Director of Public Prosecutions (Cth) v Jacobson

Case •

[2011] VSC 527

•

21 October 2011

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

CRIMINAL DIVISION

S CR 2011 0054

IN THE APPLICATION OF:

COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS Applicant
v
MERVYN JACOBSON Respondent

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JUDGE:

WEINBERG JA

WHERE HELD:

Melbourne

DATE OF HEARING:

2, 20 and 21 September 2011

DATE OF JUDGMENT:

21 October 2011

CASE MAY BE CITED AS:

DPP (Cth) v Jacobson

MEDIUM NEUTRAL CITATION:

[2011] VSC 527

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CRIMINAL LAW – Procedure – Pre-trial hearing – Dispute as to meaning of expression ‘artificial price’ in Corporations Act 2001 (Cth) s 1041A – Reservation of questions of law and statement of case for determination of Court of Appeal – Facts not agreed – Facts found or assumed to enable case to be stated – Criminal Procedure Act 2009 ss 302, 305

EVIDENCE – Hearsay – Evidence tendered for purpose of case stated – Proceedings interlocutory – Hearsay evidence admissible - Evidence Act 2008 s 75

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APPEARANCES:

 Counsel Solicitors
For the Applicant Mr J W Rapke QC with
Mr C J Winneke 		Commonwealth Director of Public Prosecutions
For the Respondent

Mr R Richter QC with

Mr P J Lawrie (2 September 2011)

Mr M K Moshinsky SC with
Mr A M Dinelli (20 & 21 September 2011)

 Clayton Utz

HIS HONOUR:

  1. Section 1041A of the Corporations Act 2001 (Cth) creates an offence known as ‘market manipulation’. That section provides as follows:

1041A  Market manipulation

A person must not take part in, or carry out (whether directly or indirectly and whether in this jurisdiction or elsewhere):

(a)a transaction that has or is likely to have; or

(b)      2 or more transactions that have or are likely to have;

the effect of:

(c)creating an artificial price for trading in financial products on a financial market operated in this jurisdiction; or

(d)maintaining at a level that is artificial (whether or not it was previously artificial) a price for trading in financial products on a financial market operated in this jurisdiction.

  1. On 2 September 2011, the respondent, Mervyn Jacobson, was arraigned pursuant to s 180 of Criminal Procedure Act 2009 (‘the Act’),[1] on 39 substantive charges of market manipulation contrary to s 1041A (charges 2 to 40), and two conspiracy charges relating to s 1041A, contrary to s 11.5(1) of the Criminal CodeAct (Cth) (charges 1 and 41). He pleaded not guilty to all charges.

    [1]Pursuant to s 210 of the Act, that did not mean that the trial had commenced.

  1. Earlier, on 30 June 2011, a directions hearing had been held before Coghlan J. During the course of that hearing, it emerged that the parties were in dispute as to the meaning to be given to the expression ‘artificial price’ in s 1041A.

  1. The Director of Public Prosecutions (‘the Director’) contended that that expression bore the meaning attributed to it by Goldberg J in Australian Securities and Investments Commission (ASIC) v Soust.[2]  There, his Honour said that the expression ‘artificial price’

connotes a price created not for the purpose of implementing or consummating a transaction between genuine parties wishing to buy and sell securities, but rather for a purpose unrelated to achieving the outcome of the interplay of genuine market forces of supply and demand.[3]

[2](2010) 183 FCR 21.

[3]Ibid 43 [90].

  1. The respondent’s position was that the term ‘artificial price’ carried a narrower and different meaning. He submitted that a purchaser of shares, doing nothing more than accepting lawful standing orders to sell, is not prohibited from doing so at any price. He contended, in effect, that even if the purchaser consciously and deliberately chose to pay more for the shares than would have been necessary to acquire them, and did so for the collateral benefit of another, that would not amount to the creation of an ‘artificial price’ within the meaning of s 1041A. In that regard, he relied principally upon the dissenting judgment of Priestley JA in Fame Decorator Agencies Pty Ltd v Jeffries Industries Ltd.[4] 

    [4](1998) 28 ACSR 58, 64-65.

  1. The Director initially sought, pursuant to s 199 of the Act, to have this Court hear and decide, before trial, this and other issues of law that were anticipated to arise in the course of the proceeding.

  1. However, I instead raised with the parties the possibility of dealing with the meaning of ‘artificial price’ by way of reserving questions of law and stating a case for the Court of Appeal, pursuant to ss 302 and 305 of the Act. After briefly considering that suggestion, the Director adopted it. The respondent, however, did not. In any event, I directed, pending further consideration of what course should be followed, that a draft case stated and draft questions of law be prepared by the Director. I ordered that the matter come back before me on 20 September 2011.

  1. In accordance with my direction, the Director prepared a draft case stated, and several draft questions of law.  The respondent continued to oppose my stating a case for the Court of Appeal.  He said that he did so not because of any concerns with the utility of having this critical matter determined before trial, but rather for reasons of high principle.  He submitted that what the Director was seeking was, in effect, in the nature of an advisory opinion.  It could not, therefore, be made the subject of a case stated for the Court of Appeal. 

  1. Having heard extensive argument on this question, and having received written submissions from the parties, I have concluded that this matter can be, and should be, the subject of a case stated.  My reasons are as follows.

Reservation of questions of law

  1. Section 302 of the Act provides for the reservation of questions of law in criminal proceedings for determination by the Court of Appeal. The section is in the following terms:

302.     Reservation of question of law

(1) This section applies to a proceeding in the County Court or the Trial Division of the Supreme Court for the prosecution of an indictable offence.

(2) In a proceeding referred to in subsection (1), if a question of law arises before or during the trial, the court may reserve the question for determination by the Court of Appeal if the court is satisfied that it is in the interests of justice to do so, having regard to-

(a)the extent of any disruption or delay to the trial process that may arise if the question of law is reserved; and

(b)whether the determination of the question of law may-

(i) render the trial unnecessary; or

(ii)substantially reduce the time required for the trial; or

(iii)resolve a novel question of law that is necessary for the proper conduct of the trial; or

(iv)reduce the likelihood of a successful appeal against conviction in the event that the accused is convicted at trial.

(3) The court must not reserve a question of law after the trial has commenced, unless the reasons for doing so clearly outweigh any disruption to the trial.

  1. It is also important to note s 305, which prescribes the form that a case stated must take. That section provides:

305.     Case to be stated if question of law reserved

(1) If a court reserves a question of law under section 302 or 304, it must state a case, setting out the question and the circumstances in which the question has arisen.

(2) The court must sign the case stated and transmit it within a reasonable time to the Court of Appeal.

(3) The Court of Appeal may return a case stated transmitted to it under subsection (2) for amendment and the court that stated the case must amend it as required.

  1. Section 302(2) makes it clear that a question of law can be reserved whether that question arises ‘before or during the trial…’.[5]  It then sets out the criteria which must be satisfied before a question of law can be reserved.  I am satisfied that those criteria are met. 

    [5]Emphasis added.

  1. In arriving at that conclusion, I note that there will be no disruption or delay to the trial process if the case stated procedure is adopted.[6]  I also note that the determination of the question of law as to the meaning of ‘artificial price’ may render any trial unnecessary[7] or, at least, substantially reduce the time that would be required for such a trial.[8]  It would also resolve a novel question of law that is necessary for the proper conduct of the trial.[9]  Finally, it would reduce the likelihood of a successful appeal against conviction in the event that the respondent is convicted at trial.[10] 

    [6]The Act s 302(2)(a).

    [7]Ibid s 302(2)(b)(i).

    [8]Ibid s 302(2)(b)(ii).

    [9]Ibid s 302(2)(b)(iii).

    [10]Ibid s 302(2)(b)(iv).

Contentions

  1. As I have previously indicated, both the Director and the respondent saw the utility in having the meaning of the expression ‘artificial price’ determined before the commencement of the trial.  Plainly, it would be difficult to prepare this matter for trial without having resolved the meaning to be given to one of the central elements of the substantive offences charged.

  1. Nonetheless, the respondent expressed concern as to whether it would be possible to have this question determined at this stage, and positively baulked at having a case stated for the Court of Appeal.  Essentially, his position was that the use of the case stated procedure in circumstances where there were not agreed facts would involve seeking an advisory opinion from that Court. 

  1. In support of that contention, the respondent drew attention to a series of cases standing for the proposition that the case stated procedure should not be invoked in circumstances where the facts have not been sufficiently settled. 

  1. The respondent referred primarily to the decision of the Court of Appeal in R v Assange.[11]  In that case, the applicant had pleaded not guilty to various charges under Pt VIA of the Crimes Act1914 (Cth). The offences concerned obtaining unauthorised access to computer data relating to the enforcement of a law of the Commonwealth, or ‘commercial information the disclosure of which could cause advantage or disadvantage to any person’.[12]  

    [11][1997] 2 VR 247 (‘Assange’).

