative to the way in which these appellants were indicted, dishonestly and intending to gain, directly or indirectly, an advantage for any person, including, of course, another corporation.
So the conduct in question must be knowingly, in the context of this indictment, carried out, within the meaning of the law, and, in addition, as these appellants were indicted, their conduct was required to be established to be dishonest, within the meaning of Peters v R (1998) 192 CLR 493, where it was held that, in relation to the offence of conspiracy to defraud under the Crimes Act 1914 (Cth), the concept of dishonesty imported a judgment to be made by the jury that the conduct was to be so categorised by the standards of ordinary, decent people, in all the circumstances of the case as the jury found them to be. That was the concept relevant to the case of these appellants.
Further again, however, the Crown had to prove beyond reasonable doubt that each of the appellants intended that their conduct should gain an advantage, directly or indirectly, for some corporate person other than Hallmark Gold NL (Hallmark). The Crown's case against each appellant was circumstantial in character. As it was put before the jury, by both the prosecutor and the trial Judge, the Crown case was that the appellants were in breach of their duty as directors of Hallmark (de facto, if not entirely de jure) because they so conducted themselves, in respect of the decisions and transactions in question, knowingly and intentionally seeking to gain an advantage for the various corporate entities who were to be the beneficiaries of the decisions that were taken and transactions entered into.
Their behaviour was dishonest, so the prosecution argued, because they joined in an enterprise with others, Endresz, Cain and Muir, with the intention of benefiting corporations controlled by those persons, rather than that they acted as they ought to have behaved as directors, honestly with the intention of furthering the interests of and producing benefit for Hallmark. The thrust of the Crown case was not that the offence was committed because they intended to harm Hallmark, necessarily, although it was said the lack of discernible commercial benefit in the transactions had that effect, but because they acted dishonestly for an ulterior, extraneous purpose, with the intention of benefiting corporations other than Hallmark. This, it was put by the prosecution, was done not only knowingly and intentionally, but it was dishonest, according to the standards of ordinary decent people, because as directors they ought to have had Hallmark's interests as the sole guide of their conduct. It was because the enterprise in which they were said to have joined had those characteristics that, at the trial, and before us, it was loosely described as a criminal enterprise.
The approach taken was that authorised by the High Court in relation to the earlier state uniform Companies Codes, s 229(4): Chew v R (1992) 173 CLR 626, and R v Byrnes (1995) 183 CLR 501. In those cases it was made clear that the test of impropriety is objective. But as I have pointed out, in respect of the offence charged in these cases, a related intention had to be established. In relation to a case such as these, where the allegation is that the appellants abused their fiduciary positions as directors, it is important to bear in mind what was said by the majority of the High Court in Byrnes, at 514 – 5:
"Impropriety does not depend on an alleged offender's consciousness of impropriety. Impropriety consists in a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case. When impropriety is said to consist in an abuse of power, the state of mind of the alleged offender is important: the alleged offender's knowledge or means of knowledge of the circumstances in which the power is exercised and his purpose or intention in exercising the power are important factors in determining the question whether the power has been abused."
It was in such terms that the matter was left to the jury in this case and neither appellant makes any complaint about the directions of the trial Judge in that regard.
The first complaint, made by both appellants, concerns the admissibility of what may be generally described as evidence of the enterprise, the joinder in which is said to constitute the contravention of their duty as directors, the impropriety involved in their dishonestly, knowingly and intentionally seeking to have Hallmark enter into transactions, not for the benefit of Hallmark, but for the benefit of third parties. I join with Miller J in the view that this evidence was clearly admissible for the reasons given by his Honour. I include in that observation the background evidence, as it might be described, of McCartney and Yannopoulos, to which objection was taken at the trial, and to the more immediately relevant evidence of Corp, Bunting and Woodhouse, to which Miller J has referred, which evidence I consider to be admissible against both appellants as part of the body of evidence concerned to demonstrate the nature of the enterprise in question.
Shortly put, I consider that there was reasonable evidence of a circumstantial kind against each of the appellants that his relevant conduct was motivated and intended to produce the result which would constitute the offence so that it might be said, if the jury so concluded, that the appellant whose case they were considering joined in an enterprise of that kind. It was then open to lead the evidence, which I have generally described as evidence of the nature of the enterprise, to demonstrate and confirm what it was that the appellants became implicated in. In that way the evidence was admissible against both and tended to prove the commission of the offences with which they were charged.
It is necessary, of course, to bear in mind that it was for the trial Judge to consider whether or not there was reasonable evidence that the conduct of the appellants involved participation by them in the enterprise alleged. That was not a matter for the jury, but a matter upon which the admissibility of the evidence as to the full character of the enterprise, depended. There was, in my opinion, no necessity to direct the jury that they should first consider evidence of the conduct of the appellants and ask themselves whether that established to their satisfaction, beyond reasonable doubt, that they had each joined an enterprise of the kind alleged before going on to consider the probative value of the evidence demonstrating the nature of the enterprise in relation to the question whether each appellant was guilty of the alleged offences, or any of them, having regard to the nature of the enterprise more amply demonstrated by evidence of events generally preceding the involvement of each appellant. In my opinion, ground 9(a) and (b) in Clark's appeal, and ground 6 in Forge's appeal, are predicated upon that erroneous view.
It is useful, however, in considering what direction was or ought to have been given by the trial Judge in respect of the evidence against each appellant, to consider the evidence of their conduct which was available as part of the proof of their commission of the offences in question on 23 October 1998.
In the case of Forge, there was evidence that he was appointed a director of Hallmark in the knowledge that he was expected to have regard to the interests of Davis Samuel Pty Ltd (Davis Samuel) and, of course, with Endresz, he was a director of CTC Resources NL (CTC). It was Forge who tabled the proposed Davis Samuel management agreement at his first board meeting on 24 September 1998. He was aware of the concerns of Corp and Bunting about the commerciality of that agreement and about the value of the interest in Kanowna Lights NL (Kanowna), which it was proposed that Hallmark would acquire.
When Forge was absent from the board meeting on 23 October 1998, when the impugned decisions were taken, having declared an interest as a director of Kanowna, he organised the drawing of the necessary cheques so that Hallmark could pay the moneys which he anticipated the resolution would require, without delay. Forge did not disclose his interest in CTC as a shareholder and director. There was evidence that Forge benefited directly through CTC and a private company which he controlled, from the moneys which were paid, and there was evidence from which the jury might have inferred that Forge knew or ought to have known that Hallmark's acquisition of the shares and options in Kanowna were not necessarily at the best price then obtainable from the point of view of Hallmark. I do not suggest that that is a comprehensive review of evidence of this kind relating to the case against Forge.
So far as Clark was concerned, he was, of course, only recruited on 22 October 1998, but this could not possibly have escaped the notice of the jury. The jury might, however, find on the evidence that he accepted his appointment to the board of Hallmark to represent the interests of Davis Samuel and protect those of Endresz. He made no inquiries, before or at the meeting on 23 October, about the merits of the transactions and resolutions for which he voted, despite the large financial commitment which Hallmark was to make. He did not even see the proposed agreement with Davis Samuel and he professed no knowledge about the acquisition of the interest in Kanowna or in relation to the Pinnacles project, which underpinned the worth of that interest. Both Forge and Clark participated in the days following in the execution of documents and the completion of the transactions resolved upon on 23 October.
As to the question whether the trial Judge misdirected the jury by failing to tell them clearly what was the evidence available to establish that each appellant joined the enterprise to which I have referred, it may be accepted that ordinarily a trial judge ought to remind the jury what was the evidence available against each of a number of accused persons. The reason why that should be done is to ensure that the jury do not, in their consideration of the case against a particular accused person, wrongly have regard to evidence which is not truly available to establish that case. If, as in this case, it is put that a failure to direct more expansively by collecting together for the jury, the evidence available in relation to each accused, has caused a miscarriage of justice, the question will be whether the jury might have been misled into misusing the evidence as it was presented to them.
Counsel for the defence made no such submission to the trial Judge in this case. And in my opinion, having regard to the nature of the evidence under consideration, no miscarriage of justice has been established by the failure of the trial Judge to direct the jury particularly as to the evidence available to establish that each of the appellants was a participant in the enterprise to which I have referred. I would, in that regard, be of the view expressed by the Court in the case of R v Masters (1992) 26 NSWLR 450 at 463, and in R v Gouroff (1979) 1 A Crim R 367 at 373.
The trial Judge told the jury how they might use the evidence which established the nature of the enterprise asserted by the prosecution. They

could not, in my view, have used that evidence as proof that each appellant joined in the enterprise, when it was abundantly clear that the evidence concerned events which occurred before the involvement of either appellant or without their participation.

To my mind, this is not a matter which involves the application of the proviso that the appeal may be dismissed if the Court is of the view that no substantial miscarriage of justice has occurred. In my opinion, more fundamentally, the appellants have not, in respect of the directions of the trial Judge, established any possibility of the occurrence of a miscarriage of justice in the manner of which they complain.
Finally in relation to conviction, the complaint is made that upon all the evidence the verdicts are unsafe and unsatisfactory because the evidence was incapable of sustaining the inference of guilt beyond reasonable doubt. Having had the advantage of reading the judgment of Miller J and his Honour's review of the evidence, I have nothing to add to his Honour's conclusion that the appeals may not be allowed upon these grounds. I would dismiss the appeal against conviction in each case.
As to the applications for leave to appeal against sentence, I could usefully add nothing to the reasons of Miller J. I too would refuse leave to appeal in each case.
MILLER J: The appellants were charged in the District Court at Perth on an indictment that contained 12 counts. Each alleged an offence committed at Perth on 23 October 1998.

