Easterday v The Queen - [2003] WASCA 69

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : COURT OF CRIMINAL APPEAL

CITATION: EASTERDAY -v- THE QUEEN [2003] WASCA 69

CORAM: SCOTT J
STEYTLER J
ROBERTS-SMITH J

HEARD: 9-13, 16 & 17 DECEMBER 2002

DELIVERED : 28 MARCH 2003

FILE NO/S: CCA 111 of 1999

BETWEEN: CLARK ERVIN EASTERDAY
Appellant
AND
THE QUEEN
Respondent

FILE NO/S :CCA 112 of 1999

BETWEEN :DEAN EDWARD IRELAND
Appellant
AND
THE QUEEN
Respondent

FILE NO/S :CCA 113 of 1999

BETWEEN :LEONARD LANCELOT IRELAND
Appellant
AND
THE QUEEN
Respondent

Catchwords:

Criminal law and procedure - Appeal by reference from Attorney-General s 140(1)(a) Sentencing Act 1995 - Charges of fraud and conspiracy arising out of sale of salted gold tenement - Failure by prosecution to disclose report into share trading which may have revealed an arguable defence - Evidence of persons/parties who may have profited from fraud not disclosed to appellants - Direction as to lies - Fresh/new evidence

Legislation:

Sentencing Act 1995, s 140(1)(a)

Result:

Appeal allowed

Category: A

Representation:

CCA 111 of 1999

Counsel:

Appellant: Mr T F Percy QC & Mr N J Mullany
Respondent: Mr L P Rayney & Mr M P Bugg

Solicitors:

Appellant: Bostock & Ryan
Respondent: State Director of Public Prosecutions

CCA 112 of 1999

Counsel:

Appellant: Mr T F Percy QC & Mr N J Mullany
Respondent: Mr L P Rayney & Mr M P Bugg

Solicitors:

Appellant: Bostock & Ryan
Respondent: State Director of Public Prosecutions

CCA 113 of 1999

Counsel:

Appellant: Mr T F Percy QC & Mr N J Mullany
Respondent: Mr L P Rayney & Mr M P Bugg

Solicitors:

Appellant: Bostock & Ryan
Respondent: State Director of Public Prosecutions

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

Bradshaw v The Queen, unreported; CCA SCt of WA; Library No 970228; 13 May 1997
Button v The Queen (2002) 25 WAR 382
Carter v Hayes (1994) 61 SASR 451
Chamberlain v The Queen (No 2) (1984) 153 CLR 521
Clarkson v Director of Public Prosecutions [1990] VR 745
Dietrich v The Queen (1992) 177 CLR 292
Easterday, Ireland and Ireland v The Queen, unreported; IAC 118 of 1993; Library No 940233; 6 May 1994
Edwards v The Queen (1993) 178 CLR 193
Gallagher v The Queen (1986) 160 CLR 392
Gilbert v The Queen (2000) 201 CLR 414
Glennon (1994) 179 CLR 1
Green v The Queen, unreported; CCA SCt of WA; Library No 970052; 23 August 1996
Grey v The Queen (2001) 75 ALJR 1708
Ireland v The Queen, unreported; CCA WA; Library No 940233; 6 May 1994
JCG (2001) 127 A Crim R 493
Keane v The Queen (1994) 99 Cr App Rep 1
M v The Queen (1994) 181 CLR 487
McIlkenny v The Queen (1991) 93 Cr App Rep 287
Mickelberg v The Queen (1989) 167 CLR 259
Mickelberg v The Queen, unreported; SCt of WA (CCA), Library No 990056; 12 February 1999
Mraz v The Queen (1955) 93 CLR 493
R v Apostilides (1984) 154 CLR 563
R v Brown (Winston) [1994] 1 WLR 1599
R v Bryer (1994) 75 A Crim R 456
R v Glennon (1992) 173 CLR 592
R v Haddy [1944] 1 KB 442
R v Hanratty [2002] 3 All ER 534
R v Keane (1995) 99 Cr App Rep 1
R v Nguyen (2001) 118 A Crim R 479
R v Paraskeva (1983) 76 Cr App Rep 162
R v Storey (1978) 140 CLR 364
R v Ward [1993] 2 All ER 577
Ratten v The Queen (1974) 131 CLR 510
Re Ratten [1974] VR 201
Shepherd v The Queen (1990) 170 CLR 573
Whitehorn v The Queen (1983) 152 CLR 657
Wilde v The Queen (1988) 164 CLR 365
Zoneff v The Queen (2000) 200 CLR 234

Case(s) also cited:

Cheatle v The Queen (1993) 177 CLR 541
Connell v The Queen (No 6) (1994) 12 WAR 133
Greer v The Queen, unreported; CCA SCt of WA; Library No 940286; 2 June 1994
Maddison v Goldrick [1976] 1 NSWLR 651
Mickelberg v The Queen, unreported; CCA SCt of WA; Library No 979749; 13 March 1998
National Employer's Mutual General Insurance Association Ltd v Waind [1978] 1 NSWLR 372
R v J (1994) 13 WAR 342
Saleam v The Queen (1989) 16 NSWLR 14

SCOTT J: The appellants were charged on indictment with one count of conspiracy to defraud and 10 counts of false pretences in relation to the sale of a goldmining prospect at Karpa Spring.
Karpa Spring is situated near Mount Gibson in the State of Western Australia. The soil in the area in which the tenements were situated was referred to by the experts as being Archaean granite. The significance of a gold find in Archaean granite will be discussed later in these reasons.
The drilling on the Karpa Spring tenements was conducted in five phases. The first phase was undertaken by Cockburn Drilling Co, a company engaged by the appellants. In Phase 1 eight rotary percussion open holes were drilled in positions determined by the appellant Dean Edward Ireland ("Mr Dean Ireland"). No significant gold was located in any of the drill holes in Phase 1. The evidence at trial indicated that any gold located in the Phase 1 drilling samples was consistent with background gold for such an area and of no commercial interest. The significance of background gold will be discussed later in these reasons.
Following the unsuccessful drilling programme in Phase 1, the appellants engaged a different firm of drilling contractors, Colby Drilling, to conduct a second programme called the "Phase 2 programme". As with Phase 1, no geologist was employed to determine the positioning of the drill holes on this phase. Samples were taken from each hole at 1‑metre intervals once sampling commenced. The system for dealing with the samples after they were extracted was that the soil was split so that one quarter was taken for assay purposes, with the remainder being designated as "bulk rejects". The Phase 2 drilling occurred between 10 and 16 March 1990 and the results showed extremely high concentrations of gold. The assay results indicated that there were spectacularly high levels of gold in the Phase 2 samples submitted to the laboratory, making the tenements extremely valuable.
The Crown's case at trial was that the Phase 2 drilling programme did not produce genuine results and that the samples submitted for assay had been contaminated in that gold had been artificially introduced into the samples to account for the spectacular results. The Crown's case was that the appellants had either themselves salted the samples by introducing the gold or at least were a party to it.
Following the receipt of the Phase 2 results, the appellants decided to sell the prospects. On 1 June 1990 an option agreement was entered into for the purchase of the tenements. The option agreement required a further exploration programme to be carried out which was designated as Phase 3. That programme confirmed the Phase 2 results. The Crown's case was that the Phase 3 samples were also salted and that the appellants were a party to the salting which caused the results to be false.
In the end, the purchaser of the tenements paid to the appellants $6,000,000 to purchase their interests in the tenements. The sale of the tenements was complex, but Perilya Mines NL ("Perilya") was the ultimate purchaser.
The purchasers then carried out a further and independent drilling programme known as Phase 4. That programme revealed no significant gold.
Following a complaint to the Company Fraud Squad, the Department of Minerals and Energy conducted an independent investigation and carried out a further drilling programme known as Phase 5. That programme was to test whether there was any significant gold at the Karpa Spring tenements. In the result those drill holes revealed there was no significant gold on the tenements.
In the meantime, the purchaser of the tenements had paid over $6,000,000 in various sums and at various times. The payment of each of those amounts was the subject of a count in the indictment, beings count 2 through to count 9 inclusive. Count 1 on the indictment was a count of conspiracy which encompassed the whole project.
It should be added at this stage that in the course of the original trial evidence was given that the appellant Mr Dean Ireland had successfully panned gold from the bulk rejects from the Phase 2 and Phase 3 samples. There was other evidence at trial to the effect that Dean Ireland had on a number of occasions successfully panned for gold from the soil obtained from the tenements.
Before purchasing the tenements the purchaser arranged for an independent geologist, Mr Whitehouse, to independently examine the Phase 2 and Phase 3 assay results and to supervise a confirmatory drilling programme, which was referred to as the Phase 4 drilling programme. The laboratory analysis of Phase 4 samples was carried out by the same laboratory as carried out the Phase 2 and 3 analyses.
After the option was exercised and the purchase price paid, the purchaser entered into possession of the tenements and carried out its own drilling programme. That programme, Phase 4, was conducted between 15 and 18 August 1990. Again, the drilling contractors were Colby Drilling who had conducted the Phase 2 and Phase 3 drilling programmes. Five reverse circulation holes and six diamond drill holes were completed under the direction of the purchaser's geologist, with Mr Whitehouse acting as an observer. No significant gold was detected in the Phase 4 programme.