    [12]Ibid 248.

  1. In that case, after arraignment, but before empanelment, there was tendered in evidence an agreed summary of facts.  That summary set out some of the circumstances which had led to the accused having been charged. 

  1. The then Chief Judge of the County Court had, on the application of the accused and with the consent of the Crown, reserved two questions of law for consideration by the Court of Appeal. Those questions were reserved pursuant to s 446(2) of the Crimes Act 1958 (which was the legislative precursor to s 302 of the Act). The questions were as follows:

1.Does a person obtain access to data stored in a computer if that person:

- whilst having the ability to view the said data, has not in fact either viewed or attempted to view the said data?

2.Are the below mentioned terms, or some thereof, words that in the context of the legislation are words of common English usage, or are they words which need to be interpreted according to a technical meaning?

(a)       “Erase“

(b)“Alter“

(c)“Information“

(d)“Computer program“

(e)“Computer system“

(f)“Stored“

(g)“Examine data“

(h)“Commercial Information”.

  1. The case stated then summarised the proceeding, and gave what it described as ‘factual background’.  That part of the case stated was drawn from the agreed summary of facts.  It also described various steps taken by police during their investigations.  However, it did not set out any facts that related specifically to particular counts, even though the agreed summary had done so. 

  1. Hayne JA,[13] as his Honour then was, held that the questions of law reserved should not be answered.  He observed that, on a case stated, the Court was not entitled to go beyond the stated case.  It could not have regard to the agreed summary that had been tendered in evidence below.  Indeed, his Honour went further.  He held that the difficulties that had arisen as a result of the defective manner in which the case

had been stated could not be cured by incorporating the agreed summary into the case stated. 

[13]With whom Vincent and Coldrey AJJA agreed.

  1. His Honour’s reasons repay careful attention.  He said that he had difficulty with the imprecision associated with the word ‘view’ in the first of the questions reserved.  As regards the second question, there was nothing in the case stated to indicate whether any of the words mentioned should have a technical meaning, let alone what that meaning might be. 

  1. In the course of his reasons, Hayne JA referred to the decision of the Full Court in Industrial Equity Ltd v Commissioner for Corporate Affairs (Vic).[14]  In that case, the particular matter raised for the consideration of the Full Court arose out of a conviction imposed by a magistrate relating to two ‘informations’ laid against a company for breaches of the Companies (Victoria) Code.  The company appealed to the County Court against conviction and sentence.  The County Court judge allowed the appeal in respect of one information, but dismissed it in relation to the other.  On application, the judge then stated a case for determination by the Full Court.   

    [14][1990] VR 780 (‘Industrial Equity’), 782.

  1. The Full Court held that a case stated should set out explicitly all findings of fact, including those found by inference, upon which the conclusion of the judge depended.  It should not state the evidence given, nor any conclusion of law.  Moreover, the court to which the case stated was brought should not be required to determine for itself any questions of fact.  Nor should it be required to draw inferences of fact from those stated.  The Full Court went on to say, somewhat cryptically, that ‘necessary facts’ might be gathered from ‘the construction of the case itself as stated’.[15]  In the instant case, the case stated was deficient because certain relevant findings of fact had been omitted; a number of legal conclusions and a summary of some of the evidence had been included; and it was not possible to gather the necessary facts from ‘the construction of the case itself as stated’.

    [15]Ibid 783 citing R v Rigby (1956) 100 CLR 146, 150-152.

  1. In my opinion, the principles stated by the Full Court in Industrial Equity remain relevant, but must be considered against the background of the particular legislative framework that was in place at the time that case was decided. The procedure now laid down for the reservation of questions of law under s 302 must be considered in the light of the radical changes to criminal procedure brought about by the introduction of the Act, and its obvious intention to promote the early identification and resolution of matters in dispute. It is also important to remember that the case stated procedure can now be invoked by the Crown, whereas previously that procedure was available only to the accused. As I will later explain, the changes brought about by the Act seem to me to have had broader legal consequences in relation to the case stated procedure.

  1. It should be remembered also that the case stated procedure came into existence in the mid-19th century, at a time when there was no general right of appeal in criminal matters.  Questions of law could, however, be reserved for the consideration of the judges sitting in banc as the Court for Crown Cases Reserved.  There was no possibility of utilising that procedure at any stage before trial. 

  1. Section 302, on the other hand, specifically contemplates questions of law being reserved before trial. The section appears in Division 5 of Part 6.3 of the Act. The Part is headed ‘Appeal and Case Stated … to Court of Appeal’. The Part includes a number of radical innovations including, for the first time, a regime for interlocutory appeals in criminal matters.[16] Division 5 is headed ‘Case stated for Court of Appeal’. However, the substantive provisions contained within that division do not set out the specific requirements of a case stated.

    [16]The Act ss 295-301.

  1. When a judge is asked before trial to reserve questions of law for the determination of the Court of Appeal under s 302, there is obviously an initial difficulty with how the judge is to approach stating the facts. Plainly, at that stage, the judge is in no position to make any findings of fact, unless the parties themselves have agreed upon them. Where agreement is reached, a statement of agreed facts can be prepared. Does it follow that, in the absence of agreed facts, s 302 simply cannot be utilised?

  1. Such an interpretation of the section would, in my view, largely deprive it of any utility. It would not sit well with the overall scheme of the Act, which was to change the culture of criminal proceedings in this State, in particular by ensuring that, so far as practicable, all issues are identified at the earliest possible stage, and resolved.

  1. Returning to Assange for the moment, there is a helpful discussion in the judgment of Hayne JA as to the historical derivation of the case stated procedure.  His Honour noted that the power to determine questions of law that had been reserved was predicated upon those questions having arisen ‘on the trial’.[17] 

    [17]Assange [1997] 2 VR 247, 253.

  1. In Victoria, until the introduction of the Crimes (Criminal Trials) Act 1993, a question of law could be reserved only if it had arisen in a trial of a person who had been convicted of an indictable offence in either the Supreme Court or the County Court, or on the hearing of an appeal in a criminal proceeding to the County Court from the Magistrates’ Court.  Thus, until 1993, the procedure governing the reservation of questions of law by case stated was similar to various provisions governing Crown Cases Reserved since at least the Crown Cases Act 1848 (UK). 

  1. The introduction of s 446(2) of the Crimes Act 1958 by the Crimes (Criminal Trials) Act 1993 enabled, for the first time in this State, a question of law to be reserved at a point before the jury were empanelled.  Hayne JA stated that he need not, and did not, express any view as to the limits of the power to reserve a question of law before empanelment.[18] His Honour did, however, foreshadow that there might be a need, at some stage in the future, to consider the relationship, if any, between the power conferred by s 446(2), and the quite distinct power conferred by s 391A of the Crimes Act 1958 (which permitted a judge to hear and determine a question with respect to the trial of the accused which the Court considered necessary to ensure that the trial was conducted fairly and expeditiously). Section 391A was, of course, the precursor to s 199 of the Act.

    [18]Ibid 254.

  1. In summary, Hayne JA concluded that the case stated procedure had failed in the particular circumstances of that case because what was being sought was nothing more than an advisory opinion of more or less general application.[19]

    [19]Ibid.

  1. Plainly, Assange offers some support for the respondent’s contention that, in the absence of a comprehensive statement of agreed facts, the case stated procedure cannot be invoked.  However, under the new statutory regime which governs that procedure there may be greater flexibility, in relation to findings of fact, than had traditionally been the case.

  1. The respondent also relied upon the decision of the High Court in Bass v Permanent Trustee Company Ltd.[20] There, a judge of the Federal Court had referred six preliminary questions of law arising out of proceedings under the Trade Practices Act 1974 (Cth) to a Full Court of the Federal Court. The Full Court had answered some of those questions adversely to the applicants, and had made various declarations regarding the matters raised. The applicants then challenged in the High Court the answers given by the Full Court to four of the questions, and the subsequent declarations made.

    [20](1999) 198 CLR 334 (‘Bass’).

  1. The High Court was critical of the Full Court for having answered the four questions posed.  It considered that the answers given to two of the questions were detached from any real facts, and were therefore hypothetical.[21]  At best, those answers did no more than declare that if certain facts were to be established the law would dictate a particular result.  One problem was that the facts in question were not stated with precision, and could not readily be discerned. 

    [21]Ibid 357 (Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ).

  1. The respondent also drew attention to the decision of the Court of Appeal in this State in R v Garlick.[22]  There, the Court refused to answer any of the seven questions reserved for its determination.

    [22][2006] VSCA 127 (‘Garlick’).