Terms of the Indictment

The appellants were jointly indicted on counts 1, 11 and 12 with committing an offence against s 1317FA(1) of the Corporations Law of Western Australia ("Corporations Law") in that being officers of Hallmark Gold NL ("Hallmark"), the contravened the provisions of s 232(6) of the Corporations Law, in that they knowingly made improper use of their positions as such officers by:
(a)dishonestly and intending to gain, directly or indirectly, an advantage for Davis Samuel Pty Ltd ("Davis Samuel"), in that they improperly resolved that Hallmark execute a Corporate Advisory Services Retainer Agreement whereby Davis Samuel was retained as consultant to Hallmark (count 1);

(b)dishonestly and intending to gain, directly or indirectly, an advantage for Davis Samuel, in that they improperly caused the execution by or on behalf of Hallmark of a Corporate Advisory Services Retainer Agreement whereby Davis Samuel was retained as consultant to Hallmark (count 11); and
(c)dishonestly and intending to gain, directly or indirectly, an advantage for Kanowna Lights NL ("Kanowna"), in that they improperly caused the execution by or on behalf of Hallmark of an agreement with Kanowna for the exercise by Hallmark of 8,200,000 options in Kanowna at an exercise price of $0.20 per option for a total exercise price of $1,640,000 (count 12).

The appellant Clark ("Clark") was charged in counts 2, 4 and 6 on the indictment that he committed an offence against s 1317FA(1) of the Corporations Law in that being an officer of Hallmark, he contravened the provisions of s 232(6) of the Corporations Law by knowingly making improper use of his position as such an officer by:
(a)dishonestly and intending to gain, directly, an advantage for Kamanga Holdings Pty Ltd ("Kamanga") and Quancorp Pty Ltd ("Quancorp"), in that he improperly resolved that Hallmark execute transfer forms for the purchase by Hallmark of 8,200,000 options in Kanowna at a purchase price of $0.08 per option for a total consideration of $656,000 (count 2);
(b)dishonestly and intending to gain, directly or indirectly, an advantage for CTC Resources NL ("CTC"), in that he improperly resolved that Hallmark execute a transfer form for the purchase by Hallmark of 3,600,000 shares in Kanowna at a purchase price of $0.20 per share for a total consideration of $720,000 (count 4); and
(c)dishonestly and intending to gain, directly or indirectly, an advantage for Kanowna in that he improperly resolved that Hallmark execute an agreement with Kanowna for the exercise by Hallmark of 8,200,000 options in Kanowna at an exercise price of $0.20 per option for a total exercise price of $1,640,000 (count 6).

The appellant Forge ("Forge") was charged on counts 3, 5 and 7 of the indictment that he was knowingly concerned in an offence by David John Muir ("Muir") in that, on or about the same date at Perth, Muir committed an offence against s 1317FA(1) of the Corporations Law in that being an officer of Hallmark he contravened the provisions of s 232(6) of the Corporations Law by knowingly making improper use of his position by:
(a)dishonestly and intending to gain, directly or indirectly, an advantage for Kamanga and Quancorp in that he improperly resolved that Hallmark execute transfer forms for the purchase of Hallmark of 8,200,000 options in Kanowna at a purchase price of $0.08 per option for a total consideration of $656,000 (count 3);
(b)dishonestly and intending to gain, directly or indirectly, an advantage for CTC in that he improperly resolved that Hallmark execute a transfer form for the purchase by Hallmark of 3,600,000 shares in Kanowna at a purchase price of $0.20 per share for a total consideration of $720,000 (count 5);
(c)dishonestly and intending to gain, directly or indirectly, an advantage for Kanowna, in that he improperly resolved that Hallmark execute an agreement with Kanowna for the exercise by Hallmark of 8,200,000 options in Kanowna at an exercise price of $0.20 per option for a total exercise price of $1,640,000 (count 7).
Forge was also charged in counts 8, 9 and 10 on the indictment that he committed an offence against s 1317FA(1) of the Corporations Law in that being an officer of Hallmark he contravened the provisions of s 232(6) of the Corporations Law by knowingly making improper use of his position by:
(d)dishonestly and intending to gain, directly or indirectly, an advantage for Kamanga and Quancorp, in that he improperly caused Hallmark to execute a transfer form for the purchase by Hallmark of 4,200,000 options in Kanowna at a purchase price of $0.08 per option for a total consideration of $336,000 (count 8);
(e)dishonestly and intending to gain, directly or indirectly, an advantage for Kamanga, in that he improperly caused Hallmark to execute a transfer form for the purchase by Hallmark of 4,000,000 options in Kanowna at a purchase price of $0.08 per option for a total consideration of $320,000; and
(f)dishonestly and intending to gain, directly or indirectly, an advantage for CTC, in that he improperly caused Hallmark to execute a transfer form for the purchase by Hallmark of 3,600,000 shares in Kanowna at a purchase price of $0.20 per share for a total consideration of $720,000 (count 10).
The terminology of each of the counts on the indictment was convoluted, caused by the interaction of the Corporations Act 2001 (Cth) with the Corporations Law. Count 1 on the indictment, the terms of which are reflected in each of the other counts, illustrates how the offence of knowingly making improper use of one's position as an officer of a company was charged. It read:
"On or about 23 October 1998 at Perth in the State of Western Australia WILLIAM ARTHUR FORGE and PETER JOHN CLARK did commit an offence against sub‑section 1317FA(1) of the Corporations Law of Western Australia as taken to be included in the Corporations Act 2001 (Cth) by section 1401 of that Act in that, being officers of Hallmark Gold NL, they contravened the provisions of section 232(6) of the Corporations Law of Western Australia as taken to be included in the Corporations Act 2001 (Cth) by section 1401 of that Act by knowingly making improper use of their positions as such officers, dishonestly and intending to gain, directly or indirectly, an advantage for Davis Samuel Pty Ltd, in that they improperly resolved that Hallmark Gold NL execute a Corporate Advisory Services Retainer Agreement whereby Davis Samuel Pty Ltd was retained as consultant to Hallmark Gold NL."
The provisions of s 1317FA(1) and 232(6) of the Corporations Law are incorporated into the Corporations Act 2001 (Cth) by reason of the provision of s 1401(2) of that Act, which is in the following terms:
"1401(2) [New corporations legislation taken to include provisions of old corporations law] For the purposes of subsections (3) and (4), the new corporations legislation is taken to include:
(a)the provision of the old corporations legislation (with such modifications (if any) as are necessary) under which the pre‑commencement right or liability was acquired, accrued or incurred; and
(b)the other provisions of the old corporations legislation (with such modifications (if any) as are necessary) that applied in relation to the pre‑commencement right or liability."
Sections 1317FA(1) and 232(6) of the Corporations Law read:
"1317FA(1) [When contravention an offence] A person is guilty of an offence if the person contravenes a civil penalty provision:
(a)knowingly, intentionally or recklessly; and
(b)either:
(i)dishonestly and intending to gain, whether directly or indirectly, an advantage for that or any other person; or
(ii)intending to deceive or defraud someone.
232(6) [No gain by improper use of position] An officer or employee of a corporation must not, in relevant circumstances, make improper use of his or her position as such an officer or employee, to gain, directly or indirectly, an advantage for himself or herself or for any other person or to cause detriment to the corporation."

Trial

The appellants were tried before Martino DCJ and a jury between 8 and 25 March 2004. At the conclusion of the trial they were each convicted of all counts that they jointly and separately faced on the indictment. They were sentenced by Martino DCJ on 25 March 2004. Clark was sentenced to 18 months' imprisonment on each count, to be served concurrently. An order was made that he be released after 9 months, upon entering into a recognisance release order in the sum of $10,000. The recognisance release order was for a period of 12 months. Forge was sentenced to 2 ½ years' imprisonment on each count, to be served concurrently. An order was made that he be released after 12 months upon entering into a recognisance release order in the sum of $10,000. This order was for a period of 12 months.

Grounds of appeal

Clark's grounds of appeal against conviction as amended and after abandonment of some grounds, are:
"1.The learned Trial Judge erred in law in admitting evidence of an enterprise ('enterprise') between Allan Endresz, David Muir and Peter Cain when there was no evidence to connect the Appellant to the enterprise whereby there was a miscarriage of justice at trial.
2.In the alternative to ground 1, having admitted the evidence of the enterprise into evidence the learned Trial Judge erred in not withdrawing that evidence from the jury at the close of the Crown case whereby there was a miscarriage of justice at trial.
3.…
4.The conviction was unsafe and unsatisfactory by reason that there was no evidence or any inference available against the Appellant that he was a member of the enterprise and no other evidence capable of supporting a conviction.
5.The Crown case being entirely based on circumstantial evidence, the verdict of the jury could not be supported having regard to the evidence.
6.…
7.…
8.In the alternative, if evidence of a criminal enterprise was admissible, the Trial Judge erred in admitting:
(a)the evidence of McCartney and Yannopoulos (and associated exhibits), because their evidence related to a different enterprise - namely, the enterprise pertaining to the borrowing of funds to acquire shares in Hallmark;
(b)the evidence of Corp, Bunting and Woodhouse (and associated exhibits) as to their opposition to the transactions, because such evidence was not evidence relating to the furtherance of the criminal enterprise and, if and to the extent admissible against Forge, should have been the subject of a direction by the Trial Judge to the effect that it was not admissible against Clark.
9.In the further alternative, if evidence of a criminal enterprise was admissible, the Trial Judge erred in failing to direct the jury adequately or at all as to:
(a)the particular evidence that was evidence of the enterprise which the Appellant was said to have joined and which could not be used for the purpose of deciding whether the Appellant had in fact joined the enterprise;
(b)the evidence to which the jury should have regard in deciding whether the Appellant had joined the alleged enterprise;
(c)the particular knowledge belief or intent which was said to render the Appellant's actions dishonest."
Forge's grounds of appeal against conviction after amendment and abandonment of some grounds are:
"1.The learned trial judge erred in law in admitting the evidence of an enterprise between Allan Endresz, David Muir and Peter Cain when there was no evidence to connect the appellant to the pre‑concert whereby there was a miscarriage of justice.
2.…
3.…
4.The verdict of the jury was unsafe, unsatisfactory and unreasonable in that no reasonable jury could on the evidence admitted at trial draw an inference of guilt beyond reasonable doubt against the appellant on any of the counts on the indictment.