The Bunny Milligan Report

Prior to the trial and as part of the investigation of the allegation of salting the appellants had an analysis of phase 2 and 3 material undertaken by geological and mining consultants, Messrs M R Bunny and I M Milligan, who reported on their analysis of the material ("the Bunny Milligan report"). In the summary of conclusions section of that report dated May 1993 the authors say:
"The principal issue arising from our assessment of the Karpa Spring project is clearly whether or not natural phenomena can account for the sequence of findings in connection with the gold distribution. As stated above, we believe this is not possible, and we are of the unequivocal opinion that the Phase 2 and Phase 3 assay and pan concentrate results, and certain of the Phase 1 data, are spurious. We believe these results do not reflect naturally occurring gold mineralisation, and that the elevated gold grades are the consequence of tampering with samples ("salting") at some time concurrent with, or subsequent to, drilling … we are of the opinion that pan concentrates, initial laboratory splits and check assay splits were separately doctored in a manner which clearly required a considerable amount of planning and skilful execution."
It is important to note that the Bunny Milligan report was in the hands of the appellants prior to the trial and, notwithstanding the views of their own experts, the matters were defended upon the basis that the phase 2 and phase 3 samples were not salted.
In cross‑examination Mr Dean Ireland denied that he had read the Bunny Milligan report, although he accepted that he had met Mr Bunny and that Mr Bunny was one of the experts that he had commissioned. Mr Dean Ireland, however, did not accept that he had received information that the phase 2 and phase 3 samples were salted. Those answers in cross‑examination were in stark contrast to the conclusions reached by Bunny and Milligan in the report to which I have referred.
It is important to note that at the trial the appellants (then the accused) denied that any of the drill holes or the samples had been salted. The appellants maintained that all of the assay results were genuine and that none of the samples had been salted or interfered with. That may have been in part because the appellants had by then been paid the purchase price of $6,000,000. Their case at trial, and on the first appeal (this being a second appeal), was that the sale of the tenements was a valid and lawful sale not tainted by illegality and that the assay results were in all respects correct.
In the course of the first appeal in Easterday, Ireland and Ireland v The Queen, unreported; CCA 118 of 1993; Library No 940233; 6 May 1994 Pidgeon J, who wrote the lead judgment, outlined in detail the Crown's case. In particular, his Honour referred to alterations in assay results and their significance. It is not necessary to descend into that degree of detail for the purpose of these reasons. Suffice it to say that Pidgeon J, having pointed out the evidence which supported the Crown's case, concluded that it was properly open to the jury to conclude that the appellants had either directly caused, or were implicated in, the falsification of the results.
After it was revealed that there was no significant gold deposit at Karpa Spring other experts were engaged to examine the prospect and the samples. In the end result, there was evidence to suggest that the gold discovered in the Phase 2 and Phase 3 samples was gold that did not naturally occur in the soil at the Karpa Spring. An analysis of the gold supported the view that it had come from at least two different sources and the inference was open that the gold had an external origin.
In his judgment Pidgeon J examined in considerable detail the evidence supporting the Crown's case and, in particular, alterations to significant documents, together with the disappearance and removal of records and the disappearance of the bulk rejects and assay materials from the Phase 2 and Phase 3 drilling programmes. Again, it is not necessary to descend into detail, but there was evidence that the Phase 2 and Phase 3 bulk reject material which had been under the control of the appellant, Mr Clark Ervin Easterday ("Mr Easterday"), had disappeared so that the bulk rejects could never be reanalysed to determine if the Phase 2 and Phase 3 results were genuine. There was evidence at the trial relating to the attempts made by the purchaser to access the bulk reject material and the steps taken by the appellants to prevent that course. The bulk reject material was never located and the appellants said that it must have been stolen. It is difficult to understand, however, why anybody would steal bulk reject soil of this type.
Similarly, the assay material which had been examined by the laboratory which produced the spectacular results from Phase 2 and Phase 3 was never located. The evidence was that Mr Dean Ireland had recovered that material and had stored it at a wildflower nursery. The material, however, was never located.
In his judgment Pidgeon J concluded that it was open to the jury to conclude that there was no gold above background level in Phase 2 and Phase 3 at Karpa Spring.
It is also important to remember that both at the trial and at the first appeal the appellants maintained that the assay results from Phases 2 and 3 were genuine. In that respect, they sought to explain the results by the presence of "coarse gold" within the samples which may have accounted for the high assay results.
Evidence was also given at the trial that the appellants refused offers of higher prices from other potential purchasers who were interested in buying the tenements. Those offers were rejected, and there was an inference open that the appellants embarked upon a course of action which, although less profitable from their point of view, meant that the falsified results were less likely to be discovered. The sale entered into enabled the appellants to retain control over the tenements.
A number of matters which were raised at the trial will be discussed later in these reasons. The appellants maintained that the Phase 2 and Phase 3 samples could have been contaminated by gold introduced through the oil reservoir of the drilling rig. In addition, it was suggested that gold could have been injected into sample bags containing the drilling samples obtained, thus producing the high readings in the Phase 2 and Phase 3 programmes. Those suggestions were, of course, in the alternative because the appellants maintained at trial that the samples were not contaminated and that there had been no salting of the drill holes. It was only if the jury rejected that evidence that the alternative means of contaminating the samples was suggested by the appellants.
It should finally be mentioned that in the course of the trial there was evidence to suggest that Mr Dean Ireland had entered the laboratory which was conducting the assay sampling at a time when the assays of Phases 2 and 3 were being undertaken. Mr Dean Ireland, however, denied that he was involved in any such act.
At the first appeal it was also suggested that contamination of the samples could have occurred through the acts of a stranger anxious to influence the share market. Reference was made to the lack of security of the samples and to the possibility of gold being introduced through the oil in the drilling rig. That evidence was considered and rejected by the Court of Criminal Appeal.
Justice Pidgeon also referred to other relevant documentation which was not available at trial and, in particular, the loss of Mr Dean Ireland's record book in relation to material from which he had panned gold.
The appellants, having exercised their right of appeal and the appeal having been rejected, sought leave from the Attorney‑General under s 140 of the Sentencing Act 1995 ("the Sentencing Act") for the matter to be referred back to the Court of Criminal Appeal for a further hearing. By a letter of 1 June 1999 the Attorney‑General referred the matter to this Court.
The appellants rely upon three grounds of appeal, namely:
1.The convictions were unsafe and unsatisfactory having regard to evidence that was not disclosed to the Appellants, their solicitors or counsel by the Prosecution prior to or at the time of the trial or the original Appeals to the Court of Criminal Appeal of Western Australia.
Particulars of Non-Disclosed Evidence
(a)Australian Stock Exchange Surveillance Report No 54/90;
(b)The first Karpa Spring Report of Freeman made on or prior to 8 April 1991;
(c)The Karpa Spring Investigation Supplementary Report, Michael John Freeman and Hugh Keith Herbert dated 16th April 1992;
(d)47 pages of handwritten notes made by G J Horsley between 12th February 1993 and 10th May 1993;
(f)Evidence in the possession of the Western Australian Police Service as at December 1990 indicating that there had been undisclosed major share trading in Perilya Mines NL in or about June/July 1990;
(g)Evidence in the possession of the Western Australia Police Service as at December 1990 identifying persons and share trading worthy of further investigation.
2.The convictions were unsafe and unsatisfactory having regard to the fresh/new evidence that has become available since the hearing of the Trial which evidence was not known, disclosed or reasonably available at the time of the Trial or the original Appeals to the Court of Criminal Appeal of Western Australia.
Particulars of Fresh/New Evidence
(a)Evidence of previously undisclosed major share trading in Perilya Mines NL by parties other than and unrelated to the Appellants in or about June/July 1990;
(b)Evidence that prior to the purchase of the tenements, Perilya Mines NL, through its officers, received notice that the samples from the tenements had been "salted";
(c)Evidence that in or about June/July 1990, the market in Perilya Mines NL shares was affected and substantially promoted by representations made by officers of Perilya Mines NL;
(f)Evidence of a new analysis of the scientific data confirming that the "salting" of the sample material from the tenements took place through the drill rig rather than after the sample material left the drill rig;
(g)Evidence of a new analysis of the data from the Phase 4 drilling carried out by Perilya Mines NL in or about July/August 1990 establishing:
(i)That the Phase 2 and 3 samples from the tenements had been "salted";
(ii)The background value of gold for the tenements; and
(iii)That the "salting" had taken place through the drill rig.
(k)Evidence that the "Blue Bag" samples referred to at the Trial:
(i)Were not the samples stolen from Wangara Storage; and
(ii)They were in fact Phase 4 sample material to which foreign gold had been added.
3.In the light of the non‑disclosed evidence and the fresh/new evidence, the "lies" direction given to the jury by the learned Trial Judge was not correct and not in terms required by the High Court of Australia in Edwards v The Queen (1993) 178 CLR 193 and Zoneff v The Queen (2000) 200 CLR 234.
Particulars
(a)The learned Trial Judge failed to draw to the attention of the jury the specific passages of evidence said by the Prosecution to have been lies and to give the jury a balanced summary of that evidence;
(b)The learned Trial Judge failed to direct the jury that in respect of each statement said to have been a lie they could only draw an adverse inference where they were satisfied that:
(i)The statement related to a material issue;
(ii)The statement was, to the knowledge of the maker, false; and
(iii)The only explanation for the making of the statement was a realisation of guilt;
(c)The learned Trial Judge failed to direct the jury that the telling of an untruth inadvertently could not be indicative of guilt.