  1. It must be said that the questions reserved in Garlick were of an extraordinarily broad nature, and a number of them were obviously unrelated to the particular facts of the case.  In effect, the Court of Appeal was being asked to provide a series of purely advisory opinions, based upon various hypotheses as to the facts that might or might not be found during the course of the trial. 

  1. To make matters worse, it was accepted by both parties that by the time the matter came to be considered by the Court of Appeal, there were no live questions of law left to be determined, all relevant matters having been resolved in the interim by earlier decisions of the Court. 

  1. In Garlick, the Court was highly critical of the form of the case stated.[23]  It referred to an earlier decision of the Court of Appeal in Furze v Nixon[24] in that regard.  I note that in Furze, the Court had been asked to answer various questions reserved for its determination after the respondent had been convicted in the County Court of an offence under the Road Safety Act 1986.  It declined to answer those questions, two of which simply asked, in a general way, whether there was any evidence, other than the certificate of breath analysis, to support the conviction.  Plainly, these were not proper questions for a case stated.  Indeed, on one view, they were not questions of law at all.  

    [23]See, generally, Garlick [2006] VSCA 127, [24]-[30].

    [24](2000) 2 VR 503 (‘Furze’).

  1. Returning to Garlick, the Court of Appeal first noted that the case stated did not set out ‘ultimate facts’ which would constitute the ‘bedrock’ of any stated case.[25]  Second, the case stated set out in part the evidence given at the earlier trial of the matter which had miscarried.  Evidence should not normally be included in a case stated.  Third, the case stated recited matters remote from identification of any relevant question of law.  Thus, for example, it set out the circumstances under which the earlier trial had miscarried.  Indeed, it annexed a paper prepared by a County Court researcher at the request of the trial judge.  Clearly, that was inappropriate.  Fourth, the case stated set out substantial argumentative passages in which the judge sought to illuminate some factual matters that might be of importance in particular cases involving the relevant provision under consideration.  Fifth, a case stated was not to be used to facilitate the offering of general advisory opinions on hypothetical facts.  The questions asked sought such advisory opinions, in part because they were not tied to the ‘ultimate facts’ of the relevant case. 

    [25]Garlick [2006] VSCA 127, [26].

  1. I note that the Court of Appeal added, at the conclusion of its judgment, that

it might have been very difficult to isolate the necessary ultimate facts at the stage which the proceeding had reached when the case was stated.[26] 

[26]Ibid [30].

  1. Of course, as with Assange, the legislative regime under which Garlick was decided differed from the scheme that now governs appellate processes in criminal matters in this State.

  1. In support of my stating a case for the Court of Appeal, the Director submitted that reserving the question of the meaning of the term ‘artificial price’ for the determination of that Court would not involve seeking an advisory opinion.

  1. In support of that contention, the Director referred to the following passage in the joint judgment of six members of the High Court in Bass:

Preliminary questions may be questions of law, questions of mixed law and fact or questions of fact. Some questions of law can be decided without any reference to the facts. Others may proceed by reference to assumed facts, as on demurrer or some other challenge to the pleadings. In those cases, the judicial process is brought to bear to give a final answer on the question of law involved. Findings of fact are made later, if that is necessary. Where a preliminary question is a pure question of fact that, too, can be answered finally in accordance with

the judicial process if the parties are given an opportunity to present their evidence and, also, to challenge the evidence led against them.[27]

[27]Bass (1999) 198 CLR 334, 358 [52] (Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ).

  1. The Director noted that the joint judgment went on to refer, with approval, to Jacobson v Ross,[28] where Brooking J, as his Honour then was, spoke of the need, in a case where a preliminary question of mixed fact and law was raised, for precision both in formulating the question and in specifying the facts upon which it was to be decided.[29]  Importantly, however, Brooking J had added:

Care must be taken to ensure that, in one way or another, all the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable ... as facts assumed to be correct for the purposes of the preliminary determination, or as facts which both sides accept as correct, or as facts which are to be judicially determined. Failure to do this, and in particular failure to perceive that the facts alleged in a pleading are some only of the facts relevant to the determination of the preliminary question, may make the order for preliminary determination unfruitful.[30]

[28][1995] 1 VR 337.

[29]Ibid 341, referring to Nissan v Attorney-General [1970] AC 179, 242-243 (Lord Pearson).

[30]Ibid 341.

  1. The Director submitted that it was noteworthy that Brooking J had concluded that certain facts could be ‘assumed to be correct’ for the purposes of a preliminary determination.  He further submitted that there was nothing to suggest that when his Honour referred to ‘assumed facts’ he had in mind only a procedure such as a demurrer (still often used in constitutional matters, but essentially obsolete in relation to criminal proceedings) rather than some other process whereby facts can be found, or legitimately assumed. 

  1. The Director submitted that the facts upon which the Court of Appeal would be asked, in the present case, to determine the questions reserved were all essentially uncontentious, or easily capable of being established.  As could be seen from the respondent’s written response to the summary of the prosecution opening, many of these facts were not disputed.  The Director submitted that in these circumstances there should be no concern that an advisory opinion was being sought.

  1. The Director relied in particular upon the decision of the High Court in R v Gee.[31] There, questions of law relating to the admissibility of evidence in a trial involving Commonwealth offences were reserved, pursuant to s 350(1)(a) of the Criminal Law Consolidation Act 1935 (SA), prior to trial for determination by the Full Court of the Supreme Court of South Australia. That Court, by majority, declined to answer those questions, holding that it lacked jurisdiction to deal with them. That was on the basis that ss 72 to 77 of the Judiciary Act 1903 (Cth) ‘covered the field’ in relation to reserving questions of law arising out of a Commonwealth criminal trial. On that basis, the State provisions were not picked up, and rendered applicable, pursuant to s 68(2) of that Act.

    [31](2003) 212 CLR 230 (‘Gee’). 

  1. The High Court held, however, that there was no impediment to the State provisions operating in conjunction with the provisions of the Judiciary Act. Gleeson CJ observed that there was no reason why the reference to appeals in s 68(2) should not be applied with full generality, and equally no reason why the regime under the Judiciary Act should be treated as a code of procedure for an appeal by way of case stated.[32]  McHugh and Gummow JJ, in a joint judgment, agreed.[33]  So too, in a separate judgment, did Kirby J.[34]

    [32]Ibid 242.

    [33]Ibid 254.

    [34]Ibid 273-274.

  1. Importantly, Gleeson CJ went on to say that the review of the trial judge’s decision on the questions reserved would not have involved the giving of an advisory opinion.  That was because the Full Court could, upon such a review, have directed the dismissal of the application to exclude evidence.  At the very least, the trial judge, on an application to reconsider his earlier ruling, would be required to follow the Full Court’s decision. 

  1. McHugh and Gummow JJ agreed that the case was not one which attracted the objections referred to in Bass (or for that matter the similar objections referred to in the earlier decision of the High Court in Director of Public Prosecutions (SA) v B).[35] Unlike those cases, Gee did not involve the Full Court giving an advisory opinion. 

    [35](1998) 194 CLR 566.

  1. Kirby J, in a particularly instructive judgment, concluded that the questions of law reserved for the consideration of the Full Court were not hypothetical, and did not involve the giving of general advisory opinions.  His Honour noted that in Director of Public Prosecutions (SA) v B,[36] the High Court had criticised the specific questions reserved in that case.  However, those questions had ‘peculiar and unique features’.[37]  By contrast, the questions raised in Gee were far from hypothetical.  His Honour referred to authority for the proposition that the Court would not enter upon abstract questions of law devoid of relevance to the rights or duties of a body or person,[38] but concluded that in Gee the determination by the Full Court would be neither theoretical nor hypothetical.[39] 

    [36]Ibid 576.

    [37]Gee (2003) 212 CLR 230, 277.

    [38]Kirby J cited, inter alia, Mellifont v A-G (Qld) (1991) 173 CLR 289, 303.

    [39]Gee (2003) 212 CLR 230, 279 [148].

  1. Callinan J agreed with the other members of the Court that the questions raised were no more hypothetical than any other question arising from time to time in the course of a criminal trial relating to the admissibility of evidence.  In his Honour’s view, the ruling sought was closely connected to the trial and for that reason should not be viewed as seeking an advisory opinion.[40] 

    [40]Ibid 296-297 [209].

  1. In addition to Gee, the Director drew attention to the recent decision of the Court of Appeal in this State in R v Quach.[41]  There, the Court answered a question of law reserved for its consideration that took the following form:

What are the elements of the common law offence of misconduct in public office?

[41](2010) 27 VR 310 (‘Quach’).

  1. It seems that no issue was taken in Quach as to whether an advisory opinion was being sought. With great respect, I have some doubt as to whether a question cast in that form is appropriate for determination under s 302, or indeed any other appellate procedure.