PARTICULARS
(a)The conviction was unsafe and unsatisfactory by reason that there was no evidence or any inference available against the appellant that he was a member of the enterprise and no other evidence capable of supporting a conviction.
(b)The crown case against the appellant being based entirely on circumstantial evidence, the verdict of the jury could not be supported having regard to that evidence.

5.In the alternative, if evidence of the unlawful joint enterprise was admissible, the learned trial Judge erred in admitting the evidence of McCartney and Yannopoulos (and associated exhibits), because their evidence related to a different enterprise - namely, the enterprise pertaining to the borrowing of funds to acquire shares in Hallmark.
6.In the alternative, having admitted evidence of a joint enterprise between Endresz, Muir and Cain, the learned trial Judge erred in failing to direct the Jury by specifically identifying:
(a)the actual terms of the joint enterprise the appellant was said to have joined and which could not be used for the purpose of deciding whether the Appellant had in fact joined the enterprise; and
(b)evidence the Jury could have considered in assessing whether the appellant had joined the alleged joint enterprise.

7.The learned trial Judge erred in failing to specifically identify evidence of the appellant's knowledge, belief or intent, which it was alleged, rendered his actions dishonest."

Each of Clark and Forge also seek leave to appeal against sentence. The ground upon which Clark seeks leave to appeal against sentence is:
"The learned Trial Judge erred in law in that the sentence imposed by him on the Appellant was manifestly excessive.
Particulars
The learned Trial Judge imposed a sentence of 18 months imprisonment on terms that the Appellant be released after nine months upon entering into a recognizance release order when, having regard to the age and antecedents of the Appellant, the impact upon which a term of imprisonment immediately served would have on the Appellant and his family, the minor role played by the Appellant in the offences for which he was convicted and the fact that the learned Trial Judge found (alternatively ought to have found) that the Appellant would not re‑offend, the learned Trial Judge ought to have ordered that the Appellant be released immediately upon entering into such recognizance release order".
The grounds upon which Forge seeks leave to appeal against sentence are:
"The applicant seeks leave to appeal against the sentence of 2½ years imprisonment concurrently on all counts to be released after 12 months upon entering into a recognisance release order for the period of 12 months in the sum of $10,000 on the following grounds:
1.In imposing such a sentence the learned trial judge erred in law in that he did not give any or any adequate reasons why the sentence of imprisonment imposed by him was the only appropriate sentence available to be imposed upon the applicant.
2.The learned trial judge erred in law and in the exercise of the sentencing discretion by imposing such a sentence of imprisonment to be served immediately when in all the circumstances of the case and having regard to the age, health, prior good character and antecedents of the applicant there was no reason why such sentence could or should not have been suspended.
3.In imposing such a sentence the learned trial judge erred in law and in the exercise of the sentencing discretion in imposing a sentence that was in all the circumstances of the case manifestly excessive having regard to the age, health, prior good character and antecedents of the applicant.
4.The learned trial Judge erred in the exercise of his sentencing discretion in failing to have sufficient regard to Section 17A of the Crimes Act 1914 by not satisfying himself that no sentence other than imprisonment was appropriate in all the circumstances of the case after having first considered all other available sentences."

The prosecution case

The prosecution case worked backwards from 23 October 1998. At 6.02 pm on that day, there was a meeting of the directors of Hallmark. Three persons were present. They were the two appellants and one Muir. Clark was present by telephone communication.
At this meeting, various resolutions were passed which are the subject of counts 1 ‑ 7 inclusive on the indictment. A copy of the relevant page of the minutes is attached and marked "A". This document was tendered at trial. On it there is a cross‑reference to counts 1‑ 7 on the indictment.
The prosecution case was that each of the first four items on the agenda was a transaction resolved upon by the directors without regard to the interests of Hallmark. It contended that:
(1)The first transaction was a retainer agreement entered into with Davis Samuel in order for that company to provide consultancy services at a cost to Hallmark of $350,000 per annum for a period of three years in circumstances where:
(i)a grossly excessive sum was being paid for services that were not clearly defined;
(ii)Davis Samuel was controlled by associates of the directors of Hallmark, namely an Alan Endresz ("Endresz") and Peter Cain ("Cain") and thus the transaction was not at arm's length; and
(iii)the retainer was "ludicrously uncommercial" in the sense that it offered little to Hallmark but was extremely favourable to Davis Samuel.
(2)The Kanowna acquisition was contrary to the interests of Hallmark in that the price paid for the acquisition of the options represented a price per option that was more than four times higher than the market price. Further, the options were to be sold to Hallmark by Kamanga and Quancorp, two companies controlled by Endresz and Cain, close associates of the two appellants. The motivation of the directors in resolving upon the acquisition was said to be to obtain an unfair benefit for Endresz and Cain.
(3)The acquisition of the fully paid ordinary shares in Kanowna was again contrary to the interests of Hallmark in that the price paid was more than twice the prevailing market price for those shares. The reason for what would otherwise be an inexplicable transaction was said to be that the vendor of the shares was CTC, a company closely associated with Endresz and Cain and with the directors of Hallmark, Forge and Muir. The transaction was thus said to be in the interests of CTC and not Hallmark.
(4)The options contract with Kanowna was alleged to be against the interests of Hallmark because the company contracted itself to acquire a further 8.2 million Kanowna shares for a total consideration of $1.64 million. The price per share was said to be more than twice the market price then prevailing for Kanowna shares and by reason of the second transaction, the end result was that Hallmark would pay an effective total of 28 cents per share at a time when Kanowna shares were trading in the market at 9.5 cents. $1.6 million would be paid to Kanowna, a company in which CTC and a number of the directors of Hallmark had an interest.
The prosecution case was that there was considerable doubt as to whether Muir, Clark and Forge had been properly appointed as directors of Hallmark. Muir and Forge had been appointed directors of Hallmark by way of filling casual vacancies on the Board, by resolution at a meeting approximately one month beforehand. The articles of association of the company provided that the appointment of Muir and Forge to casual vacancies on the Board terminated at the annual general meeting. Although there was an annual general meeting of Hallmark on 22 October 1998, neither Muir nor Forge were elected at that meeting. Indeed, no directors were elected at the meeting.
On the morning of 23 October 1998 Muir and Forge met as directors of Hallmark and purported to appoint Clark to the Board. The prosecution case was that whatever the validity of the appointment of Muir, Forge and Clark, they were acting as directors on 23 October 1998 and insofar as the two appellants were concerned, they were to be held accountable for their actions in so doing. The Crown's case was that they were officers of Hallmark because they acted as such.
To prove that the appellants knowingly made improper use of their positions as officers of Hallmark, and did so dishonestly, the prosecution contended that what they did on 23 October 1998 was the end result of substantial planning that had been in train for some weeks prior to the meeting. There was what was termed a "common enterprise or plan". That common enterprise was said to have been the result of a joint effort of the two appellants, an Allan Endresz ("Endresz"), Cain and Muir.
In his opening address to the jury, the prosecutor described the alleged common enterprise in these terms:
"The crown case is that a strong inference can be drawn that this meeting and the transactions which followed were the product of a joint enterprise between the five people I have named, Forge, Clark, Muir, Endresz and Cain to effectively strip Hallmark of a large proportion of its cash assets.
In any such scheme different players may play different roles; some may be more active, some less, some may join at a later time. Whilst the crown cannot say at what point each of the participants joined this, as we say illegal enterprise, we do say that all of them were clearly parties by the morning of 23 October. It may well be, for example, that Clark was a relative latecomer to this enterprise. The crown indeed would suggest he was recruited to bring up the numbers to the required quorum of three after the former directors of Hallmark resigned in protest at the proposed resolutions.
…
The actions and statements of Muir, Endresz and Cain and to some extent Forge, serve to explain the nature we say of the enterprise that was achieved in October 1998. It will be obvious to you that Muir, Cain and Endresz are not on trial here. You should not concern yourself with why that it so. I can tell you that the crown has no intention of calling Muir, Cain and Endresz as witnesses. The crown would say that they were participants in the criminal enterprise and not therefore people who you could expect to tell you the truth if they were called as witnesses."
The prosecutor then unfolded a sequence of events which began in September 1998 when one Corp, a director of Hallmark, advised a stockbroker named Smart that he and another director, Smith, wanted to sell their substantial shareholding in Hallmark. They had been shareholders and directors of the company for a considerable period, but had decided "to move on". Smart, in his capacity as a stockbroker, had dealt with Endresz. On 15 September 1998 he introduced Corp to Muir, Endresz and Cain as possible purchasers of Corp's shares in Hallmark.