As can be seen from the grounds of appeal, the appellants rely upon evidence which they contend was not disclosed to them prior to or during the trial. In addition, they rely upon what is said to be fresh/new evidence particularised in ground 2. There is no distinction drawn in the way the ground is formulated between fresh or new evidence, nor was any such distinction drawn in argument. The appellants contend that whether the evidence is properly categorised as fresh evidence or new evidence, a miscarriage of justice has occurred.
At the hearing of this appeal a substantial body of evidence was called by the appellants and by the respondent. It is necessary to examine that evidence in the course of these reasons and it is to that issue to which I now turn.
The appellant, Mr Easterday, testified that after the police inquiry into this matter commenced, he ascertained that a publicly listed company, Newcap Holdings Ltd ("Newcap"), was a substantial shareholder of Perilya shares. Perilya was to be part of the joint‑venture body to develop the Karpa Spring tenements. It followed that the value of Newcap shares would be likely to fluctuate in accordance with the value of the share price of Perilya shares because Newcap was a very substantial shareholder of Perilya shares.
The reason for following the share sales and prices of the Newcap shares was because there was a period of time when Perilya was suspended and during that time Mr Easterday was able to follow the fluctuations of the value of the Perilya shares by following Newcap share sales. Mr Easterday visited the Australian Stock Exchange ("ASX") to ascertain details of Newcap and its shareholders prior to trial. Mr Easterday kept a schedule of the price fluctuation of Newcap shares.
In cross‑examination Mr Easterday agreed that whilst the trading in Perilya shares was suspended by the ASX, he was able to follow the change in the value of Perilya shares by following the Newcap sales. As he expressed it in cross‑examination, during the period of suspension of Perilya "that was the only way anybody could make any money out of Perilya shares".
It follows, in my view, that Mr Easterday was acutely aware of the potential for profit to be made from the purchase of the tenements by the holders of either Newcap or Perilya shares, and his evidence establishes that he took a keen interest in pursuing and recording the shares sales of the shares in each of those publicly listed companies.
Mr Easterday testified that part of his interest in the shares stemmed from the fact that the appellants, as vendors of the Karpa Spring tenements, were being sued following the sale of the tenements and police inquiries were under way. For those reasons he was particularly interested in the fortune of Perilya and, indirectly, Newcap. Mr Easterday even went so far as to ascertain from the ASX the top 20 shareholders of Newcap which were listed in a schedule. It is clear from that document, in my view, that Mr Easterday was anxious to ascertain the identity of the substantial shareholders in Newcap to determine the profit made by them as a result of the rise in the value of Newcap shares following the purchase of the tenements.
In my view, Mr Easterday's evidence and cross‑examination establishes that he was aware and focused upon the value of Newcap and Perilya shares following the sale of the tenements. He was at some pains to ascertain the identity of the person or party to have profited from the purchase of the tenements during the period when the value of the Perilya shares escalated. The significance of that aspect of the case will become apparent later in these reasons, but, in my view, Mr Easterday's evidence clearly establishes that he was aware of the significance of the share trading in Perilya and Newcap shares prior to the commencement of the trial.
The trial transcript makes it apparent that the issue of motive was an important issue at the trial. The Crown's case was that the appellants salted the mine because they benefited to the extent of $6,000,000 from the sale of the tenements. In closing the Crown's case, counsel for the prosecution said to the jury:
"The motives powerfully - powerfully - reside in the accused and every road, every crooked road here, leads back into that dock, doesn't it - every road? I mean, there are 6,000,000 reasons and they're suggesting to you, "Oh no." They think we came down with the last shower. This question of motive is absolutely relevant for your consideration and the fact that millions of dollars were involved, I would suggest to you, is motive enough.
My learned friend, in opening at least, suggested that others had motives. There was reference in the evidence, you recall, about Mr Unsworth doing share manipulations; no basis for that, but there we are. There is another throwaway, but there simply aren't others with motives."
The evidence before this Court makes it clear that the prosecution was in possession of a report (hereinafter referred to as 54/90) at the time of the trial or, at the very least, had access to it. The prosecution would have been aware from report 54/90 that others apart from the appellants had profited substantially from trading in Perilya shares. In that context, the closing submissions of counsel for the prosecution set out above may have misled the jury into thinking that the only party or parties to have profited from the salting of the tenements at Karpa Spring were the appellants. That, in my view, clearly was not so. Report 54/90 will be discussed in detail later in these reasons.
The appellants also rely upon two affidavits of the appellant Dean Edward Ireland dated 8 December 1999 and 2 June 2001. The Crown did not seek to cross‑examine Mr Dean Ireland and the contents of those two affidavits, subject to the objections, have been taken into account. The admissible portion of those affidavits, in my opinion, add little to the appellants' case.
The next witness for the appellants was Robert Fowler ("Mr Fowler"), a retired prospector who was working for Perilya in 1990 when these transactions took place. Mr Fowler had the opportunity of examining the Karpa Spring tenements before the tenements were purchased. He described the ground in which the drilling was conducted as "hungry granite". In his view, the area was not worth sampling. He says in his evidence that he made clear to the representatives of Perilya that in his view the tenements were valueless.
In relation to Mr Fowler's evidence, it should be noted that there is no ground of appeal which suggests that Perilya was not induced to enter into the purchase of the tenements by reason of the misrepresentation of the appellants. Mr Fowler agreed that he was one of the people who profited from the increase in the value in Perilya shares through an exploration company in which he was involved. He denied having any involvement in the salting of the samples.
The next witness for the appellants was Roger Townend ("Mr Townend"), a geologist and consulting mineralogist. Mr Townend's evidence confirmed that the Phase 2 and Phase 3 samples had been salted. He was not cross‑examined. As I have earlier indicated, it is not in issue in this appeal that the Phase 2 and Phase 3 samples returned high gold contents because of salting and, as I have emphasised throughout these reasons, that is a marked variation from the position of the appellants at trial where the issue of salting was strongly contested.
The next witness for the appellants was Michael McGowan ("Mr McGowan"), a chartered professional engineer. Mr McGowan swore a number of affidavits in relation to this appeal.
Mr McGowan's involvement with the appellants commenced in 1997 following a discussion with the appellants. Mr McGowan became interested in ascertaining how a drilling rig worked and how samples could be contaminated.
Mr McGowan has many years' experience in the mining industry in varying capacities and, in my view, was qualified to speak in the areas outlined in his affidavits.
It is clear from the evidence of Mr McGowan, in my view, that he became obsessed with determining how the Phase 2 and Phase 3 samples from Karpa Spring could have become salted. Mr McGowan went to a great deal of trouble and conducted experiments to determine how the salting could have taken place. In the end, he concluded that the most likely way was via gold contamination of the grease used to join the drilling rods. Not only did Mr McGowan explain how that occurred, but he also made a demonstration film showing how the drilling rods were connected to each other and how grease was used in relation to each drill rod when it was connected.
Mr McGowan made it clear that only a small amount of gold would be needed to contaminate the drill rod grease so as to produce the spectacular readings from the Phase 2 and Phase 3 drilling. He concluded that the most likely way for the fraud to have occurred was by contamination of the drill grease. The effect of the contaminated drill grease would be to introduce gold into the samples in the drill hole. In addition, however, one would expect to find some smearing of gold in the drill hole as the drilling rods penetrated the ground.