  1. Nonetheless, the fact that the Court in Quach did answer a question of that kind does provide some support for the Director’s contention that the much narrower, and more specific, questions proposed to be reserved in this case in the context of what are, in the main, undisputed facts do not seek the giving of an advisory opinion. 

Reasoning

  1. It is obviously in everyone’s interest that there be a speedy and authoritative resolution of the question what meaning is to be given to the expression ‘artificial price’ in s 1041A. The trial, if it proceeds, is likely to be a very long one, with an estimate of up to six weeks duration.

  1. If the approach to the meaning of that expression adopted by Priestley JA in Fame Decorator Agencies Pty Ltd v Jeffries IndustriesInc[42] is correct, it is virtually certain that the charges against the respondent will be withdrawn. 

    [42](1998) 28 ACSR 58, 64-65.

  1. Moreover, I was told that this is the first case of market manipulation to be tried on indictment in this country.  It seems likely that there would be others in contemplation.  In these circumstances, it is highly desirable that the meaning of ‘artificial price’ be determined as soon as practicable. 

  1. As I have previously indicated, it should not be assumed that the case stated procedure now set out in ss 302 and 305 of the Act operates in precisely the same way as that procedure has operated in the past.

  1. In R v Wei Tang,[43] the Court of Appeal emphasised

the need to ensure, so far as practicable, that critical legal questions affecting a criminal trial are adjudicated upon before the trial commences, rather than at its conclusion. In this case, it was not until after two lengthy trials of the applicant on the slavery counts that this court was asked to rule on fundamental threshold questions regarding the slavery provisions — whether they were constitutionally valid and, if so, how they were to be interpreted. Those same questions were, in turn, ruled on by a seven member bench of the High Court.

As Eames JA noted in R v Wei Tang, the task facing the trial judge and trial counsel was one of considerable difficulty, there being no guiding case law on the elements of the offences or on the meaning to be attributed to the statutory language. It is to be hoped that the new provisions of the Criminal Procedure Act 2009, introducing interlocutory appeals and greatly expanding the case stated procedure, will enable questions of fundamental importance to a trial to be decided — and, where necessary, considered by this court — before the trial begins.[44]

[43](2009) 23 VR 332.

[44]Ibid 333 [4]-[5] (emphasis added; citations omitted).

  1. In my opinion, the expression ‘artificial price’ in s 1041A is not used in any general or lay sense. It seems to me to carry a technical meaning, though one that is left undefined in the Corporations Act2001 (Cth). The meaning to be accorded to such a term is, in my view, a question of law, suitable for reservation for the determination of the Court of Appeal.

Findings for the purpose of case stated

  1. As I have previously indicated, the respondent contends that there are insufficient facts agreed, or ascertainable, or capable of being properly assumed, to enable a case to be stated.  I reject that contention. 

  1. I asked senior counsel for the respondent what meaning should be given to the written response to the summary of the prosecution opening filed on behalf of his client.  He replied that when the respondent said he ‘did not dispute’ a matter detailed in the summary of the prosecution opening, that effectively meant that the fact alleged was admitted.

  1. That concession was hardly surprising.  The details of each of the transactions that took place are almost certain to be uncontentious.  Even if they were not ultimately admitted, they would easily be proved.  So, too, would the existence of the various emails that were sent to and from the respondent, in particular those sent to and from his daughter and son-in-law. 

  1. When the matter came before me on the second occasion the original concession was affirmed. 

  1. Although the respondent consistently maintained his objection to the statement of a case to the Court of Appeal, I acknowledge that serious efforts were made by both parties, at my request, to resolve between them most of the outstanding issues relevant to any case stated.  The latest version of a draft case statement provided to the Court, with considerable input from the respondent, indicated that virtually all factual matters that were originally in dispute had been resolved, at least for the limited purpose of reserving questions of law.  

  1. One issue which continues to divide the parties related to the Crown’s submission that, for the purpose of a case stated, I should find that the sole or dominant purpose of the respondent’s daughter, Tamara Newing’s, purchase of shares in Genetic Technologies Limited (‘GTG’) at 4.09 pm on 4 July 2006 was to ensure that the price of a GTG share was not less than $0.35 at the close of trade on the Australian Stock Exchange (‘ASX’), and that this was done in order to protect her father’s financial position.  I was further asked to find that a fall below $0.35 would have resulted in a margin call on the respondent, and that this would have led to significant financial detriment for both him and his daughter.

  1. As I understand the respondent’s position, he does not accept that this was either Ms Newing’s sole or dominant purpose. 

  1. It was in the light of the respondent’s challenge to the accuracy of that factual assertion that the Director filed additional material before me.  The material was substantial.  It included the transcript of the plea conducted on behalf of Ms Newing when she was dealt with for market manipulation arising out of her involvement in the purchases of GTG shares, and the sentencing remarks of the County Court judge who sentenced her.  In addition, the material included a detailed summary of the Crown case against Ms Newing that was tendered at the hearing of her plea and was, so the evidence before me established, not disputed by her. 

  1. It was then submitted on behalf of the respondent that I could not act upon this material as it was not in proper evidential form.  In essence, the respondent objected to all of this evidence as he contended that it was hearsay. 

  1. In response, the Director submitted that the material, which was annexed to an affidavit, could be received for the limited purpose of enabling me to find, as a fact, that  it was Ms Newing’s sole or dominant purpose in taking part in or engaging in the transaction on 4 July 2006 to ensure that the price of a GTG share on the ASX was not less than $0.35 at the close of trade on that day. 

  1. I must say that I considered it regrettable that the respondent, having previously taken a stand on matters of high principle,  then sought to invoke the hearsay rule as a last ditch attempt to prevent this matter going forward by way of case stated.  It seemed to me that, given that any finding of fact I might make regarding Ms Newing’s motivation in engaging in the transaction in question could not operate to the detriment of the respondent in his trial, there was every reason for the respondent to waive the operation of the hearsay rule. 

  1. In any event, I then invited submissions from both parties as to the possible application of s 75 of the Evidence Act 2008 to overcome any hearsay difficulties.  That section provides as follows:

75.      Exception–interlocutory proceedings

In an interlocutory proceeding, the hearsay rule does not apply to evidence if the party who adduces it also adduces evidence of its source.

  1. Eventually, the respondent acknowledged that s 75 could be invoked in answer to his earlier hearsay objection. In his written submission, he ‘accept[ed] that th[is] hearing … is not final in nature’ because ‘in the circumstances of this case, any

findings of fact in stating a case cannot finally dispose of the proceeding, nor any rights of the parties’.[45]

[45]The respondent cited Wentworth v Wentworth (Unreported, Supreme Court of New South Wales, Santow J, 17 April 1997); Rossage v Rossage [1960] 1 WLR 249, 251; Allstate Life Insurance C v Australia & New Zealand Banking Group Ltd (No 3) (Allstate Judgment No 28) (1996) 64 FCR 55, 59-60; and Brouwer v Titan Corp Ltd (1996) 73 FCR 241, 244.

  1. On the basis, therefore, of the totality of the material tendered before me on behalf of the Director, I find that Ms Newing acted as she did for the sole or, at the very least, dominant purpose of ensuring that the price of a GTG share on the ASX was not less than $0.35 at the close of trade on 4 July 2006.  In my opinion, the inference that Ms Newing entered into that transaction for that purpose, and to protect her father’s financial interests, is overwhelming. 

  1. Even if I were not prepared to make that finding, I would draw that inference as an assumed fact, suitable to be used by the Court of Appeal in dealing with the questions of law that are to be resolved. 

  1. For the sake of completeness, I also state formally that I find that each of the circumstances set out in paragraphs 1 to 6 of the attached case stated, and each of the factual assertions set out in paragraphs 7 to 67 of that case stated, are established for the purpose of the Court of Appeal determining the reserved questions of law. 

  1. I should make it clear that I make each of these findings, or assume each of these facts, for the limited purpose of the case stated.  I do so upon the understanding that any such findings of fact, or any such assumptions of fact, do not, and cannot, give rise to any estoppel against the respondent.     

Questions of law to be reserved

  1. The Director initially proposed five separate questions of law for the consideration of the Court of Appeal.  Each of them related in various ways to the meaning of the expression ‘artificial price’.  The Director also foreshadowed a sixth question, cast in much the same terms as the question asked and answered in Quach.

  1. I have considered the various questions proposed and the criticisms levelled at them by the respondent.  I have determined that there is substance in a number of those criticisms.  I have concluded that, on the facts that I propose to state, there are three questions of law appropriate to be reserved for determination by the Court of Appeal.  Those questions are:

1) For the purpose of s 1041A of the Corporations Act 2001 (Cth), is the price of a share on the ASX which has been created or maintained by a transaction on the ASX that was carried out for the sole or dominant purpose of creating or maintaining a particular price for that share on the ASX an ‘artificial price’?