Hallmark was at this time a cash rich company. It was an exploration company that had been involved in a successful mining tenement joint venture. It had sold its interest in the joint venture for $7 million cash. This money was on bank deposit.
Corp and Smith agreed to sell to Endresz, Cain and Muir 19.9 per cent of the issued shares in Hallmark. Davis Samuel was to be the entity which acquired that interest. The 19.9 per cent represented 7.4 million shares and the agreed price was $2.5 million. Endresz, Cain and Muir then gained control of Hallmark.
To enable the acquisition of this large parcel of shares to proceed, Muir sought bank finance. The prosecution case was that he made a representation to various banks that if the bank would advance $2.5 million to enable Muir and interests associated with him to acquire the shares, Hallmark would enter into a contract with Davis Samuel for management services for an amount of money to be paid back over several years. To secure payment of the amount required under the contract he would ensure that Hallmark placed a $2.5 million deposit with the lending bank.
The prosecution case was that the proposed Davis Samuel contract was a total sham. It contended that it had nothing to do with management or consultancy services but was a means whereby the associates of Clark and Forge were seeking to obtain finance to purchase shares in Hallmark. The funds of Hallmark would effectively be used to finance the acquisition of Hallmark shares by those associates.
Minutes of a meeting of Hallmark at 3.15pm on 24 September 1998 reveal that the directors present were Smith, Corp, Bunting, Forge and Smart. The latter two were said to be present by invitation. At this meeting, a former director named Judge resigned and it was resolved to appoint Muir and Forge. Smith then resigned.
24 September 1998 was the day upon which Smith and Corp's interest in Hallmark was transferred to Davis Samuel, and thus to Endresz and Cain. This gave Endresz and Cain the capacity to nominate members to the Board of Hallmark. The change in the make up of the directorship of the company reflected this fact.
After the resignations and appointment of directors, the first item of business attended to on 24 September 1998 was the termination of a management contract between Hallmark and BMS Consultants Pty Ltd. The latter was a service company which supplied staff and services at commercial rates. A management consultancy agreement from Davis Samuel was then tabled. The minutes record:
"A management consultancy agreement from Davis Samuel Pty Ltd was tabled. After some discussion it was decided not to make a decision at this time and that the agreement be raised at a later directors' meeting."
The prosecution case was that the proposed management consultancy agreement with Davis Samuel was produced by Forge. Neither Corp nor Bunting, both of whom had been directors of Hallmark prior to September 1998, had seen the agreement and both expressed grave reservations about it. It was for this reason that the matter was deferred.
The prosecution case was that there was no value for money in the proposed consultancy agreement and as Davis Samuel was the corporate body which had acquired the 19.9 per cent of interest in Hallmark, there must have been a clear conflict of interest in Forge representing the interests of Davis Samuel on the Hallmark Board.
It is unnecessary to trace the precise detail of the shareholding in Davis Samuel and associated companies. It is sufficient to say that Davis Samuel was holding the Hallmark shares in trust for Cain and Endresz. They were respectively directors and shareholders in Quancorp and Kamanga.
It was the essence of the prosecution case that the consultancy services ostensibly being offered to Hallmark by Davis Samuel, were substantially fictitious and the consultancy agreement was a proposed agreement for the purpose of extracting funds from Hallmark to enable Davis Samuel to acquire the 19.9 per cent interest in the company.
The prosecution contended that Forge and Clark controlled family companies named Bisoya Pty Ltd ("Bisoya") and Thurgoona Investments Pty Ltd ("Thurgoona") respectively. Muir controlled a similar company, Callform Pty Ltd ("Callform"). These three companies in turn held interests in CTC, of which Forge and Endresz were directors. CTC was the beneficial holder of a 14.45 per cent interest in Kanowna and these shares were ultimately sold to Hallmark for what the prosecution contended was the inflated price of $720,000. There were other relevant shareholdings detailed by the prosecution. They are set out in a chart which was made available to the jury. It is annexed and marked "B".
The prosecution case alleged that there was a very real connection between CTC and each of Bisoya and Kamanga by reason of the fact that CTC had entered into agreements to pay each of those companies significant sums of money for management services. Thus, the prosecution contended, Forge and Endresz had good reason for wanting CTC to make significant profits, which, as a consequence of the resolutions of 23 October 1998, it would do.
On 21 October 1998 Corp and Bunting met with Muir, Forge, Endresz and Cain at the offices of Hallmark in Perth. The Davis Samuel consultancy agreement was discussed. Endresz and Cain sought to justify why Davis Samuel should be retained and paid the sums of money proposed. Corp was unhappy with the proposal and voiced concern at whether it was a commercial agreement.
At the same meeting the proposal that Hallmark acquire a 30 per cent interest in Kanowna by acquiring shares and options from Davis Samuel and CTC was raised for the first time. This proposal was supported by Forge and Muir. The prosecution case was that they expressed their support because of the financial gain they anticipated they would receive. Forge was a member of the Board of CTC. He had a business relationship with CTC through Bisoya. Muir had an interest in the Hallmark Unit Trust which held the shares in Hallmark. The prosecution case was that neither Forge nor Muir could bring an independent judgment to these resolutions.
Bunting, who was a professional geologist, questioned why Hallmark might wish to acquire an interest in Kanowna. Kanowna had an interest in a project known as the Pinnacles project, but Bunting questioned whether the project was viable. Corp made it clear that he was not in favour of the resolutions. They were to be the subject of a meeting which was scheduled for 22 October 1998 at 11 am.
At the annual general meeting of Hallmark on 22 October 1998, Muir, Corp, Forge and Bunting were present. Nothing was discussed at the annual general meeting about the various proposals which became the subject of the Board meeting of Hallmark on 23 October 1998. On the notice for that meeting, Muir had endorsed the words "not to be discussed with anybody". It was the prosecution case that this note, which sought to keep secret the proposals in relation to the consultancy agreement, was evidence of the fact that it was understood that the transactions were not in the best interests of Hallmark.
Shortly after the annual general meeting, Corp and Bunting resigned as directors of Hallmark. The prosecution contended that these resignations posed a problem for Endresz, Cain, Forge and Muir because a quorum of three directors was needed and without Bunting and Corp, the directorship of the company was reduced to only the two directors; Muir and Forge. The prosecution case was that they needed to recruit somebody upon whom they could rely to pass the resolutions which were effected on 23 October.
There was then a meeting of directors of Hallmark held at 9.15 am on 23 October, at which Clark was appointed a director of the company. The resignations of Bunting and Corp were accepted. Bank signatories were changed to remove Corp and Bunting and substitute Forge and Muir. The prosecution case was that this was in anticipation of the passing of resolutions later that day which would require Hallmark to draw cheques against its cash at bank to pay for the shares and options being acquired by interests associated with Endresz, Cain and Muir.
The critical meeting of the Board of Hallmark at 6.02 pm on 23 October 1998 took only 23 minutes. By the resolutions passed at that meeting, Hallmark committed itself to arrangements which resulted in over $4 million of its net assets being expended. The minutes record no discussion of the resolutions. The prosecution case was that what occurred at the meeting at 6.02 pm on 23 October was largely a sham. It contended that there was never any intention that Hallmark would enter into the various transactions in its own best interests, but rather in the interests of the associates of the directors.
Forge absented himself from part of the meeting in consequence of a possible conflict of interest by reason of being a director of Kanowna. The prosecution contended that his conflict "ran far deeper than that". It pointed to the fact that not only was he a director of Kanowna but also a director of CTC. It said that he had a very real interest in CTC's wellbeing because of the financial relationship he enjoyed with that company. His conflict was alleged to be much more than merely being a director of Kanowna.
The prosecution case was that whilst Forge was absent from the meeting, he requested the company accountant to draw cheques to pay for the options and shares. This, it alleged, revealed that there was never any doubt in his mind that the resolutions would be passed, whether or not he was present. As the prosecution put it, "they were a foregone conclusion". That same day Forge and Muir executed the necessary transfer forms to effect the resolutions. It was the prosecution case that the execution of such transfers was in breach of Forge's duty as a director of Hallmark.
It is unnecessary to detail the various transfers that were signed by Forge and Muir and the mechanics of payment of moneys. Within a few days of 28 October the retainer agreement between Hallmark and Davis Samuel was signed. The prosecution alleged that the agreement contained no detail as to what Davis Samuel was to do for Hallmark in return for a payment of $350,000 per annum.
The sequel to the meeting of 28 October also involved the exercise of the options agreement. I have already touched on the prosecution case in relation to the alleged uncommerciality of this transaction. Payments were made from Hallmark to CTC and onwards to Kamanga and Bisoya. CTC on‑loaned on 27 October 1998 $350,000 to Kamanga and $75,000 to Bisoya. On 13 November 1998 it on‑loaned, $150,000 to Kamanga.
The prosecution assertion was that CTC was put into funds in consequence of the transaction and as a result gave a benefit to Forge and Endresz by way of extremely favourable unsecured loans of substantial sums of money. This, the prosecution asserted, was the practical and direct benefit which resulted from the transaction.
The essence of the prosecution case in relation to count 1 on the indictment was that the appellants, in doing what they did on 23 October 1998, were dishonestly motivated by the interests of Davis Samuel. By their actions, they were alleged to have intended to obtain a benefit for that company. They were thus acting improperly in the use of their position as officers of Hallmark and dishonestly so because, it was alleged, they performed the various actions in question with the knowledge that what they were doing was for an improper purpose.
Count 2 alleged that the acquisition of options by Hallmark was intended to gain directly or indirectly an advantage for Kamanga and Quancorp. The prosecution case was that Clark had improperly used his position as an officer of the company and dishonestly so, with the very intention that Kamanga and Quancorp would gain that advantage directly or indirectly.
Counts 3, 5, 7, 8, 9 and 10 related to Forge alone. Counts 3, 5 and 7 alleged that he was knowingly concerned in the commission of offences by Muir. Muir's offences were alleged to relate to actions he took whilst Forge had absented himself from the meeting of 23 October. The prosecution case was that what Muir did was done dishonestly and with an intention to gain a benefit for Kamanga and Quancorp. Forge was alleged to be knowingly concerned in what had occurred, particularly as he had left the meeting and arranged for cheques to be drawn, and then subsequently executed transfers on behalf of Hallmark. The prosecution case was that Forge's absence from the meeting was a formality and he remained a party to what was being done. It was alleged that he was thus knowingly concerned in the actions of Muir. The execution of the documents were the subject of counts 8, 9 and 10.
Counts 4 and 6 on the indictment concerned respectively Clark's actions in relation to the resolutions that Hallmark would execute a transfer to purchase the $3.6 million Kanowna shares and execute an agreement for the exercise of the 8.2 million Kanowna options.
Counts 11 and 12, in relation to which the appellants were jointly charged, concerned respectively, the execution of the Davis Samuel retainer agreement and the execution of the agreement to exercise the 8.2 million Kanowna options.