It is clear, in my view, that Mr McGowan has become obsessed with the Karpa Spring fraud to the extent that he is writing a book on the subject. A perusal of one of the drafts indicates that Mr McGowan had a firm belief that the appellants were not involved in the salting and that they were victims of a complex fraud perpetrated by others. The cross‑examination of Mr McGowan revealed that his evidence cannot be relied upon as objective and that he has based his evidence on his entrenched belief that the appellants are not guilty of salting the samples which he believes was perpetrated by others. Mr McGowan forwarded a draft copy of his book to the Attorney‑General in support of the appellants' petition for a rehearing before the Court of Criminal Appeal. He referred to that draft copy of the book as "The Karpa Sting".
As will become apparent in the course of these reasons, Mr McGowan has become a driving force in assembling the appellants' experts and in formulating the questions which he had the experts answer. As will also become apparent, some of the questions were formulated on a misunderstanding of evidence at the criminal trial and, in my view, the questions were biased in such a way as to seek to advantage the appellants.
I do not accept Mr McGowan as an independent witness and I do not accept that his evidence is objective and impartial and the kind of evidence that can be relied upon. I am further of the view that, in formulating the questions for answer by the appellants' experts, Mr McGowan has biased the questions so as to try and advantage the appellants. That will become apparent when I refer to the evidence of the analyst, Graham John Horsley ("Mr Horsley"), who examined the Phase 5 samples and reported on them.
In my view, Mr McGowan misinterpreted Mr Horsley's evidence and his notes in a totally inappropriate way. He was aware that Mr Horsley did not agree with his interpretation of the notes of analysis of the Phase 5 samples. Notwithstanding that, Mr McGowan presented the questions to the experts on the basis of his interpretation of Mr Horsley's notes, knowing that Mr Horsley not only disagreed with that interpretation, but had provided a draft affidavit to the appellants' solicitors in which he made it clear that such an interpretation was incorrect.
There are a number of aspects of Mr McGowan's evidence which, it seems to me, should be accepted. In particular, having viewed the evidence overall, I am of the view that it is at least a plausible theory that the contamination of the Phase 2 and Phase 3 samples occurred through the drill grease used on the drill rods. In addition, I accept Mr McGowan's contention that had more sensitive sampling been carried out by the Department of Minerals and Energy when the Phase 5 sampling was done, it could have provided confirmatory evidence that the salting occurred in that way. In my view, however, that is not a valid criticism of the way in which that sampling was done, because it is to be recalled that, at least at that stage, the issue was not how the salting occurred but whether it occurred. In setting the parameters of the gold detection level, the Department of Minerals and Energy was concerned to determine whether the gold content in the samples was in the nature of background gold or whether the Phase 2 and Phase 3 results were genuine. In my view, the Phase 5 sampling was appropriately conducted with that aim in mind.
At the Phase 5 sampling stage there was no suggestion that the salting had occurred through the drill grease so that there was no need to conduct the more sensitive test which may have confirmed that the salting occurred in that manner.
Whilst criticism is made by Mr McGowan and by counsel for the appellants of the gold detection level used in the Phase 5 sampling, in my view that criticism is unwarranted, bearing in mind the purpose for which that sampling was done.
As I have also indicated, Mr McGowan's misconceived views of Mr Horsley's notes resulted in inappropriate questions being asked of the appellants' experts which, in turn, considerably diminished the value of the answers. As I have already said, that aspect of the appeal will be discussed later in the course of these reasons.
Finally, dealing with Mr McGowan's evidence, in my view it is clear that prior to the presentation of the appellants' petition which resulted in the reference by the Attorney‑General, Mr McGowan had formed a view as to the innocence of the appellants. Attached to the petition was an affidavit which included part of his draft book and in a chapter headed "Who Dunnit" the following is written:
"This is a massive injustice since they are innocent. The fact that this could occur demands correction by the legal system. Can it do this? Will it fix this?
What happened to the prospectors could happen to anyone. They are ordinary men trapped by circumstances. They have shown courage and fortitude through this. I think they are men of stature. They deserve justice. Can the system provide justice? For me, the system is now on trial. The facts have been established."
In the same chapter of the draft book prepared by Mr McGowan he suggests a conclusion as to the identity of the person involved in salting the samples and suggests a complex fraud involving others.
It is, in my view, an inevitable conclusion that Mr McGowan lacks objectivity and that because of preconceived views, his evidence is biased and unreliable, except in the areas that I have indicated.
The next witness for the appellants was Richard Harold Mazzuchelli ("Mr Mazzuchelli"), a geologist and geochemist whose evidence related to the appropriate background level for gold at Karpa Spring. In particular, Mr Mazzuchelli considered that the respondent's expert, Mr Freeman, in using a level of less than 0.1 grams per tonne, used a detection level that was inappropriate for background level. The reason for that, Mr Mazzuchelli said, was that the more appropriate figure for the background level of gold at Karpa Spring was 2.35 ppb, a level 40 to 50 times less than the figure of 0.1 grams per tonne used by the respondent's witness, Mr Freeman. The background level of 2.35 ppb was a figure published by Saager and Meyer for background level of gold in granitoid rocks in South Africa.
The point put on behalf of the appellants is that a background level of less than 0.1 grams per tonne used by Mr Freeman was not appropriate. The appellants contend that it is meaningless and of no assistance where the true value is closer to 2.35 ppb. The significance of the correct background level of gold at Karpa Spring is that if the contamination which caused the salting of the drill holes was via the drill rod grease, then one would expect to find smearing where the grease came into contact with the granitoid rock. Smearing of that sort, according to the experts, would produce a reading of less than 0.1 grams per tonne, but greater than 2.35 ppb. Accordingly, if an appropriate background level of 2.35 ppb had been used, then smearing through the rod grease could be identified. By using the figure of 0.1 grams per tonne, there was no possibility of identifying smearing.
It is worth repeating, however, that so far as the samples taken by the Department of Minerals and Energy were concerned in Phase 5, the samples were taken for the purpose of establishing whether or not salting had occurred. Those samples were not taken for the purpose of determining the method by which the salting occurred, if indeed it had. Accordingly, for the purpose for which it was being used, the level of 0.1 grams per tonne was entirely appropriate.
Whilst I accept that using the Saager and Meyer level for background value in Archaean granitoid rock would have been more useful than the figure of 0.1 grams per tonne actually used, at the end of the day, in my view, the difference is not of any particular significance.
The next witness called by the appellants was Peter Campbell Robinson ("Mr Robinson") who gave evidence via video‑link from New Zealand. Mr Robinson is a geologist, highly qualified, who worked for Perilya at the time at which that company was interested in purchasing the tenements at Karpa Spring. Mr Robinson had physically examined the tenements and when advised of the results of the Phase 2 and Phase 3 drilling, realised that the results did not appear genuine. He testified that at the time he spoke to the exploration manager for Perilya, Mr Paul Cranney ("Mr Cranney"), and told him that the samples "must be spiked", by which he meant that they must have been salted. Mr Robinson said that his education and experience in the industry and the area was such that gold in those quantities would not occur naturally in such samples.
The evidence both at trial, and before this Court, makes it clear that prior to the purchase of the tenements at Karpa Spring Perilya was aware of the possibility that the phase 2 and phase 3 assay results might not be genuine. That, as I have said, was made clear to Mr Cranney before the purchase was finalised.
In addition, it should be mentioned that by a media release of 12 July 1990 which was released to the ASX Perilya referred to the drilling results in the following terms:
"Perilya today has released details of drilling results from the Karpa Spring gold prospect located 10km north‑east of the Mt Gibson gold mine. The assay results have returned high grade gold mineralisation in 11 of the 19 drill holes completed on the property.
The best results from the reverse circulation drilling programme include:

Hole

Interval
(meters)

Width
(meters)

Grade
(g/t Au)

RCH2

15-48

    33

14.68

RCH3

51-75

    24

10.08

All assays cut to

RCH6

27-65

    38

22.44

30 grams Au/T

RCH7

48-63

    15

28.06

RCH11

16-35

    19

20.64

also

38-68

    30

13.95

RCH12

19-50

    31

11.98

The mineralisation appears to be open in all directions with 8 out of the 11 holes ending high grade gold mineralisation.
Perilya Exploration Director Warren Batt said that although the Karpa Spring Project was at a very early stage of evaluation, it held a very high potential to host a substantial gold mineralised system."

In the light of the information which had been provided to Mr Cranney prior to the acquisition of the Karpa Spring tenements, it is surprising that such a release was made in an unqualified form. The appellants contend that this lends support to the view that the behaviour of the directors and officers of Perilya should be viewed with suspicion. That suspicion, on their argument, is compounded by the revelation report 54/90 which reveals the nature and extent of the profit made by parties connected with Perilya from the sale of Perilya shares.

As I have already said, there is no ground of appeal which suggests that Perilya was not induced by the Phase 2 and Phase 3 assay results to enter into the purchase contract and, accordingly, in my view, there was no particular importance to be attached to that evidence in the context of this appeal.
The following witness, Alan Edward Marshall ("Mr Marshall"), a consultant geologist and geochemist, was directed towards the answers that he gave as one of a group of experts to the questions formulated by Mr McGowan for consideration by the experts.
As I have already said, the questions were formulated by Mr McGowan and some of those questions were based upon a wrong interpretation of Mr Horsley's notes. As a consequence, the answers to the questions were at best, in my view, of limited value. Whilst I accept Mr Marshall as an expert and a truthful witness, his evidence, for that reason, was of limited value.
I would make similar comments about the evidence of John Stuart Ferguson Dunlop, a mining engineer who was similarly used by the appellants for the purpose of providing expert answers to the questions formulated by Mr McGowan.
The following witness, Kaipillil Vijayan ("Dr Vijayan"), gave evidence as a statistician employed by the Mathematics Department of the University of Western Australia.
The evidence of Dr Vijayan related to the establishment of background level for gold at the Karpa Spring tenements following from the analysis of the Phase 5 samples. As I have already commented, because of the high detection level of 0.1 grams per tonne, most of the results of the analysis produced a nil reading. That, of course, only reflected the fact that gold was not detected at a level above 0.1 grams per tonne and did not indicate any gold level detected. As a result, there was a vast number of 0.00 results from the sampling. That in turn meant that some of the tests applied by the experts to the sample results were mathematically unsustainable.
As I have said, the true background level of gold in the tested area of the tenements at Karpa Spring probably cannot be determined on the evidence placed before this Court. That having been said, however, looking at the evidence in its totality, in my view, the most likely method by which the Phase 2 and Phase 3 samples were salted was via the drill rig. The mathematical analysis of the Phase 5 drilling, whether valid or not, is of no particular relevance in reaching that conclusion.
Again, Dr Vijayan's evidence was largely directed towards the answers provided to the questions prepared by Mr McGowan, some of which related to the mathematical analysis of the data obtained.
The appellants' next witness was Kenneth Steele ("Mr Steele"), a drilling consultant. Mr Steele had originally considered that the most likely method of contamination was via oil contamination through the drilling rig, but after further analysis of the data he said that it was equally possible that the contamination could have arisen through the drill rod grease. Mr Steele had conducted experiments using contaminated drill oil and concluded that the salting could have occurred in that way. No equivalent tests had been conducted by him in relation to contamination of drill rod grease, but he was unable to discount the possibility that the contamination could have occurred in that way.
The next of the appellants' witnesses, John Adrian Watts ("Mr Watts"), an experienced geologist and geological consultant, was not directly involved in the mining operations at Karpa Spring, but essentially became involved in this matter to assist the appellants to obtain the release of funds for the purpose of conducting testing on the tenements prior to their trial. In my view, there was little relevance in Mr Watts' evidence so far as these appeals are concerned.
The appellants also called Mr Horsley, a scientific officer employed by the State of Western Australia in the forensic science laboratory in Hay Street, East Perth. Mr Horsley, under the supervision of his superior, Dr Hugh Herbert, prepared an analysis of the Phase 5 drilling samples.
In the course of undertaking that analysis Mr Horsley prepared 47 pages of notes.
The starting point of Mr Horsley's work was to have the material from the Phase 5 samples prepared in what were called "polished mounts". As Mr Horsley explained it, material from the samples was set in plastic and, via a process of cutting and polishing, a cross‑section of mineral grains was made suitable for scanning by electron‑microscopy. Mr Horsley obtained 58 polished mounts for analysis, although he said there were many more prepared. Each of the polished mounts had prefixes which, for the most part, corresponded with drill holes at Karpa Spring.
In the course of his analysis of the polished mounts Mr Horsley noted that particles of gold had fallen onto the surface of the polished mounts. That gold was not part of the sample or part of the material within the polished mount, but contamination that had occurred in the laboratory by way of specks of gold falling onto the surface of the polished mounts. Mr Horsley recorded the contamination on the polished mounts in his notes.
It is important to note that gold observed on top of the polished mounts was not part of the sample, but contamination probably from within the laboratory.
Mr Horsley was adamant that the gold on top of the polished mount in each case was not part of the sample. In the course of his evidence, Mr Horsley explained from his notes how he reached the conclusion that the gold contamination was not part of the sample.
It also should, however, be mentioned that there was some gold in each of the polished mounts and Mr Horsley reported the gold identified.
It would appear from Mr McGowan's evidence that he visited Mr Horsley's laboratory and interviewed him concerning his notes and findings. From that, Mr McGowan concluded that the specks of gold found on top of the polished mounts were in fact contamination within the polished mounts. In reaching that conclusion, in my view, Mr McGowan was undoubtedly wrong. The significance of that finding is that Mr McGowan, in formulating his questions for the experts, made the assumption that the gold contamination on the surface of the mounts was material within the mounts.
In my view, not only was Mr McGowan incorrect in formulating his questions on that basis, but, more importantly, he was aware of the fact that Mr Horsley had refused to sign an affidavit which he, Mr McGowan, had instructed solicitors to prepare reflecting this wrong conclusion. Mr Horsley had made clear to Mr McGowan that the affidavit was inaccurate and not sufficiently detailed. Mr Horsley prepared his own affidavit and submitted it to the appellants' solicitors as an affidavit that he was prepared to swear. That affidavit made it quite clear that the contamination on top of the mounts was not part of the sample. In my view, Mr McGowan was well aware of the draft affidavit and chose to prepare the questions for the experts based upon what he then knew was a misunderstanding of Mr Horsley's notes. The effect was to give an elevated level of gold within the polished mounts and a false basis upon which the experts were asked to consider the questions that Mr McGowan had formulated. As a result, as I have already indicated, some of the answers given by the experts, when viewed in that light, were misleading and have to be discounted. That is not to say that some gold was not present in the polished mounts. Mr Horsley's notes make it clear that there were gold particles included in the polished mounts, as well as contaminating the surface.
I accept Mr Horsley's evidence was that he told Mr McGowan after he saw the draft affidavit that the gold contamination on top of the polished mounts was not part of the sample, but Mr McGowan refused to accept his answers in that regard. No doubt the reason was that it did not suit Mr McGowan's theory and the conclusions that he had already reached. Mr McGowan insisted that his questions were formulated on the basis of Mr Horsley's admissions to him when first orally interviewed, and he insisted that he had taken meticulous notes of that interview. In that interview, however, Mr Horsley had said that he did not recall the specific examination of the polished mounts. His subsequent affidavit, however, made it quite plain, as Mr McGowan would have known, that the contamination was on the surface of the polished mounts and not part of it. Significantly, as well, I accept Mr Horsley's evidence that Mr McGowan tried to pressure him to sign an affidavit which Mr McGowan had prepared and which Mr Horsley was not prepared to sign because it was inaccurate. I accept Mr Horsley's evidence that he found Mr McGowan aggressive and intimidating and that Mr McGowan was not prepared to accept or listen to his explanation of the comments concerning the notes.
It is also significant that after Mr Horsley sent to the appellants' solicitors, Bostock and Ryan, the draft affidavit that he was prepared to sign, the document was never returned to him for execution. No doubt the reason was that it was inconsistent with the thesis that Mr McGowan wished to present. Consistent with Mr McGowan's theory that the salting had occurred through contamination of the drill grease, it suited Mr McGowan to say that the contamination on the polished mounts was part of the sample material rather than external contamination.