2) Was the closing price of shares in GTG on the ASX on 4 July 2006 an ‘artificial price’ within the meaning s 1041A(c) of the Corporations Act 2001 (Cth)?

3)          Was the price of shares in GTG on the ASX on 4 July 2006 maintained at a level that was ‘artificial’ within the meaning of s 1041A(d) of the Act?

  1. I should also formally indicate why I will not reserve a question along the lines of that posed in Quach. The Director sought the reservation of such a question so that the Court of Appeal could provide guidance as to the elements of the offence under s 1041A. Quach did not involve any element of federal jurisdiction.  In my opinion, greater caution is required, in relation to the use of the case stated procedure, when it comes to a proceeding involving Commonwealth criminal law.  In my opinion, the foreshadowed question was not sufficiently linked to any findings of fact that I might be in a position to make for the purpose of a case stated.  For that reason, I declined to put that foreshadowed question to the Court of Appeal.

  1. I should say, for the sake of completeness, that I propose to ensure that certain background material is available to the Court of Appeal for its assistance, should that be required.  I refer particularly to the relevant transcript of the argument before me, and the written submissions filed by each party, on the question whether a case should be stated.  I will also make available to the Court of Appeal the Crown’s summary prosecution opening, and the defence response, together with the additional material filed by the Director in relation to Ms Newing.  This material does not, of course, constitute part of the case stated.

  1. Attached to this judgment are the indictment (‘Annexure A’), the case stated (‘Annexure B’), and the questions of law reserved for determination (‘Annexure C’).

- - - - -

ANNEXURE A

IN THE SUPREME COURT  No.. 0054 of 2011
IN THE STATE OF VICTORIA

AT MELBOURNE

INDICTMENT

THE QUEEN

-v-

MERVYN JACOBSON

SUMMARY OF STATEMENT OF OFFENCE

Offence Number of charges Charge Numbers

MERVYN JACOBSON

Conspiring contrary to sections 11.5(1) of the Criminal Code and section 1041A of the Corporations Act 2001(a breach of s1041A being an offence by reason of s1311(1) of Corporations Act 2001) to take part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange of ordinary shares in Genetic Technologies Limited ("GTG"), which were likely to have the effect of creating an artificial price, or maintaining, at a level that is artificial, a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

 2 1, 41
Contrary to section 1041A of the Corporations Act 2001(a breach of s1041A being an offence by reason of s1311(1) of Corporations Act 2001) taking part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange of fully-paid ordinary shares in Genetic Technologies Limited ("GTG") which had or were likely to have the effect of creating an artificial price, or maintaining, at a level that is artificial, a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere. 39 2 to 40

PARTICULARS

AND STATEMENT OF OFFENCE

Charge 1

The Director of Public Prosecutions of the Commonwealth of Australia, who prosecutes in this behalf for Her Majesty the Queen, charges that between on or about 16 May 2006 and about 31 October 2006 Mervyn Jacobson conspired with Geoffrey Newing and Tamara Newing to take part in transactions, namely purchases on the financial market now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") of ordinary shares in Genetic Technologies Limited ("GTG"), which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence – Conspiring to take part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to section 11.5(1) of the Criminal Code and sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 2

And the said Director of Public Prosecutions further charges that on 14 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 70,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $23,800.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence – Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 3

And the said Director of Public Prosecutions further charges that on 14 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 50,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $17,000.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence – Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 4

And the said Director of Public Prosecutions further charges that on 14 September 2006 Mervyn Jacobson took part in a transaction, namely the purchase on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 10,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $3,450.00 (excluding GST and brokerage), which had or was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence – Taking part in a transaction which was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 5

And the said Director of Public Prosecutions further charges that on 14 and 15 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 24,484 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $8,324.56 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 6

And the said Director of Public Prosecutions further charges that on 14 and 18 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 6,500 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $2,210.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 7

And the said Director of Public Prosecutions further charges that on 14 and 18 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 9,016 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $3,065.44 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 8

And the said Director of Public Prosecutions further charges that on 14 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 30,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $10,350.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 9

And the said Director of Public Prosecutions further charges that on 14 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 69,300 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $24,255.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 10

And the said Director of Public Prosecutions further charges that on 15 September 2006 Mervyn Jacobson took part in a transaction, namely the purchase on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 50,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $17,000.00 (excluding GST and brokerage), which had or was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in a transaction which was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 11

And the said Director of Public Prosecutions further charges that on 18 and 19 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 100,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $34,000.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence – Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 12

And the said Director of Public Prosecutions further charges that on 18 and 19 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 7,484 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $2,544.56 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 13

And the said Director of Public Prosecutions further charges that on 18 September and 2 October 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 92,516 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $31,455.00 (excluding GST and brokerage), which traded on the ASX on 2 October 2006 which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 14

And the said Director of Public Prosecutions further charges that on 18 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 60,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $20,700.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 15

And the said Director of Public Prosecutions further charges that on 18 and 19 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 30,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $10,500.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 16

And the said Director of Public Prosecutions further charges that on 18 and 19 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 20,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $6,900.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 17

And the said Director of Public Prosecutions further charges that on 19 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 50,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $17,500.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 18

And the said Director of Public Prosecutions further charges that on 19 September 2006 Mervyn Jacobson took part in a transaction, namely the purchase on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 16,258 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $5,609.01 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in a transaction which was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 19

And the said Director of Public Prosecutions further charges that on 19 and 26 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 20,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $6,900.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 20

And the said Director of Public Prosecutions further charges that on 19 and 27 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 13,742 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $4,740.99 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 21

And the said Director of Public Prosecutions further charges that on 19 and 20 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 30,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $10,500.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 22

And the said Director of Public Prosecutions further charges that on 19 September 2006 Mervyn Jacobson took part in a transaction, namely the purchase on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 10,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $3,550.00 (excluding GST and brokerage), which had or was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in a transaction which was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 23

And the said Director of Public Prosecutions further charges that on 20 and 21 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 50,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $17,500.00 (excluding GST and brokerage), which had or was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 24

And the said Director of Public Prosecutions further charges that on 20 September 2006 Mervyn Jacobson took part in a transaction, namely the purchase on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 10,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $3,550.00 (excluding GST and brokerage), which had or was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 25

And the said Director of Public Prosecutions further charges that on 21 and 22 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 41,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $14,350.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 26

And the said Director of Public Prosecutions further charges that on 22 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 28,061 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $9,821.35 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 27

And the said Director of Public Prosecutions further charges that on 22 and 26 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 20,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $7,000.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 28

And the said Director of Public Prosecutions further charges that on 22 and 26 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 1,939 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $678.65 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 29

And the said Director of Public Prosecutions further charges that on 22 and 26 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 30,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $10,500.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 30

And the said Director of Public Prosecutions further charges that on 22 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 50,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $17,750.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 31

And the said Director of Public Prosecutions further charges that on 22 September 2006 Mervyn Jacobson took part in a transaction, namely the purchase on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 30,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $10,650.00 (excluding GST and brokerage), which had or was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in a transaction which was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 32

And the said Director of Public Prosecutions further charges that on 22 and 25 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 25,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $8,875.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 33

And the said Director of Public Prosecutions further charges that on 25 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 100,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $35,500.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 34

And the said Director of Public Prosecutions further charges that on 25 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 50,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $17,750.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 35

And the said Director of Public Prosecutions further charges that on 25 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 50,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $17,750.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 36

And the said Director of Public Prosecutions further charges that on 25 September 2006 Mervyn Jacobson took part in a transaction, namely the purchase on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 20,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $7,100.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in a transaction which was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 37

And the said Director of Public Prosecutions further charges that on 26 and 27 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 50,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $17,500.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 38

And the said Director of Public Prosecutions further charges that on 26 September 2006 Mervyn Jacobson took part in a transaction, namely the purchase on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 20,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $7,100.00 (excluding GST and brokerage), which had or was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in a transaction which was likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 39

And the said Director of Public Prosecutions further charges that on 27 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 50,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $17,500.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 40

And the said Director of Public Prosecutions further charges that on 27 September 2006 Mervyn Jacobson took part in transactions, namely purchases on the financial market operating in this jurisdiction now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") by XY Inc of 50,000 fully-paid ordinary shares in Genetic Technologies Limited ("GTG") for $17,500.00 (excluding GST and brokerage), which had or were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Taking part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

Charge 41

And the said Director of Public Prosecutions further charges that between on or about 27 September 2006 and 2 November 2006 Mervyn Jacobson conspired with Rocco Musumeci and Tamara Newing to take part in transactions, namely purchases on the financial market now known as the Australian Securities Exchange (formerly the Australian Stock Exchange) operated by ASX Limited (formerly Australian Stock Exchange Limited) ("the ASX") of ordinary shares in Genetic Technologies Limited ("GTG"), which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in the securities of GTG on the ASX at Melbourne and elsewhere.