The defence cases

The case for Clark was that the decisions he made on 23 October 1998 were the decisions of a man then 50 years of age who had no previous experience as a director of a public company and only nine hours within which to consider the matters which were being put to the Board of Hallmark. It was said on his behalf that the proposed resolutions at the meeting on that day were being put forward by people whom he trusted and in whom he had confidence. Further, the prosecution case against Clark was presented with the benefit of five and a half years of "analysis, hindsight and preparation" that Clark did not have on the day in question.
Character evidence was led to the effect that Clark was a person of good character and unlikely to have engaged in criminal activity after 50 years without a blemish on his character or reputation. Much reliance was placed by counsel for Clark on the fact that he had been invited to join the Board of Hallmark only a day prior to the meeting of 23 October and was informed of the agenda for the director's meeting only an hour before that meeting. He had made enquiries about Kanowna, but more importantly, knew Endresz to be a successful share trader and believed both Endresz and Forge were trustworthy men. It was put that Clark trusted these two men and against that background, he voted in favour of the resolutions which were put before him on 23 October.
Counsel for Clark submitted to the jury that there was no evidence Clark had ever been told there was any agreement to strip from Hallmark its assets. There was evidence to confirm that there was really no prospect of acquiring sufficient Kanowna shares on the market to secure control of the company because limited trade in Kanowna shares had occurred at or about the time of the transactions. Further, it was put that Clark knew Davis Samuel to be a successful and reputable firm; the consultancy fee to be paid to Davis Samuel was justified; the decisions of Clark were made without the benefit of the opinions of experts; there was no chance of Hallmark purchasing the number of shares it required without the market price spiralling; a placement of shares in Hallmark was not practicable and there was "no reason for Clark to second guess the transactions which seemed to be supported by people whom he trusted".
Counsel for Clark pointed to many aspects of the evidence and submitted to the jury that there was nothing before them to suggest that any suspicions should have been raised in Clark's mind about the merit of the resolutions before he joined in them and later signed documents in accordance with them.
The case for Forge was that the evidence did not justify the prosecution contention that the transactions entered into on 23 October were "ludicrously uncommercial" with "hugely inflated" prices. Reliance was placed upon evidence that following the acquisition of the Kanowna shares by Hallmark, those shares rose in value to a figure in the vicinity of 45 cents. It was put that having heard Forge, the jury could be confident that he acted honestly at all times, but more importantly, the general submission was that the transactions proposed at the Board meeting of 23 October were "a very good deal". Reliance was placed upon Forge's integrity and commitment to the Pinnacles project which, it was said, all valuers agreed was a very valuable project.
The case for Forge also relied on the fact that he believed Cain and Endresz to be experienced commercial people who had successfully advised commercial companies in the past and in those circumstances, the fees agreed to be paid to Davis Samuel could not be said to be unreasonable. Reliance was placed upon high fees paid to accountants and other professional people in the field. Character evidence led for Forge was relied on in the same way as it was for Clark. It was also put on behalf of Forge that risk taking is inherent in the world of mining and exploration companies and subsequent rises in Kanowna share prices justified the decisions which were made. Much emphasis was put upon the evidence of the then chairman of the Board of Kanowna, one Thomas Bannerman ("Bannerman"), that Kanowna had an optimistic future. The fact that Corp had subsequently bought shares in the company and went on to the Board was also relied upon.

Objection to evidence of the common enterprise

When the witness Smart was called to give evidence, objection was raised by counsel for Clark and Forge. It was contended that any evidence of events before the involvement of Clark and Forge in the company was irrelevant and inadmissible against them. Evidence of events involving Endresz, Cain and Muir prior to 23 October was said to be hearsay and inadmissible. The objection seems to have related to all evidence of the alleged common enterprise, as appears from the following extract from the submissions of counsel for Clark:
"There are two real evidentiary objections to the material that is sought to be led, the one I articulated as to relevance and secondly the issue of hearsay, which becomes important. I'm sorry to be taking time so early in the trial with an issue like this, but it's perhaps important that this is agitated before your Honour at this stage. One accepts that in the context of a trial such as the present, historical material can be relevant to establish a background to the transaction. If, however, any further use is sought to be made of the evidence than that, in other words, if it's sought to be called in aid in relation to my client, I can't speak for Mr Forge of course, then it's objected to as not relevant for two reasons: (1) on the material opened by the crown it is manifestly clear that this was well before Mr Clark was involved in any way in the company.
As your Honour will recall from my learned friend's opening yesterday he was invited to join the board of the company on the day of 23 October meeting and there is no material that ties him to any antecedent transaction. Secondly, these are transactions between people all of whom are strangers to Mr Clark, that is to say Mr Endresz, Mr Cain, Mr Muir - although Mr Muir was chairman of directors at the time Mr Cain was elected to the board - Mr Corp and the witness.
He is not present at those discussions. Anything that is said in the discussions cannot be either relevant or admissible against him, applying the ordinary rule against hearsay. In those circumstances so far as he at least is concerned the evidence is not admissible other than in the historical context and that has been established by the evidence that has already been given. To go beyond it and lead the content of the conversations is evidence which can only be tendered for its prejudicial value and it has no evidentiary basis for reception. In my submission it ought properly to be rejected."