I would indicate that I accept Mr Horsley's evidence as accurate and reliable and I prefer his evidence in this area to that of Mr McGowan.
The next part of the appellants' case concerned an investigation into the trading in Perilya shares undertaken by the ASX. This evidence was largely heard in camera because of rulings earlier made concerning the confidentiality attached to report 54/90 prepared for the stock exchange by one of the appellants' witnesses, Debbie Robertson‑Dunn ("Ms Robertson‑Dunn"). That report was prepared under the supervision of James Hunter Berry ("Mr Berry"), the national manager for surveillance with the ASX.
The appellants have had access to the report 54/90 for some time on the basis of confidentiality undertakings. The evidence called by the appellants arises out of that report.
Amongst other things, the ASX investigation was directed towards ascertaining if there was evidence to support an allegation of insider trading in Perilya shares contrary to s 128 of the Securities Industry Act1975.
It is common ground that no persons or companies were prosecuted following the report.
Mr Berry testified that the reason for the report was that after it was ascertained that the Karpa Spring tenements had been salted, the ASX gathered information from stockbrokers as part of the investigation into the alleged fraud which caused the Perilya share price and sale volume to substantially increase.
The report identified possible offences and persons or parties who may have been involved in insider trading. The report was sent to the Western Australian Fraud Squad and the National Companies and Securities Commission and, as I have said, in the end result no charges were preferred.
The second witness called by the appellants on this issue, Ms Robertson‑Dunn, was at the relevant time the officer who conducted inquiries into the share trading and who identified from that trading the list of persons who were under suspicion for insider trading. In particular, Ms Robertson‑Dunn identified a person associated with a drilling company who was also the proprietor of Colby Drilling, the company that had conducted drilling at Karpa Spring. That person, however, on the information available, had not profited from the purchase and sale of Perilya shares.
It is clear from Ms Robertson‑Dunn's evidence that the ASX had suspicions and concerns in relation to the people identified in the report and that although charges were not laid, suspicion remained.
From the appellants' point of view, there are two matters of consequence flowing from report 54/90. The first is that in his evidence at trial Detective Sergeant Zappa was asked:
"Did you make any search with the Australian Securities Commission share trading of Perilya shares around May and June of 1990?---As you can see from the transcript of our conversation Detective Gregson actually spoke the words but possible stock market manipulation was a concern.
…
As of 1 August did you go and investigate with the Australian Securities Commission as to the share movements in Perilya?‑‑‑Yes. I developed a liaison with the Australian Stock Exchange.
Did you ascertain who it was who was buying and selling large amounts of Perilya shares?---I was told certain things by the Australian Stock Exchange but the final word was that they were not concerned as to the stock market movements.
Did you obtain any information?---Yes; they reported.
…
You subsequently became aware in relation to that - about the persons who had - or entities which had holdings of Perilya - you subsequently became of aware of that, did you?‑‑‑We were advised by a report as to what stock market trading there was."
The evidence of Ms Robertson‑Dunn establishes that the ASX was very concerned about stock market movements and had identified certain persons and/or entities considered worthy of further investigation.
It was, in my view, inaccurate for Detective Sergeant Zappa to say that the ASX was not concerned as to the stock market movements.
Counsel for the appellants at trial did not call upon the prosecution to produce the report referred to by Detective Sergeant Zappa and it is common ground that that report was never produced to the appellants or their legal advisers prior to its release following orders made by this Court.
The second aspect of the report which is of significance is that had it been made available to the appellants at or before trial, they could have investigated parties who had sold and/or purchased Perilya shares to identify those who had profited from the increase in the value of those shares following the purchase of the tenements. Depriving the appellants of the report meant that they did not have the opportunity of conducting that investigation. The trading in Perilya shares referred to in report 54/90 is analysed in detail in the judgment to be published by Steytler J. I agree with his Honour's analysis and conclusions on this aspect of the appeal. In view of the fact that by order of this Court this material was treated confidentially, and evidence concerning the report heard in camera, it is not necessary to discuss the matter further.
Whilst report 54/90 has recently been available to the appellants, it is clear from the evidence that to try and track down the vendors and purchasers of Perilya shares in 1990 is now impossible. The trail is now cold and inquiries have proved fruitless. That, of course, may not necessarily have been the case had the investigation been done at or about the time of the trial when these transactions were more recent and when appropriate records may have been available. That view was expressed by one of the appellants' witnesses, Kenneth William Brownlow.
The legal responsibilities of the prosecution in relation to disclosing information of this sort and the significance of the failure of the prosecution to do so in this case will be discussed later in the course of these reasons.
Ms Robertson‑Dunn, in her evidence, accepted that after report 54/90 was provided to the ASC, the ASC concluded that there were no further investigations to be conducted and she accepted that, so far as she was concerned, that was the end of the matter. That, of course, was very different from saying that the ASX was not concerned about the stock market movements, which, as I have earlier outlined, was the testimony of Detective Sergeant Zappa.
The respondent to this appeal called a number of witnesses, the first of whom was John Edward Vann ("Mr Vann"), a consulting professional geologist and geo‑statistician. In dealing with his evidence, I accept that Mr Vann, as a geo‑statistician, was better qualified to interpret geo‑statistical data than Dr Vijayan who, although an eminently qualified statistician, was not, and did not purport to be, a geo‑statistician. The evidence of Dr Vijayan as to the mathematical significance of the analysis data is accepted, but its significance, in my view, was more clearly and cogently explained by Mr Vann.
Mr Vann accepted that there was no evidence to establish the true background level of gold at Karpa Spring. In addition, because of the "spotty" nature of the gold occurring in the sampling from Phase 4, a re‑analysis of the same sample could produce a different result. As a consequence, as Mr Vann expressed it, the "repeatability" of testing of the samples was very poor. As a result, Mr Vann concluded that the data from Phases 4 and 5 of the drilling at Karpa Spring was not suitable to determine the background level of gold.
In the end result, Mr Vann's evidence was that because it was not possible to determine the background level of gold at Karpa Spring, it was not possible to determine whether there was smearing in the drill holes consistent with the salting occurring either through the drill rig oil or the drill rod grease.
As I have already said, notwithstanding that evidence from other evidence in this case, in my view, a plausible possibility is that the contamination of the samples occurred either through the drill rig oil or the drill rod grease.
The respondent also called Paul Andrew Morris ("Mr Morris"), the chief geochemist of geological survey at the Department of Minerals and Energy in Western Australia, a further highly qualified geochemist. Mr Morris was one of the authors of the publication by Morris and Sanders concerning the background level of gold in South Africa.
Mr Morris made it clear that it was not possible to translate the published findings relating to South Africa to Karpa Spring. Mr Morris evaluated the correlation between the results from the assayed samples of the Phase 3 drilling ("EF samples") and the results from the check or CK samples from the same source coming from the bulk rejects. Mr Morris's evidence was that there was good correlation within the EF samples at the same depth, but there was no good correlation between EF samples and CK samples at the same depth. Mr Morris's evidence was that if the salting had occurred through the drilling rig, he would expect there to be some degree of correlation between the EF and the CK samples and in this case the correlation was not there. In the end result, Mr Morris's evidence was that because of the poor correlation, he was of the view that the data led to the conclusion that the addition of gold to the samples must have taken place after the samples had left the ground. That, of course, was inconsistent with the evidence of Mr McGowan that the salting occurred through the drill rod grease.
As I have already said, however, in my view, notwithstanding that evidence, a plausible conclusion is that the contamination occurred either through the drill rod grease or the oil in the drill rig.
Mr Morris was strongly challenged in cross‑examination in relation to his statistical analysis of the data and what was said to be inconsistency between his analysis and the evidence of Dr Vijayan. Whilst I accept Mr Morris's evidence in the area of geo‑statistics as being preferable to that of Dr Vijayan, the evidence needs to be looked at globally. As I have said, in my view, notwithstanding Mr Morris's conclusion, on balance I have come to the view that a credible method by which the samples could have been salted was through the drilling rig either via the drill rod grease or the drill rig oil. That does not exclude the possibility that the samples may have been contaminated after they left the drill rig by injection into the sample bags or in some other way.