Statement of Offence - Conspiring to take part in transactions which were likely to have the effect of creating an artificial price, or maintaining at a level that is artificial a price for trading in securities contrary to section 11.5(1) of the Criminal Code and sections 1041A and 1311(1) of the Corporations Act 2001(Cth).

SHANE PATRICK KIRNE
  for and on behalf of the
  Director of Public Prosecutions

ANNEXURE B

THE QUEEN V MERVYN JACOBSON

CIRCUMSTANCES AND FACTS UPON WHICH THE CASE STATED PURSUANT TO s.302 OF THE CRIMINAL PROCEDURE ACT 2009 IS TO BE DETERMINED

CIRCUMSTANCES

  1. The accused, Mervyn Jacobson, is charged with 39 offences against s.1041A of the Corporations Act 2001(charges 2 to 40 on the attached indictment) and 2 conspiracies to engage in conduct in contravention of that provision (charges 1 and 41 on the indictment). The accused has foreshadowed an application to seek to dismiss the conspiracy charges pursuant to s.11.5(6) of the Criminal Code Act 1995 (Cth) or alternatively to have the conspiracy charges tried separately from the other charges pursuant to s.195 of the Criminal Procedure Act 2009 (Vic).

  2. The accused was arraigned pursuant to section 180 of the Criminal Procedure Act 2009 on 2 September 2011 and pleaded “Not Guilty” to all charges.

  3. Each of charges 2 to 40 on the indictment alleges that the accused took part in or carried out a transaction that had or was likely to have the effect of creating an artificial price for trading in financial products on a financial market operated in this jurisdiction, or maintaining at a level that was artificial a price for trading in financial products on a financial market operated in this jurisdiction. Charges 1 and 41 allege that the accused conspired with others to take part in transactions that had the proscribed effect.

  4. Common to all charges on the indictment is an allegation that the activities of the accused had the effect of creating or maintaining an artificial price for a financial product.

  5. The term “artificial price” has not previously fallen for judicial determination in the context of a criminal prosecution for offences against s.1041A.

  6. The questions reserved for the determination of the Court of Appeal raise for the consideration of the court the meaning of the term “artificial price” in the context of the facts of this particular prosecution.

FACTS

7,ASX Limited(“ASXL”) operates a financial market called the Australian Securities Exchange ("ASX") which provides a market place for the trading of financial products quoted on the ASX.

  1. Since 4 September 2000 Genetic Technologies Limited (‘GTG') ordinary shares have traded on the ASX using the code GTG.

  2. Up to 29 September 2006, all trading in quoted equities on ASX was conducted by a screen based, computerised trading system known as the Stock Exchange Automated Trading System ("SEATS"). 

  3. SEATS enabled brokers ("Trading Participants") throughout Australia to have equal access to the market.  All trading in quoted equities on ASX, except for "off-market" transfers between a holder of a security and an acquirer without the use of a broker, was conducted through SEATS.

  4. In order for a client to buy or sell equities on ASX through SEATS, the client must engage the services of a Trading Participant.  Each Trading Participant employs a Designated Trading Representative ("DTR") who has been approved by ASX to act as that Trading Participant's operator of a SEATS terminal (or workstation).

  5. Every Trading Participant is allocated an individual broker identification number by the ASX.  The individual broker identification numbers are used to identify each broker on SEATS.

  6. The broker identification number allocated to ABN AMRO Morgans Ltd ("ABNAMRO Morgans") was 406.

  7. A Trading Participant's identification number is automatically recorded in SEATS when the Trading Participant makes an entry into SEATS.  The record of that number and entry is maintained by ASX and is incorporated into the trading records of ASX.

  8. SEATS trading is done by means of a connected computer terminal.  At the relevant time each Trading Participant usually maintained at least one SEATS terminal in its office.

  9. A DTR accesses SEATS by entering the individual DTR's username and password into a SEATS workstation.  The record of these entries is maintained by and is incorporated into the trading records of the ASX.

  10. In the ordinary course of a Trading Participant's business, when a client places an order to buy or sell securities with the Trading Participant, the price at which the client instructs the Trading Participant to place the order may be either the prevailing market price of the relevant security, known as "at market", or at a specific price limit, known as "limit" orders.  There are more types of orders than these two basic examples.

  11. Upon receipt of instructions from a client to buy securities, the Trading Participant, via the DTR, enters the order (the "BID") into SEATS, at a price and for a quantity that accords with the client's instructions.

  12. Upon receipt of instructions from a client to sell securities, the Trading Participant, via the DTR, enters the order (the "ASK") into SEATS, at a price and for a quantity that accords with the client's instructions.

  13. A trade in a security occurs automatically when the price of a BID and an ASK for that security overlap on SEATS.  That is, when either:-

    (a)the price of a BID and an ASK are the same; or

    (b)the price of a BID is greater than the price of an ASK.

  14. SEATS is a priority based trading system.  Accordingly, all BIDs that are entered into SEATS are, until they are traded or cancelled, given priority and displayed on SEATS in order of:

    (a)first, price.  That is, the BID with the highest price is displayed first and that with the lowest price is displayed last.  A BID with a higher price is transacted as a trade before a BID with a lower price; and

    (b)secondly, time of entry of the BID into SEATS.

  15. The current BIDs on SEATS, as referred to in the preceding paragraph, are commonly described as comprising the BID schedule in SEATS.

  16. All ASKs that are entered into SEATS are, until they are traded or cancelled, given priority and displayed on SEATS in order of:-

    (b)first, price.  That is, the ASK with the lowest price is displayed first and that with the highest price is displayed last.  An ASK with a lower price is transacted as a trade before an ASK with a higher price; and

    (b)secondly, time of entry of the ASK into SEATS.

  17. The current ASKs on SEATS, as referred to in the preceding paragraph, are commonly described as comprising the ASK schedule in SEATS.

  18. At the relevant time trading in quoted securities on ASX during the "Normal Trading" phase was conducted through SEATS between 10:00am and 4:00pm (Eastern Standard Time) on each trading day.  Between 7:00am and 10:00am AND between 4:00pm and 4:15pm, the market is placed in "Pre-Open".  During this time trading stops and orders are able to be entered, amended or cancelled.  SEATS does not process these orders until the Open and Closing Single Price Auction ("OSPA" and "CSPA" respectively).  .

  19. The opening of trading takes place and lasts for approximately 10 minutes at the end of which there is the OSPA.  Securities open in five groups, according to the starting letter of their ASX code.  GTG is in Group 3, which opens for trading at 10:04:30am +/- 15 seconds (at a time randomly generated by SEATS).

  20. During the relevant period the CSPA took place between 4:15pm and 4:17pm at a time randomly selected by SEATS up to 60 seconds after 4:15pm. 

  21. The auction price for a security is determined by a four step approach involving the use of conditional decision rules.  If a clear result cannot be achieved when the first decision rule is applied, the model progresses to the second decision rule and so on.  For the purposes of this Case Stated, only the first two principles are relevant.  The decision rules are always applied in the same order:

    (a)There are two steps involved in the first principle, which is designed to determine the maximum executable volume.  The first step determines the Cumulative Buy and Sell quantities at each eligible price.  The Cumulative Buy quantity increases as prices decrease – a buy price is the maximum that a buyer is willing to pay for their share, however it is accepted that the buyer is willing to pay a lower price.  Conversely the Cumulative Sell quantity increases as prices increase – a sell price is the minimum a seller will accept for their shares but the seller will accept a higher price.

    The second step establishes the total tradeable volume at each eligible price step.  The total tradeable volume at a price is the minimum of the Cumulative Buy and Cumulative Sell quantities at that price;

    (b)The second principle ascertains the eligible price levels at which the unfilled or unmatched quantity is a minimum.  The quantity of shares left in the market at the auction price should always be the lowest possible.  The minimum surplus at each price level is equal to the cumulative buy quantity minus the cumulative sell quantity.

  22. If, at the time of the CSPA, there are overlapping BIDs and ASKs, i.e. BIDs at the same or higher prices than ASK prices), SEATS applies an algorithm to match the greatest number of shares possible at a single price during the CSPA.

  23. The closing price of securities quoted on the ASX is based on either (a) the price at which the security traded during the CSPA or (b) if no trades occurred during the CSPA, then the last traded price at which the security traded during the Normal Trading phase.

  24. All BIDs and ASKs entered into SEATS will immediately appear on all connected SEATS terminals and are recorded by ASX.