Counsel for Forge stated his objection very shortly:
"DAVIES, MR: Yes. It appears to me that the only possible relevance that evidence of these statements, cast in direct speech as they must be, could possibly have is if there has already been independent evidence which reasonably suggests the existence of a preconcert. Although I had not anticipated that we would strike the issue this early in these proceedings that is the only basis that I can possibly see upon which such direct statements could be admitted and that is the principal that we have seen in Tripodi v (sic) Ahern. Simply stated there must be independent reasonable evidence upon which the inference can be drawn of preconcert …".
Later objections made it clear that it was the totality of the "common enterprise" evidence which was the subject of objection.
The prosecutor sought to justify the admission of the evidence in the following way:
"HALL, MR: Your Honour, it's not as evidence of preconcert that we seek to admit this. I think I made it clear during the course of the opening that the crown would seek as part of its case to lead acts and utterances of others of those parties, not as evidence of the adhesion of the accused to the preconcert or the common purpose at that stage but to explain the nature of it. That's a recognised exception to the hearsay rule.
…
… there was an enterprise we say but an enterprise of which Clark was not in all likelihood a member. There was an enterprise between Endresz and Cain and Muir. Forge may have joined it at some stage and Clarke joined it at some stage."
The learned trial Judge deferred any ruling on the issue by saying:
"MARTINO DCJ: Yes. Senior counsel for the crown having informed me that the crown case is that as at this date of 15 September 1998 at the meeting of which evidence is sought to be led, there was a common purpose or enterprise to take over the company to force it to pass resolutions resulting in the paying out of cash and that the accused men in this trial subsequently became party to that enterprise, the appropriate course for me to follow in my view is the course explained in Ahern at page 104 of postponing my decision on the admissibility of this evidence until all of the evidence is in and once I have made that ruling to direct the jury on the use, if any, of which they can make of this evidence."
The ruling in relation to the admissibility of the evidence was ultimately given on 16 March 2004. It appears to have been limited to certain aspects of the evidence of common enterprise. It seems to have been assumed that the balance of the evidence of the alleged common enterprise was admissible.
The learned trial Judge referred to some of the evidence which had been led. He referred to evidence of an approach by Muir to a man named Yannopoulos in September 1998, enquiring whether Yannopoulos had any associates who might be interested in investing money at a high rate of interest. His Honour further referred to evidence that Endresz and Cain had visited Yannopoulos and explained a business proposal which involved borrowing approximately $2.5 million to buy Hallmark shares. There was reference to evidence that Yannopoulos telephoned his bank manager and introduced Muir, Endresz and Cain to him. The evidence of proposals in relation to loans of moneys to finance the acquisition of shares was detailed as follows:
"At the request of Mr Muir Mr Yannopoulos faxed Mr McCartney a two-page document which was a letter dated 14 September 1998 from Mr Muir as managing director of Callform Pty Ltd as trustee for the Doull Family Trust to Messrs Endresz and Cain. … In short, the letter referred to the fact that an offer had been made to Endresz, Cain and Muir by Mr Gus Smart of Kirke Securities for them to acquire 8 million ordinary shares in Hallmark at 30 cents per share.
He proposed a possible method of purchasing the shares which method included among other things three steps: (1) borrowing $2.6 million from the ANZ Bank, (2) the new board of Hallmark resolving that Hallmark enter into an agreement described as a commercial agreement with Davis Samuel Pty Ltd and Callform Pty Ltd for management services for seven years at a $325,000 and $165,000 per annum respectively, and (3) the loan of $2.6 million being refinanced by a seven-year principle and interest loan to Davis Samuel and Callform which loan was described as being granted on the future value of the cash flow provided by the management contract which was to be entered into between Hallmark, Davis Samuel and Callform.
Mr McCartney faxed back a file note containing his requirements for the transaction."
His Honour then pointed out that in the end those proposals did not proceed. The funds which were ultimately raised for the acquisition of shares in Hallmark came from a different source.
The learned trial Judge outlined the essence of the objections which had been made on behalf of the appellants and the response of the prosecution:
"Counsel for each of Mr Forge and Mr Clark have submitted this evidence is inadmissible against their clients, that is the evidence of Messrs McCartney and Yannopoulos. They point to the fact that not only were neither of the accused men involved in these discussions there is no evidence to be led that they at any time knew of the discussions. The crown case is that the passing of the resolutions of 23 October and 28 October which are the subject of the indictment, are part of a joint enterprise between Endresz, Cain, Muir, Forge and Clark to take control of Hallmark and distribute a large portion of its cash assets.
The crown case is that as at 14 September 98, Endresz, Cain and Muir were part of that joint enterprise and Mr Forge and Mr Clark had joined it by 23 October 1998."
His Honour then continued:
"… The legal principles which are relevant to proving the fact of a conspiracy or joint enterprise were explained by the High Court in Ahern v R (1998) 165 CLR 87 at page 93. The fact of the conspiracy or joint enterprise can be proved by proof of acts and declarations made in the presence of the accused. That case is also authority for the proposition that the principle upon which such evidence is admitted extends beyond cases of conspiracy to joint enterprises.
Further, where an accused person joins the conspiracy or enterprise after others had already done so evidence of declarations and actions before they join the enterprise are admissible against the accused to show the nature of the enterprise the accused joined. The authority for that is R v Bilick and Starke (1984) 36 SASR 321 at 331. The letter of 14 September 1998 and the forwarding of it to Mr McCartney shows that Messrs Endresz, Muir and Cain planned at that date to acquire Hallmark to secure control of the board and to secure the passing of resolutions for it to enter into long term contracts to pay substantial sums to Davis Samuel and Callform.
The fact that the details of the transactions subsequently entered into do not match precisely the details proposed in the letter of 14 September 1998, in my view does not detract from the fact that the evidence can lead to the conclusion that as at 14 September 1998, Messrs Endresz., Muir and Cain planned to take control of Hallmark and force it to pay out moneys. Further, there is evidence from which the jury can infer that each of Mr Forge and Mr Clark had to join that common enterprise by 28 October 1998.
In relation to the Davis Samuel management contract that evidence includes the evidence of the experienced accountant Mr Duncan Calder as to the uncommercial nature of the agreement entered into, that it was highly favourable to Davis Samuel, and the evidence as to the lack of analysis of the benefit to Hallmark before the resolution was passed notwithstanding that Mr Corp had raised with Mr Muir and Mr Forge the lack of evidence to support the agreement and the fact that Mr Clark joined the board on a day on which a resolution was passed.
For these reasons I conclude that the evidence of Mr McCartney and Mr Yannopoulos is admissible. The fact that Mr McCartney faxed back requirements can be led as part of the narrative that this proposal did not proceed. The requirements themselves are not relevant or admissible. In relation to Mr Walsh, Mr Roger John Craig Walsh was the auditor of CTC Resources. His evidence relates to management fees paid to Kamanga Holdings and Bisoya by CTC and to his inquiries to as to the justification for those payments.
Hallmark acquired shares in Kanowna Lights from CTC and that is something in relation to which these charges refer to. The evidence from Mr Walsh together with other evidence can show that moneys paid to CTC were used to be paid to companies associated with Mr Endresz and Mr Forge and evidence that Mr Clark subsequently joined the enterprise may be inferred from the evidence, that conclusion may be inferred from the evidence, including evidence that the price paid was in excess of the market price, that no analysis of the assets of Kanowna Lights, or on one view no adequate analysis, was performed and that Mr Clark joined the board on the day that the resolution was passed.
The legal principles I have set out in my ruling on Mr McCartney and Mr Christos George Yannopoulos and applying those same principles to that evidence I conclude for the same reason that the evidence of Mr Walsh is admissible against both accused men. In relation to prejudice, in my view the evidence is not so prejudicial that its evidentiary value is outweighed by its prejudicial value and if necessary to do so can be cured by an appropriate direction, so these are my rulings."
It will be seen that the ruling on admissibility was restricted to the evidence of the initial unsuccessful approach to Yannopoulos and McCartney and to the evidence of Walsh about management fees paid by CTC. However, the learned trial Judge clearly considered that all the evidence of "preconcert" was admissible for the reasons he gave.

Grounds of appeal

Grounds 1, 2, 8(a), 9(a) and 9(b) (Clark) and grounds 1, 5 and 6 (Forge)

These grounds of appeal are common to both appellants. They challenge the admissibility of all the evidence of common enterprise, but particularly the evidence of McCartney and Yannopoulos. They make complaint about the way in which the learned trial Judge directed the jury on these issues.
The learned trial Judge clearly admitted evidence of common enterprise on the basis of the principles set out in Tripodi v R (1961) 104 CLR 1 and Ahern v R (1988) 165 CLR 87. In Tripodi v R the prosecution case was that in the commission of a crime, a number of persons had acted in preconcert. The question was whether, once reasonable evidence of the preconcert had been adduced, evidence of directions, instructions, arrangements or utterances accompanying acts by one of the persons in the absence of the other or others, in furtherance of the common purpose forming an element of the crime, was admissible against the other or others. The High Court held that it was. The reason for admission of such evidence was that the combination or preconcert to commit the crime was to be considered as implying an authority to each to act or speak in furtherance of a common purpose on behalf of the others.
Dixon CJ, Fullagar and Windeyer JJ (at 6 ‑ 7) made it clear that it is a mistake to think that such evidence is admissible as a special rule of evidence which is confined to cases of conspiracy. Their Honours said:
"… when a substantive crime, not a conspiracy, is charged in the indictment it is the ingredients of the substantive crime that must be proved, not combination for a common purpose. When the case for the prosecution is that in the commission of the crime a number of men acted in preconcert, reasonable evidence of the preconcert must be adduced before evidence of acts or words of one of the parties in furtherance of the common purpose which constitutes or forms an element of the crime becomes admissible against the other or others, …
…
It must be remembered that the basal reason for admitting the evidence of the acts or words of one against the other is that the combination or preconcert to commit the crime is considered as implying an authority to each to act or speak in furtherance of the common purpose on behalf of the others."
Ahern v R (supra) involved a charge of conspiracy to defraud the Commonwealth. Ahern was one of four alleged co‑conspirators who were alleged to have knowingly participated in a scheme to evade the payment of income tax. At trial, he admitted the existence of a conspiracy to defraud the Commonwealth, but contended that it was the alleged co‑conspirators who had joined in the conspiracy, not him. Ahern was an accountant who had introduced clients whose companies had been used in the scheme. There was evidence that he had taken part in various activities of the companies which were part of the scheme. He had shared in the fee which was paid by vendor shareholders.
The prosecution case against Ahern was that the activities in which he was engaged supported an inference that he knew the companies with which he was concerned were to be "dumped". It was alleged that he participated knowingly in the conspiracy to defraud. His defence was that what he did formed no part of any scheme to engage in fraudulent conduct. In his directions to the jury, the trial Judge instructed the jury to look first at the evidence of the acts and declarations of Ahern. He directed that if they were satisfied there was prima facie proof of his participation in the conspiracy, then they might look at evidence which included acts and declarations of other conspirators. This could be done for the purpose of determining the nature and extent of the underlying agreement which was alleged.
The High Court adopted what had been said in Tripodi v R (supra) at 7. At 92 ‑ 93 the Court said:
"There it was said to be an 'empirical but practical and convenient test' that acts and declaration done or made outside the presence of an accused are not admissible against him. Practical and convenient though that test might be, it can be no more than a rule of thumb, because it is clear that it has a limited application. It represents an attempt to state in practical terms the effect of the hearsay rule although, of course, acts (other than certain acts of communication) cannot of themselves constitute hearsay and, strictly speaking, lie outside the rule. However, acts may contain an implied assertion on the part of the actor which makes it appropriate to treat evidence of those acts for some purposes as the equivalent of hearsay. A conspirator may, in the absence of another person alleged to be a co‑conspirator, say or do something carrying with it the implication that the other person is involved. The statement or the act may be admissible in evidence to prove the fact of a conspiracy and, by way of admission, the participation of the maker of the statement or the actor in that conspiracy. But evidence of neither the statement nor the act should, except in the circumstances which we shall elaborate presently, be admitted against the other person to prove his participation because it would for this purpose be hearsay or the equivalent of hearsay.
In conspiracy cases a clear distinction is to be made between the existence of a conspiracy and the participation of each of the alleged conspirators in it. Conspiracy is the agreement of two or more persons to do an unlawful act or to do a lawful act by unlawful means and it is the fact of the agreement, or combination, to engage in a common enterprise which is the nub of the offence. This fact can seldom be proved by direct evidence of the making of an agreement and must in almost all cases be proved as a matter of inference from other facts, that is to say, by circumstantial evidence. For this purpose, evidence may be led which includes the acts or declarations of one alleged conspirator made outside the presence of the others provided such evidence is not led to prove against the others the truth of any assertion or implied assertion made by the actor or the maker of the statement. It may take the form of evidence of separate acts or utterances from which the fact of combination might be inferred. Led in that way, it is not hearsay and is not dependent upon some circumstance to take it outside the hearsay rule, such as an implied authority making the acts and words of one the acts and words of the other."
The Court pointed out (at 94) that in some cases both the combination and the participation of participants may be proved by the same evidence. It quoted with approval the following passage of Isaacs J in R and Attorney‑General (Cth) v Associated Northern Collieries (1911) 14 CLR 387 at 400:
"… though primarily each set of acts is attributable to the person whose acts they are, and to him alone, there may be such a concurrence of time, character, direction and result as naturally to lead to the inference that these separate acts were the outcome of pre‑concert, or some mutual contemporaneous engagement, or that they were themselves the manifestations of mutual consent to carry out a common purpose, thus forming as well as evidencing a combination to effect the one object towards which the separate acts are found to converge."
The Court said, however, that evidence of the separate acts of the alleged conspirators will not in all cases prove the fact of combination and their participation. Their Honours said (at 94 ‑ 95):
"… if the evidence fails to prove a combination at all then that is an end of the matter. But if it proves a combination, although not the participation of an individual alleged to be a conspirator, then the question arises whether there are circumstances in which evidence of the acts and declarations of other participants, outside the presence of the individual, may be led against him, not as separate facts from which, when combined with other facts, an inference of combination may be drawn, but as evidence of his own participation. Evidence of the acts or declarations of others led for this purpose will be led to prove the truth of the assertion or implied assertion contained in those acts or declarations. It would be excluded as hearsay or its equivalent were it not admissible upon some other basis.
That basis is provided in an appropriate case by the rule which states that when two or more persons are bound together in the pursuit of an unlawful object, anything said, done or written by one in furtherance of the common purpose is admissible in evidence against the others. The combination implies an authority in each to act or speak on behalf of the others: Tripodi. Thus anything said or done by one conspirator in pursuit of the common object may be treated as having been said or done on behalf of another conspirator. That being so, once participation in the conspiracy is established, such evidence may prove the nature and extent of the participation. The principle lying behind the rule is one of agency and the closest analogy is with partners in a partnership business. Indeed, conspirators have been described as partners in crime. The principle of agency has a particular application in cases of conspiracy where preconcert is the essence of the crime."
At 95, the Court highlighted what it termed a "dilemma". This passage was the foundation of the argument of counsel for Clark:
"The implied authority on the part of one conspirator to act or speak on behalf of another will only arise if the latter is part of the combination. Evidence of the acts or declarations of the former may, however, be led to prove that very fact. That is where the dilemma lies in cases of conspiracy because, to assume the participation of the latter in order to admit the evidence on the basis of implied authority is to assume the very fact which is sought to be proved by that evidence. If there were no prerequisite to the admission of such evidence 'hearsay would lift itself by its own bootstraps to the level of competent evidence': Glasser v United States."