The respondent also called as a witness Michael John Freeman ("Mr Freeman"), a geologist with the Department of Minerals and Energy in Western Australia, the person responsible for overseeing the drilling of the Phase 5 sampling at Karpa Spring. Mr Freeman, and his report, has been referred to earlier in these reasons.
Mr Freeman's evidence was that he formulated the programme to test sufficient sites to be confident of the likely tenor of mineralisation in the Karpa Spring tenements and he used techniques which would give the highest quality results practicable within time and cost constraints.
Mr Freeman gave evidence that the programme that he conducted was "most inappropriate" to determine background levels of gold at Karpa Spring.
Mr Freeman testified that one type of drilling conducted in Phase 5 was to overdrill pre‑existing holes (in other words, to overdrill a larger hole over the earlier holes) to obtain material from the outside perimeter of the earlier holes. The other was to excavate in proximity to the earlier drill holes. The excavations were called "costeans". The purpose was to check the assay results of the Phase 2 and Phase 3 sampling by obtaining samples from as near as possible to the pre‑existing holes. Mr Freeman concluded that the results from his Phase 5 drilling suggested that the contamination did not occur through the drill rig because, had it done so, one would have expected to find a higher gold grade in close proximity to the existing holes.
Mr Freeman conducted his testing on the basis that the background level of gold at Karpa Spring was less than 0.1 grams per tonne, and this is not disputed. As discussed earlier, that testing level was not appropriate to detect smearing from drill rod grease or oil contamination. The drilling programme conducted by Mr Freeman resulted in the obtaining of 198 samples for analysis and three analyses were done on each of those samples, making a total of 594 results. Of those samples, only 39 revealed gold at or above the detection level of 0.1 gram per tonne. That analysis inevitably led to the conclusion that the Phase 2 and Phase 3 samples were salted. However, the results were, as I have said, of little value in determining how the salting occurred.
In cross‑examination Mr Freeman was unable to exclude the possibility that the salting could have been done via the rod grease.
Mr Freeman also testified that at the request of the prosecution he tested the possibility of gold being injected into the sample bags via a syringe in order to produce the spectacular results found from the Phase 2 and Phase 3 samples. Mr Freeman said that he did not have access to gold for the purpose of conducting his experiment and so he used lead filings. He accepted, however, that he could have obtained gold for that purpose had he chosen to do so. He also accepted that lead was 50 per cent less dense than gold. The purpose of the experiment was to see if lead could be injected into the sample bags. In conducting the experiment, he used lead samples which were approximately one millimetre in size, although he knew that in the Phase 2 and Phase 3 samples gold of up to two millimetres had been detected. The purpose of the experiment, he said, however, was to determine whether or not that contamination method was a possibility.
Using the hypodermic syringe and with a needle of a bore of approximately two millimetres, Mr Freeman ascertained that contamination via syringe was a possibility. That, however, did not mean that gold of up to two millimetres could be injected using a needle with a bore of two millimetres because it was likely that the needle would become clogged.
Mr Freeman accepted in cross‑examination that he had prepared an earlier draft report which he had later modified after discussion with his supervisor. In the draft report Mr Freeman had referred to a background level of gold at Karpa Spring in the order of .002 to .015 parts of gold in a million parts of rock. In the final report, however, he deleted that reference and used the level of less than 0.1 ppm which, although accurate, he agreed was less meaningful. The draft report was not disclosed to the appellants prior to trial.
Having dealt with the facts and the findings of fact, it is then necessary to return to the grounds of appeal set out earlier in these reasons. Ground 1 of the grounds of appeal makes reference to the evidence which the appellants contend was not disclosed to them or their solicitors prior to the trial. It is not in issue that each of the six items of evidence referred to under the particulars in ground 1 were not disclosed to the appellants.
Had the appellants been told of the contents of report 54/90, there is little doubt that it would have been a fertile area of cross‑examination of Detective Sergeant Zappa in relation to the evidence that I have outlined earlier in these reasons: Grey v The Queen (2001) 75 ALJR 1708 per Gummow CJ and Callinan J at 1712 [18].
In addition, the revelation of the contents of that report in a timely fashion may have enabled the appellants to conduct inquiries to ascertain the identity of persons or parties who had profited from the rise in the value of Perilya shares. As I have already indicated, many of the transactions occurred through nominee companies and through financial institutions so that it is now not possible to identify the beneficial purchasers and vendors of the shares concerned. Whether that would have been possible had the report been disclosed in a timely fashion is not known, but there is evidence which I accept that the appellants are now in a position where that line of inquiry cannot be profitably pursued. The consequence of the loss of that line of inquiry is that the appellants are now unable to put before this Court material that may otherwise have been available on this aspect of the case. What that evidence may have been, if any, is impossible to say, but it was material that may have affected the course of the trial and influenced the outcome of it: Bradshaw v The Queen, unreported; CCA SCt of WA; Library No 970228; 13 May 1997 per Owen J at 2; Button v The Queen (2002) 25 WAR 382 at 392.
In this case, in my opinion, it does not greatly matter whether the evidence can properly be described as fresh or new evidence. The question is whether the material available to the Crown at the time of the trial but not disclosed to the defence was material which might well have influenced the result of the trial: R v Bryer (1994) 75 A Crim R 456. The ultimate question, however, is whether in all the circumstances there has been a miscarriage of justice: Ratten v The Queen (1974) 131 CLR 510 per Barwick CJ at 518; Gallagher v The Queen (1986) 160 CLR 392 per Gibbs CJ at 395.
In relation to report 54/90, although this Court has not been provided with any admissible evidence, either in terms of the report or in terms of material that has been uncovered from the appellants' inquiries subsequent to receiving the report, the question that falls for consideration is whether in all of the circumstances there has been a miscarriage of justice.
As to the remaining particulars of non‑disclosed evidence, in my view the first Karpa Spring report, being the draft report prepared by Mr Freeman and his subsequent report, add little to the appellants' case. The investigation conducted by Mr Freeman with the use of the lead particles to which I have referred was conducted in response to a suggestion in evidence by one of the appellants that one method of salting the samples was by syringe injection into the sample bags. The fact that Mr Freeman conducted experiments using lead particles to evaluate that suggested method of contamination was responsive to a suggestion emanating from the appellants at trial. As such, in my view, there was no obligation on the Crown to reveal its contents to the appellants.
As to the fourth particular, that relating to the 47 pages of handwritten notes made by Mr Horsley between 12 February 1993 and 10 May 1993, these notes were his working notes as a laboratory technician. Those notes ultimately formed the basis of his report. Had they been called for by the appellants at trial, I have no doubt that the Crown would have had an obligation to provide them to the appellants. That did not happen. In the circumstances where the report of Mr Horsley was made available to the appellants, in my view, there was no obligation on the part of the respondent to hand over the handwritten notes of the laboratory workings.
Particular (f) has been dealt with under particular (a), as has particular (g).
As to the second ground of appeal, particular (a) has already been dealt with and particular (b) was developed at trial and the subject of consideration at the earlier appeal; similarly with particular (c). Particular (f) has already been dealt with and as to particular (g), as I have already said, it is now not in issue that the samples from Phase 2 and Phase 3 were in fact salted.

Blue Bag Samples - Particular 2(k)