  25. Trading Participants are able to view on a SEATS screen, with respect to each security traded, the following information:

    (a)the relevant security's ASX code and name;

    (b)where it is disclosed, the quantity of the relevant security in respect of BIDs and ASKs entered;

    (c)the price of all BIDs and ASKs(but not the identity of the broker who placed those BIDs and ASKs);

    (d)the time, quantity and price of trades that have occurred during the relevant day's trading; and

    (e)while the relevant security is from 16:00 in Pre-Open, an indicative price of what the security will trade at the time of the CSPA.

  26. The accused was at all material times the chief executive officer and a director of Genetic Technologies Ltd (“GTG”), shares in which were listed for trading on the ASX. 

  27. On 18 March 2005, a company associated with the accused domiciled in Denmark (“JGT ApS”) exercised 49 million GTG options at a price of 20 cents per option (“GTG options”). A sum of $9.8 million was required to be paid to GTG to exercise the GTG options.

  28. The exercise of the GTG options resulted in the accused and entities associated with him holding, directly or indirectly, in excess of 150 million fully paid ordinary class shares in GTG.

  29. On 18 March 2005, the closing price of a GTG share on the ASX was 48 cents.

  30. On 18 March 2005 in order to finance the exercise of the GTG options, JGT ApS entered into an equity financing agreement with Opes Prime Securities Ltd (“Opes”), specifically a Securities Lending and Borrowing Agreement (“Opes facility”).

  31. A total of 98 million GTG shares were lodged by JGT ApS against the Opes facility, made up of the GTG options shares and an additional 49 million GTG shares already held by JGT ApS.

  32. Opes undertook a daily valuation of the Opes facility, specifically the value of the collateral lodged against it (“mark to market calculation”). The valuation was done after the close of trading on the ASX each day, with the closing price of GTG shares being applied to the following formula:

    Loan Value - Market Value x Loan Value Ratio ("LVR") = Margin Call/Available Margin
    (Market Value being the number of shares pledged multiplied by the closing share price)

  33. An LVR of 25% was provided by Opes.

  34. Opes would issue a “margin call” when the Loan Value of the Opes facility exceeded the mark to market calculation.

  35. If the margin call was made, the accused was required to provide additional collateral in the form of cash or the lodgement of additional shares.

  36. As at 12 April 2005, the loan outstanding on the Opes facility was in excess of $10.3 million.

  37. Between 18 April 2005 and 2 November 2006, 29.2 million GTG shares and $355,702.01 in cash were provided to Opes as additional security to satisfy margin calls on facilities related to the accused. 

  38. Opes made a number of margin calls during the period covered by the charges on the indictment because of the falling price of GTG shares and, thus, the diminution in the value of the collateral security held by it in respect of the loans advanced to the accused and related entities– on 12 April 2005 for $907,541.25, on 6 February 2006 for $406,047 (subsequently met by a payment of $13,812.41 made from an account in the name of the accused’s son, Jack Jacobson, and the transfer of 9.2 million GTG shares), on 5 May 2006 for $241,889.60, on 8 June 2006 for $101,664.68, on 15 June 2006 for $778,095.84, on 28 July 2006 for $270,772.46 or $778,09594 should GTG shares close at 33 cents, and on 4 August 2006 for $371,000. Chimaera Capital Ltd (see paragraph 47 below) made a margin call on 18 September 2006 for $84,766.64 and on 10 October 2006 for $32,505.04.

  39. When Opes made the margin call on 6 February 2006, it was based on the previous closing price of 36 cents on 3 February 2006.  On 5 May 2006, the closing price of a GTG share was 35 cents and on 28 July 2006 it was 35 cents.

  40. On 15 May 2006, two further Securities Lending and Borrowing Agreements were entered into between Chimaera Capital Ltd (“Chimaera”) and a person and entity associated with the accused. 25 million GTG shares were pledged as security for loans totalling $2.5 million. 

  41. On 16 May 2006 Geoffrey Newing, the son in law of the accused and a named co-conspirator in Charge 1 on the indictment, sent the accused, who was in Switzerland, a fax which read, in part –

    "“On the assumption that funding comes through tomorrow or the next day that can be used to acquire shares, you needed the most appropriate structure to use these funds and manage the market plus also meet all the statutory requirements of the ASX and ASIC…While you no doubt have alternatives I would put the following forward for you to consider. You gift funds to Tammy [a reference to Tamara Newing, nee Jacobson, the daughter of the accused and his alleged co-conspirator in Charges 1 and 41 on the indictment] to enable her to pay down some of the Williams Road mortgage. This gets the funds into someone’s hands who can the buy shares at arms length and without the funds being seen as a loan from you which could potentially create disclosure requirements…Tammy can then draw down the mortgage and acquire shares in GTG. The basis of her share purchase would be an arms length and see her sit in the market and acquire shares at a fixed price. Tammy would watch the shares daily and maintain a floor price…As the share price rises and if funds are needed to repay debts, Tammy is able to sell shares without having any disclosure requirements. Funds can be repaid to you through existing loan agreements you have with Tammy. The benefits of this arrangement are as follows: 1. Funds are not seen as a loan by you to someone else for the purpose of buying shares on your behalf. 2. You have someone watching the market all day who is based in Australia and not charging brokerage other than online brokerage which is minimal…3. You have no disclosure issues… Call me to discuss. Regards Geoff Newing."

    I note that the accused admits receipt of this facsimile, but denies acting upon it.  He says that it was unsolicited, and that he found it to be perplexing.  He further denies any agreement or understanding with Mr Newing or Mrs Newing in respect of trading in GTG shares.  I make no findings regarding the claims made by the accused because it is unnecessary to do so for the purpose of resolving the questions of law reserved by this case stated.

  1. On 17 and 18 May 2006, Chimaera transferred $1.9 million to a Cash Management Account held with St George Bank in the name of the accused. On 18 May 2006, Chimaera transferred $600,000 to a St George Bank Trustee Account held in the name of the accused.  On 18 May 2006, $241,889.60 and on 31 July 2006, $100,000 was transferred from the accused’s Cash Management account to Opes. Opes applied those funds to satisfy the margin lending facility it had previously negotiated with the accused. Between 19 May and 4 September 2006, the accused paid to his daughter, Tamara and/or her husband, Geoffrey Newing, a total of $1.6 million from these accounts, which such sum included the amount of $150,000 referred to in paragraph 64 below.  It was not unusual for the accused to pay money to his family members including his children and grandchildren. 

  2. On 28 June 2006, a representative of Opes sent an email to Geoffrey Newing, stating, inter alia:

    “When I spoke to Mervyn [the accused] last week he indicated the price of GTG would move favourably to reduce his margin requirement. However this has not been the case, the margin call stands today at $270,772.46. Currently GTG is hoovering (sic) around $0.33 which means margin requirement of $778,095.94, should it close at $0.33. We will require payment of at least $270,772.46 to cover today’s exposure…”.

  3. The amount of a margin call by Opes was determined by reference to the price of a GTG share at the close of a day’s trading on the ASX during the currency of the margin loan agreement between the accused and Opes.

  4. At 3.43 pm on 28 June 2006, Tamara Newing instructed Richard Wade of ABN AMRO Morgans Ltd to buy 40,000 GTG shares at 34 cents. These instructions were given by Tamara Newing on behalf of Palamine Pty Ltd a company controlled by her husband Geoffrey Newing. She was authorised to place orders on behalf of Palamine Pty Ltd. In an email sent to Wade at that time, she wrote – “Let’s buy at 34…but lets just wait a few minutes to see if anyone else does”. In an email sent to Wade at 3.58 pm on the same day, Tamara Newing instructed him –“…can we buy 70k at 34.5 please”. In a further email sent to Wade at 4.01 pm, Tamara Newing instructed Wade – “May as well change it to 35 please”.

  1. On 4 July 2006 the GTG share price opened at 35.5 cents and traded in a range between 35 and 35.5 cents.

  2. At 4 pm on 4 July 2006 the last traded price for a GTG share had been 35.5 cents.  The market for GTG was in Pre-Open.  The priority Bid of 6,000 was held by Palamine Pty Ltd. The market for GTG at this time is set out in the table below.  As there were no overlapping BIDs and ASKs, the CSPA would produce no transactions.  Accordingly, with no further activity the share price for GTG would close at 35.5 cents (based on the last traded price).  