By 23 October 1998 the market share price in Kanowna shares was 9.5 cents. For options it was 1.9 cents. Those options had an expiry date of 31 December 1998. The prices paid by Hallmark by reason of the resolution to prove on 23 October 1998 represented a 110 per cent premium over the market price of the shares and a 300 ‑ 400 per cent premium over the market price of the options. This in turn led to a 195 per cent premium for the shares acquired by exercise of the options. On the expert evidence led at trial, this was well outside normal limits. Further, there was no independent valuation of the shares or options which could have justified the appellant's approving the resolutions to acquire those shares and options. There was no exploration of any of the alternative means mentioned by Poynton for securing a substantial holding in Kanowna shares.
The vendors of the Kanowna shares and options were companies associated with Endresz. They were Davis Samuel, CTC and Kamanga. This was known to each of the appellants in respect of the options and Clark acknowledged that he believed the vendor of the shares was a company which was associated with Endresz. Forge was actually a director of CTC and so had an interest in any agreement for the acquisition of shares from that company.
The appellants contended that the prices paid for the shares and options were fair, but they were unable to testify in relation to any negotiations with Endresz in relation to those prices. They acknowledged that they were set by Endresz and accepted.
The exercise of the options required Hallmark to expend 28 cents to acquire each share (8 cents per option and 20 cents for the exercise) in circumstances where the shares were trading at 9.5 cents. The majority of options of this type expired without being exercised before the end of 1998 because the market price of Kanowna shares did not rise above 20 cents. There was no commercial justification in the transaction.
Counsel for Clark argued on the hearing of the appeal that the evidence in relation to commercial justification of the various transactions was equivocal. There were three primary bases for this submission:
(1)The asset backing of the Kanowna shares was in fact 40 cents.
(2)The value placed on the Kanowna shares was supported by expert valuation.
(3)The Kanowna shares rose at a subsequent time above 40 cents.
Counsel for the respondent countered these submissions by first pointing to the fact that the asset backing contended for was calculated on the basis of an earlier transaction to purchase 5 per cent of the Pinnacles project by CTC. It was contended that this transaction did not provide any independent evidence of the value of the Pinnacles project as the appellants must, had they investigated the matter, have known. In answer to the second proposition, counsel for the respondent pointed to the fact that the valuation in question was from McKay Schnellman, and was not commissioned until well after 23 October 1998. It was not something that the appellants could have been aware of at the time of the meeting of 23 October. It could not have justified the price they agreed to pay. In any event, the valuation was obtained for the benefit of Kanowna, not Hallmark, and in arguably different circumstances. Question marks were raised about the valuation, particularly as an independent accountant ultimately commissioned by Hallmark to consider whether the share and options transactions were fair and reasonable, expressed the view that the report was not reliable and commissioned his own independent report.
In answer to the third proposition, counsel for the respondent conceded that the price of shares in Kanowna did, after 23 October 1998, rise above 40 cents. It was contended, however, that this was not due to any valuation placed upon the Pinnacles project, but upon other events. Counsel for Clark contested this contention, pointing out that Corp, who had resigned from Hallmark prior to 23 October 1998, later bought shares himself in Kanowna. He also relied upon the evidence of Bannerman, to which I have previously referred.
It is unnecessary to trace the voluminous evidence in relation to the question of commerciality of the transactions which are the subject of the resolutions of 23 October 1998. As I have pointed out, it was not the Crown case that the transactions were in fact detrimental to Hallmark, although this was an inference the prosecution said could be drawn. Each of the counts faced by the appellants pleaded an intention to gain an advantage for another, and not the alternative of causing a detriment to Hallmark.
The question of the commerciality of the various transactions was, of course, an important aspect of the trial. There was some evidence upon which the defence could rely in contending that the question of commerciality was at least ambiguous, but the preponderance of the evidence clearly supported the prosecution contention that the transactions were far from being in the best commercial interests of Hallmark.
I am of the view that there is no substance in grounds 4 and 5 of Clark's grounds of appeal and ground 4 of Forge's grounds of appeal. There was ample evidence upon which the jury was entitled to find beyond reasonable doubt that the only inference that could be drawn was that each of the appellants had in relation to each of the transactions referred to in the indictment acted in breach of their duties as directors, and dishonestly, intending to gain, directly or indirectly, an advantage for another or others.