Buy Broker

Buy Volume

Bid Price

Ask Price

Sell Volume

Sell Broker

      406

      6,000

      35.0

     35.5

     91,551

     154

      140

      10,000

      34.5

     35.5

     15,500

     144

      144

      38

      34.0

     36.5

     48,000

     140

      638

      50,000

      34.0

     36.5

     50,000

     144

      140

      2,500

      34.0

     37.0

     4,000

     180

      140

      5,000

      34.0

     37.0

     50,000

     180

      140

      500

      34.0

     37.5

     20,000

     140

Multiple (x19)

      577,373

33.5 to 20.0

     38.0 to 60.0

     437,229

Multiple (x20)

  1. At 4:00:02 an ASK for 50,000 GTG shares at a price of 34 cents was entered onto the market by another broker at ABN AMRO Morgans on behalf of an unrelated client. The market for GTG shares following the entry of this ASK is set out in the table below.  In the absence of any other market activity the 4:00:02 ASK would transact in the CSPA at a price of 34 cents, closing the GTG share price at that price.  

Buy Broker

Buy Volume

Bid Price

Ask Price

Sell Volume

Sell Broker

      406

      6,000

      35.0

     34.0

     50,000

     406

      140

      10,000

      34.5

     35.5

     91,551

     154

      144

      38

      34.0

     35.5

     15,500

     144

      638

      50,000

      34.0

     36.5

     48,000

     140

      140

      2,500

      34.0

     36.5

     50,000

     144

      140

      5,000

      34.0

     37.0

     4,000

     180

      140

      500

      34.0

     37.0

     50,000

     180

Multiple (x19)

      577,373

33.5 to 20.0

     37.5 to 60.0

     457,229

Multiple (x21)

  1. At 4:09:10 a BID for 50,000 GTG shares at a price of 35 cents was entered onto the market by Palamine Pty Ltd.  The market for GTG shares following the entry of this BID is set out in the table below.

Buy Broker

Buy Volume

Bid Price

Ask Price

Sell Volume

Sell Broker

      406

      6,000

      35.0

     34.0

     50,000

     406

      406

      50,000

      35.0

     35.5

     91,551

     154

      140

      10,000

      34.5

     35.5

     15,500

     144

      144

      38

      34.0

     36.5

     48,000

     140

      638

      50,000

      34.0

     36.5

     50,000

     144

      140

      2,500

      34.0

     37.0

     4,000

     180

      140

      5,000

      34.0

     37.0

     50,000

     180

      140

      500

      34.0

     37.5 to 60.0

     457,229

 Multiple (x21)

 Multiple (x19)

     577,373

33.5 to 20.0

  1. The Bid entered by ABN AMRO Morgans on the instructions of Tamara Newing by Palamine Pty Ltd at 4:09:10 for 50,000 GTG shares at a price of 35 cents traded as to 44,000 shares via the CSPA process at that price.  The BID had the effect that the BID participated in the CSPA and that the closing price was 35 cents.  Had the balance of the BID (6,000) not been amended (down in price to 34.5 cents) prior to the opening of Normal Trading on 5 July 2006, it would, in the absence of any other market activity, have traded at 34.5 cents.  By amending the balance of the BID from 35 to 34.5 cents, the BID lost priority on the Bid Schedule and, at that time, would no longer trade during the OSPA.  A closing price of 34 cents on 4 July 2006 would have resulted in a margin call from Opes for an amount of $538,011. 

  2. In the absence any other market activity, had Palamine's BID of 50,000 at 35 cents been priced at 34.5 cents it would have acquired 40,000 GTG shares (instead of 50,000) but at 34.5 cents and not 35 cents due to the mechanics of the CSPA.

  3. Alternatively, in the absence of other market activity, had the BID been for up to 33,999 at 34.5 cents, Palamine Pty Ltd could have acquired up to 39,999 at 34 cents as highlighted in the tables below(remembering that there was another Bid for 10,000 at 34.5 cents):

    Principle 1 would apply in determining CSPA, if the e Bid had been 33,999 at 34.5 cents

Price

Cents

Cumulative Buy

Cumulative Sell

Maximum Executable Volume

Minimum Surplus

33.5

282,102

Zero

Zero

Not applicable

34.0

108,037

50,000

50,000

Not applicable

34.5

49,999

50,000

49,999

Not applicable

35.0

6,000

50,000

6,000

Not applicable

35.5

Zero

157,051

Zero

Not applicable

As can be seen from the table above, only the first principle would be necessary as the maximum executable volume (being 50,000) would have been at the eligible price step of 34 cents.

Principles 1 & 2 applied in determining CSPA with Bid 50,000 at $0.35

Price

Cents

Cumulative Buy

Cumulative Sell

Maximum Executable Volume

Minimum Surplus

33.5

298,103

Zero

Zero

Not applicable

34.0

124,038

50,000

50,000

74,038

34.5

66,000

50,000

50,000

16,000

35.0

56,000

50,000

50,000

6,000

35.5

Zero

157,051

Zero

Not applicable

As can be seen from the table above, the Bid for 50,000 at 35 cents resulted in there being three eligible price steps which would have a maximum executable volume of 50,000.  Therefore, the second principle was applied (i.e determining the minimum surplus at these price levels).  As a result the Closing Price, based on the CSPA price, was 35 cents (i.e. a minimum surplus of 6,000).

  1. Later on 4 July 2006, Tamara Newing sent an email to her father (who was in Colorado at the time), the accused, which read:

    – “Sorry to wake you but since I haven’t heard from you…I thought I should call.

    I have had to buy 65k shares today on close, just to keep it at 35 as someone dumped 70k at 34c when the market was in settlement.
    This – coupled with the few yesterday and the 75k I had to buy a couple of days ago, I am now almost completely out of funds once again.

    I know this is frustrating for you but I need direction from you as to how you want me to proceed.

    I can keep doing my job but will need funds within the next 24 hours, otherwise I won’t be able to provide any support…

    Please confirm (or ask Gail to) to my email before the market opens tomorrow so I know what you need me to do.

    I assume that once you re-finance this won’t be necessary so hopefully this is not too far away.

    Love you dad, and sorry this is such a frustrating time. I had hoped July would bring some good news and financial relief for you. Taz xx".”.

    I note that the accused admits receipt of this facsimile, but denies acting upon it.  He says that it was unsolicited, and that he found it to be perplexing.  I make no findings regarding the claims made by the accused because it is unnecessary to do so for the purpose of resolving the questions of law reserved by this case stated. 

  2. The email referred to in the preceding paragraph was endorsed by the accused in his own handwriting – “150k – Taz From MJ (→ Bal =150K)”. The accused admits the handwriting on the email is his, but says that it does not relate to market manipulation. 

  3. As at 4 July 2006, Tamara held bank accounts with National Australia Bank Ltd with credit balances of $410,925.46 and $27,044.95 respectively. 

  4. The transactions that took place on 4 July 2006 took place between buyers and sellers operating at arms’ length and in the absence of any connivance between the buyers and the sellers as to either the price or volume of the transactions.

  5. On 5 July 2006, the accused caused a cheque in the sum of $150,000 to be drawn on the Mervyn Jacobson account with St George Bank payable to Tamara Newing. The cheque was paid into an account held with the National Australia Bank in the name of Tamara and Geoffrey Newing.

  6. On 5 July 2006 the GTG share price opened at 34.5 cents, traded to a high of 35.5 cents, a low of 34.5 cents and closed at 35 cents. During the normal phase of trading on this day there were three price increases in the GTG share price. All were attributable to either Tamara Newing’s trading through Etrade or Palamine through ABN AMRO Morgans. On this day the GTG share price would have closed at 34.5 cents but for a Bid made by Palamine Pty Ltd for 5000 shares at 35. cents.

  7. When Tamara Newing purchased shares in GTG at 4:09 pm on 4 July 2006 her sole purpose in doing so was to ensure that the price of a GTG share was not less than $0.35 at the close of trade on the ASX on that day.  Her motive for doing so was to protect her father’s financial position.  The fact was that a fall in the share price below $0.35 would have resulted in a margin call being made.  That would have then been financially detrimental to her father and, indirectly, to herself. 

  8. Alternatively, and at the very least, Ms Newing’s dominant purpose in purchasing those shares on that day was to ensure that the price of a GTG share was not less than $0.35 at the close of trade on the ASX on that day, thereby avoiding the risk of a margin call being made. 

- - - - -

ANNEXURE C

THE QUEEN V MERVYN JACOBSON

QUESTIONS OF LAW RESERVED FOR DETERMINATION BY THE COURT OF APPEAL

  1. For the purpose of s 1041A of the Corporations Act 2001 (Cth), is the price of a share on the ASX which has been created or maintained by a transaction on the ASX that was carried out for the sole or dominant purpose of creating or maintaining a particular price for that share on the ASX an ‘artificial price’?

  1. Was the closing price of shares in GTG on the ASX on 4 July 2006 an ‘artificial price’ within the meaning s 1041A(c) of the Corporations Act 2001 (Cth)?

  1. Was the price of shares in GTG on the ASX on 4 July 2006 maintained at a level that was ‘artificial’ within the meaning of s 1041A(d) of the Act?

- - - - -


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