Application of the proviso to s 689(1) of the Criminal Code

I have concluded that the learned trial Judge erred in his directions to the jury in the following respects:
(1)Failing to identify to the jury just what was the unlawful enterprise which it was contended the appellants had joined - with a clear direction as to what aspects of the evidence of that enterprise revealed unlawfulness and which did not.
(2)Failing to single out and identify for the jury the evidence which was admissible against each of the appellants individually to support the prosecution contention that each had joined the unlawful enterprise.
(3)Failing to direct the jury that evidence of Corp, Bunting and Woodhouse, whilst evidence in relation to the unlawful enterprise alleged, was not evidence against Clark insofar as it went to the question of their views on the commerciality of the transactions, the subject of the resolutions of 23 October 1998.
It must also be said that the learned trial Judge's directions to the jury were particularly brief in the context of what was a long and complex trial. Nevertheless, the directions given did, apart from the blemishes to which I have referred, essentially comply with the requirements of a Judge's charge to a jury as set out in R v Zorad (1990) 19 NSWLR 91 at 105:
"A summing up should, in every case, not only include directions as to the ingredients of the offence which the Crown has to establish and an explanation of how the relevant law may be applied to the facts of the particular case, but it should also include a collected resume of the evidence which relates to each of those ingredients and a brief outline of the arguments which have been put in relation to that evidence: Holford v Melbourne Tramway & Omnibus Co Ltd [1909] VLR 497 at 522-523: Mowlds v Fergusson (1939) 40 SR (NSW) 311 at 323 and Alford v Magee (1952) 85 CLR 437 at 466. This is a rule which appears increasingly to be ignored by trial judges. It is not a compliance with that rule simply to read the relevant part of the section to the jury and then to read out the evidence which has been given chronologically, starting with the first witness and going through the evidence in chief, the cross-examination and then re-examination of each witness before turning to the next witness and so on. The idea of a summing up is to present for the jury the issues of fact which they have to determine."
The question to be considered is whether, despite the shortcomings I have identified, there was no substantial miscarriage of justice within the meaning of s 689(1) of the Criminal Code.
In Mraz v R (1955) 93 CLR 493 at 514, in a judgment generally regarded as authoritative on the meaning of the proviso to s 689(1) of the Criminal Code (although the provision was s 6(1) of the Criminal Appeal Act 1912 (NSW)), Fullagar J said:
"It is very well established that the proviso to s 6(1) does not mean that a convicted person … must show that he ought not to have been convicted of anything. It ought to be read, and it has in fact always been read, in the light of the long tradition of the English criminal law that every accused person is entitled to a trial in which the relevant law is correctly explained to the jury and the rules of procedure and evidence are strictly followed. If there is any failure in any of these respects, and the appellant may thereby have lost a chance which was fairly open to him of being acquitted, there is, in the eye of the law, a miscarriage of justice. Justice has miscarried in such cases, because the appellant has not had what the law says that he shall have, and justice is justice according to law. It is for the Crown to make it clear that there is no real possibility that justice has miscarried."
In Hoy & Ors v R [2002] WASCA 275 at [46] ‑ [48], I made reference to the more recent observations of members of the High Court in Festa v R (2001) 208 CLR 593, to the following effect:
"46 In Festa v The Queen (2001) 76 ALJR 291, McHugh J considered this passage in considerable detail. His Honour concluded (at [120]) that what had been said by Barwick CJ in Driscoll v The Queen (1977) 137 CLR 517 at 524 - 525 and before that in R v Storey (1978) 140 CLR 364 at 376, contained the correct principles to be applied to the interpretation of the proviso. In the first of those cases Barwick CJ said:
'It is noticeable that the proviso to s 6(1) speaks in terms of 'substantial miscarriage of justice'. The word 'substantial' in this connexion denies, as it seems to me, the proposition that of necessity the existence of any of the enumerated circumstances in the subsection amounts to a miscarriage of justice. No doubt the oft quoted passage from the reasons for judgment of Fullagar J in [Mraz] rightly emphasises that it is for the Crown to satisfy the Court that occasion exists for resort to the proviso: but that passage ought not be read as saying that every departure in the course of a trial from compliance with the relevant law or rule of procedure results of necessity in a miscarriage of justice. Indeed, in my opinion, the very terms of s 6(1) and its counterparts would seem to deny that proposition. The important words, in my opinion, in the passage from the judgment of Fullagar J in that decision and at that page are 'may thereby have lost a chance which was fairly open to him of being acquitted'. Of course, if the Court of Criminal Appeal on its review of the facts and circumstances of the case concludes that before a jury, properly directed, the appellant can be said fairly or reasonably to have had a chance of acquittal, it will not be warranted in concluding that there was no miscarriage of justice.
It is for the Court itself to be affirmatively satisfied in this respect, and for this purpose the Court will consider for itself the evidence and the inferences properly available therefrom.'
47In Festa v The Queen, McHugh J (at [121] - [122]) added these observations:
'[121] The question whether a jury, acting reasonably, would inevitably have convicted an accused ultimately falls to be determined by the relevant Court according to its assessment of the facts of the case. The prevalence of dissenting views in cases dealing with the application of the proviso illustrates the largely subjective nature of the inquiry, resting as it does on factors such as the error alleged, the relative strength of the prosecution and defence cases and the Court's characterisation of the hypothetical jury, 'acting reasonably' and properly directed. As Brennan, Dawson and Toohey JJ stated in Wilde:
"In the end no mechanical approach can be adopted and each case must be determined upon its own circumstances."
[122] But one important development has occurred since this Court decided Mraz, Storey, Driscoll and Wilde. Courts of criminal appeal are now required to examine and analyse the evidence in criminal trials to a much greater extent than previously. This Court has interpreted the 'miscarriage of justice' ground of appeal as entitling a Court of criminal appeal to examine the whole of the evidence and form its own opinion as to whether there is a reasonable doubt as to the accused's guilt. Even 30 years ago, such an approach would not have been contemplated.'
48Similar observations to those of McHugh J were made in Festa v The Queen by Hayne J (at [228] - [229]). Other members of the Court determined the appeal on the basis that notwithstanding the error of the trial Judge in his directions to the jury concerning identification evidence, there was no substantial miscarriage of justice within the meaning of s 668(e)(1)A of the Criminal Code (Queensland). I have referred to the case in some detail because it is clear authority for the proposition that not every departure in the course of a trial from compliance with the relevant law or rule of procedure will result of necessity in a miscarriage of justice. That principle is of primary importance in considering the learned trial Judge's charge to the jury and the challenges to it that have been made in this appeal."
A statement to similar effect is to be found in Krakouer v R (1998) 194 CLR 202 per Gaudron, Gummow, Kirby and Hayne JJ at [23] ‑ [24].
In the present case, I am of the view that an examination of the whole of the evidence leads inevitably to the conclusion that no reasonable jury could have been left with a reasonable doubt as to the guilt of either of the appellants. The case against each of them was very strong. I remain entirely unconvinced of the plea of counsel for Clark that there was a reasonable hypothesis open which was consistent with his innocence, namely, his naivety and inexperience as a company director. The review of the evidence that I have made in relation to grounds 4 and 5 of Clark's grounds of appeal and ground 4 of Forge's grounds of appeal reveals the strength of the prosecution case and the existence of ample evidence, upon which a jury was entitled to conclude beyond reasonable doubt that the only inference that could be drawn was that each of the appellants was guilty of the offences charged. In those circumstances I am confident that despite the shortcomings in the learned trial Judge's directions to the jury, there was no substantial miscarriage of justice within the meaning of s 689(1) of the Criminal Code. In relation to the three areas in which there were shortcomings, it can be said:
(1)The evidence in relation to the unlawful enterprise was clearly identified by counsel, and aspects of the enterprise that were not unlawful in themselves highlighted by counsel.
(2)Great emphasis was placed by counsel on the acts from which it could be said that an inference could or could not be drawn, that each appellant had joined the unlawful enterprise.
(3)The evidence of Corp, Bunting and Woodhouse in relation to their opinions of the resolutions of 23 October 1998 was only a minor aspect of the prosecution case on that point. Other evidence independently established the uncommerciality of those resolutions.
For these reasons I would dismiss the appeals against conviction.

Application for leave to appeal against sentence

Each count of which the appellants were convicted carried a maximum penalty of a fine of $200,000 and/or imprisonment for five years. The sentences imposed upon the appellants were (Clark) 18 months' imprisonment on each count, to be served concurrently with an order for release after 9 months upon entering into a recognisance release order and (Forge) 2 ½ years' imprisonment on each count, to be served concurrently, with an order for release after 12 months upon entering into a recognisance release order.
Clark contends that the sentence he received was excessive, having regard to his age, antecedents, the impact of the sentence on his family, the minor role he played and the fact that the learned trial Judge found him unlikely to reoffend. Forge contends that the sentence he received was excessive, having regard to his age, health, prior good character, antecedents and because the learned trial Judge failed to satisfy himself that no sentence other than imprisonment was appropriate in all the circumstances of the case.
When the learned trial Judge sentenced the appellants he first made reference to the facts of the case. He found Forge to have been more culpable than Clark because he had joined the "dishonest plan" at an earlier stage than Clark. His conclusion in this respect was:
"Your involvement in the plan was greater and you disregarded clear and well founded concerns expressed by Mr Corp and Mr Bunting."
The learned trial Judge concluded in relation to Clark:
"Mr Clark. You also joined the dishonest plan, but you did so late in the piece on no earlier than 22 October 1998 and you did not know of the concerns that had been expressed, but you nevertheless committed serious offences because you dishonestly, acting pursuant to a plan to take control of Hallmark and force it to pay out moneys, passed the resolutions which were for the payments to which I have referred and you signed the agreements with Davis Samuel and with Kanowna for the exercise of the Kanowna options."
The learned trial Judge then took into account the good character of Forge and all matters personal to him. He noted that because of the convictions his commercial career would be devastated. Clark was also described as coming to the Court with "an excellent character". He was said to be of a person who engaged in a wide range of activities and business life successfully and had been completely honest until his convictions. He too would be devastated because of the loss of opportunity to engage in further commercial public life.
After reviewing the penalties applicable for the offences, the learned trial Judge said:
"Those high maximum penalties reflect the seriousness of the offences that you have committed. I cannot find precisely the sum lost by the victim company but I have set out the amounts that were placed at risk, the amounts that were spent. The amounts lost were less than the amounts spent because at least in relation to the shares the company still has Kanowna shares.
In arriving at the appropriate sentence it's necessary in each case for me to consider not only the need to punish and deter each of you for these offences but also to deter others who might be tempted dishonestly to improperly use their position as officers of public companies."
The learned trial Judge clearly took the view that only a sentence of imprisonment was appropriate to deal with the offences committed by the appellants. He gave consideration to the question whether he could suspend the whole of the term of the sentence, but decided he could not.
In my view the exercise of the sentencing discretion by the learned trial Judge in this case was entirely open to him. It cannot be said that he failed to consider options other than imprisonment. His Honour saw imprisonment as the only appropriate disposition of the matter, having regard to the seriousness of the offences. Careful consideration was given to the period of the sentence which the sentence should be served in each case. Full account was taken of the antecedents of each of the offenders and their prior good character. So too was an acceptance of the fact that their commercial life would be "devastated" in consequence of the convictions.

In my view the learned trial Judge was fully entitled to impose the sentences he did and I can see no error that occurred in the sentencing process, nor can I see how it can be properly argued that the sentences were excessive in any way. The case is a classic application of the principle clearly stated in Lowndes v R (1999) 195 CLR 665 at [15]:
"The principles according to which an appellate Court may interfere with such a discretionary judgment by a sentencing judge are well established. In their application to a Crown appeal against sentence they were summarised in R v Allpass and R v Clarke. Of particular importance in the present case is the principle that a Court of criminal appeal may not substitute its own opinion for that of the sentencing judge merely because the appellate Court would have exercised its discretion in a manner different from the manner in which the sentencing judge exercised his or her discretion. This is basic. The discretion which the law commits to sentencing judges is of vital importance in the administration of our system of criminal justice."
I would refuse leave to appeal in each case.

JENKINS J: I have read the draft reasons of Miller J. For the reasons expressed by his Honour I would dismiss the appeals against the convictions and the applications for leave to appeal against the sentences.