On 20 August 1990 Colleen Ann Ireland ("Mrs Ireland"), the wife of the appellant, Mr Dean Ireland, located in her garage a green plastic bag in which was a blue bag and a poly‑woven bag. Mrs Ireland said that she had not seen those bags before but that the blue bag contained soil samples. She handed that material to the appellants' solicitors for analysis.
Upon analysis, the samples from the blue bag had some free gold in a number of the samples.
There was no evidence as to the origin of the material in the blue bag, nor anything to directly link it to material from Karpa Spring.
It is difficult to see, on the evidence, how the blue bag sample was linked into the trial in some direct evidentiary way. However, the blue bag samples were referred to in the course of the trial and are referred to in particular 2(k) of the grounds of appeal. In dealing with the blue bag samples, the learned trial Judge said in his summing up (transcript 3371):
"We come to that blue zip bag. The blue zip bag, as you know, turns up at Dean's home on 20 August, and whilst he is in hospital Mrs Colleen Ireland finds it, rings her solicitor, and he then takes steps to make public the material, as it were, by producing it to the court. That bag has been the subject of analysis and a particular report from Mr Herbert, exhibit 93(b). I wonder - and this is my own observation, that perhaps too much might have been made of that bag. As far as I can see, the history of that bag and what is in it is uncertain and the chain of title, or the chain of verification leading up to that bag seems to me to be a bit cloudy.
Again, as has been pointed out, there are discrepancies between the Whitehouse logging and the little packets which were in the blue zip bag. Again, as I say, perhaps too much has been made of this bag. The fact of it being found might be some fact of which you might made some significance but as for any positive result or positive determination from an analysis of the little packets of samples of varying degrees found within that bag, perhaps at the end of the day, as I say, too much has been made of it and not a lot can be drawn from it.
You see, the thing about the blue zip bag is this, that it doesn't have the characteristics that a lot of these other samples and tests have … . You might find it a bit difficult to draw much from the blue zip bag overall but like all other matters that is a matter for you."
In my opinion, the learned Judge quite properly took the view that the blue bag samples were of little relevance in the overall context of the trial. There was no evidence as to the origin of that material and nothing to directly link it with the missing samples from the shed at Wangara.
In my view, the learned trial Judge quite properly indicated to the jury that there was little relevance in the material from the blue bag.
Accordingly, I am of the view that this ground of appeal is not made out.
I turn then to ground 3 relating to the non‑disclosed evidence and the "lies" direction given to the jury by the learned trial Judge. It is to be recalled that the trial took place in the District Court between 31 May 1993 and concluded on 30 July 1993. That was before the decisions of the High Court in Edwards v The Queen (1993) 178 CLR 193 and Zoneff v The Queen (2000) 200 CLR 234. In that respect the contention advanced by counsel for the appellants that the "lies" direction given to the jury by the learned trial Judge was not in accordance with the terms of those two cases is correct. It is fair to say that the learned trial Judge did not draw the attention of the jury to the specific passages of the evidence said by the prosecution to have been lies, nor did the learned trial Judge give the jury a direction in terms of the requirements of those two cases.
What the Judge did say concerning lies related to a specific example. It is not necessary to discuss the details of the particular matter, but it concerned a prospect which the appellants, or two of them, had at Bullabulling where they considered they were misled by the advice of a geologist, a Dr Dunnet.
Having referred to that evidence, the learned trial Judge said:
"The crown says to you that these were lies and that they were told as lies specifically for a purpose, to explain the lack of presence of a geologist on phase 2, I think it was, and to explain a distrust in geologists generally; that the story was made up; the story was wrong and that it was made up and promoted for that purpose in order to promote the conspiracy and that it was a lie.
Now, as you know, as the way the evidence has turned out, all three accused have said to you in the witness box, 'Yes, we did have those views concerning Dr Dunnet; we did have that view that we had been cheated at Bullabulling; we were wrong about that and we are extremely sorry and we owe Dr Dunnet an apology. He has been defamed and it is wrong of us to have said that but it was an honestly held belief.' As I recall the evidence, I think it was in late 1991 that Mr Easterday and one other of the Ireland brothers - I am not quite sure which one - did go up to Bullabulling along the highway and see that the mine that they had thought was on their former location was on an adjoining location and that what they had thought about Dunnet was wrong. So the crown says to you, 'These are lies and these are lies that were told deliberately and they were told as part of an overall plan or purpose', and the accused says to you, 'They were not lies. We had an honest belief about Dr Dunnet and we truly believed that we had been cheated' and, of course, if what the accused says is correct - that they did have a genuine belief that they had been cheated by Dr Dunnet - then what they were saying about Dr Dunnet at the time was not a lie because, of course, what is a lie? A lie is a deliberate untruth. If you say something which happens to be untrue that is not a deliberate untruth, it might be that you're mistaken; it might be that you are hoodwinked; it might be any number of things but you're not telling a lie, if you honestly believe what you are saying. The crown says to you 'No. In all the circumstances, you can come to the conclusion that this was a true deliberate lie and that things should flow from that.'
In looking at the Bullabulling factor and the evidence concerning Dr Dunnet, I would think you would first have to determine whether or not it was a lie or whether or not it was a genuine mistake on their part and a genuine misunderstanding causing them to say things about Dr Dunnet.
If you come to the conclusion that it was a deliberate lie and you are satisfied that it was a deliberate lie, the law says that you should take into account a number of factors before you use it against the people who said it. This might be one of those situations whereby if - no, I will save that for the moment; I withdraw that. In looking at this question, if you have decided that it was a lie, before you can use it against the person saying it you must be convinced that it was a deliberate lie, that the person said it knowing it was to be false. You have got to be convinced that it is relevant to this matter of alleged conspiracy and sometimes it is said that a lie must be shown to - the motive for it must be a realisation of guilt and a fear of the truth. You have got to see whether there were any other possible reasons for telling the lie, a reason of embarrassment or confusion or politeness or some social reason, and you must remember that the person who told the lie was not on oath when he told it.
The crown goes further here and says, 'Yes, all of those things were so. Commonsense and the evidence will tell you that it was so and that the lie was told in order to advance the conspiracy.' Well, each of the accused have given you their own explanation. They say it was not a lie. The crown says that it was to provide a reason for there being no geologists on phase 1; the accused say, 'It was a genuine error and in any event there was no geologist on phase 1 because we didn't have the money to employ them.' So when you are considering the impact of the Bullabulling factor, look at it with all those things in mind. In other words, care has to be taken in looking at a situation where you have lies, proven lies, told by an accused. You cannot then immediately jump to conclusions adverse to the accused without looking at it in that fashion that I have outlined to you."
The Crown had pointed to a number of areas where it was contended that the accused had told lies apart from the specific matter of Bullabulling. Those lies were not specifically identified by the trial Judge, nor were specific directions given in relation to them. Had the direction been given after the High Court decisions in Edwards and Zoneff, it might well be that the direction would be held to be deficient. That, however, was not the case.
As to ground 3(c), in my view, the trial Judge quite explicitly told the jury that the telling of an untruth inadvertently could not be indicative of guilt.
It is to be noted that in the first appeal this issue was not raised as a ground of appeal even although the appellants were then represented by counsel. As has been explained, this trial took place a long time ago and in that respect is not unlike R v Hanratty [2002] 3 All ER 534 where Wolff CJ said, at 542:
"The non-technical approach is especially important in references by the Commission such as this since standards may have changed because of the passage of time. For understandable reasons, it is now accepted in judging the question of fairness of a trial, and fairness is what rules of procedure are designed to achieve, we apply current standards irrespective of when the trial took place. But this does not mean that because contemporary rules have not been complied with a trial which took place in the past must be judged on the false assumption it was tried yesterday. Such an approach could achieve injustice because the non‑compliance with rules does not necessarily mean that a defendant has been treated unfairly. In order to achieve justice, non‑compliance with the rules which were not current at the time of the trial may need to be treated differently from rules which were in force at the time of trial. If certain of the current requirements of, for example, a summing up are not complied with at a trial which takes place today this can almost automatically result in a conviction being set aside but this approach should not be adopted in relation to trials which took place before the rule was established. The fact that what has happened did not comply with a rule which was in force at the time of trial makes the non‑compliance more serious than it would be if there was no rule in force. Proper standards will not be maintained unless this Court can be expected, when appropriate, to enforce the rules by taking a serious view of a breach of the rules at the time they are in force. It is not appropriate to apply this approach to a 40‑year‑old case."

Next, counsel for the respondent relied upon the fact that the appellants gave what he described as a "false" explanation (which was later repeated by them to the police) for the absence of a geologist during the Phase 2 drilling process and also for their reluctance to have a geologist in control of the confirmatory drilling programme, being that to the effect that they had been "diddled" by Dr Dunnet in respect of the Bullabulling prospect.
He referred also to the fact that the appellants insisted that the observers for the purchasing party in respect of the Phase 3 drilling process did not stay on site and to the fact that they rejected requests from those persons to take samples from the bulk rejects and for the provision of residue assay samples. He also mentioned that, when Dean Ireland was ultimately interviewed by the police, he had dishonestly said that the purchaser of the tenements had controlled the Phase 3 drilling process and had had possession of the samples from Phase 3, when neither had been the case.
Counsel for the respondent then pointed to the fact that the appellants had rejected offers for the acquisition of the Karpa Spring tenements at a price very much greater than that ultimately accepted by them, seemingly only because each of those other offers contained a condition to the effect that the purchasers would retain control of the drilling confirmation programme. I have mentioned that Noranda Exploration made an oral offer, on 29 May 1990, of payment of a sum of $20 million, with payments to be made over a period of 12 months and the appellants to retain a 5 per cent royalty interest and that, on 31 May 1990, it made a further offer, this time in writing, of payment of a sum of between $10 million and $12 million. In each case, as I have said, the offer was conditional upon the purchaser controlling the confirmation drilling programme. Each offer was rejected by the appellants.
Next, the respondent pointed to evidence that Dean Ireland had panned visible gold from the Phase 1 drilling samples when subsequent results indicated that there could not have been any gold there and in circumstances in which the appellants were the only people common to the drilling processes in Phases 1, 2 and 3. He referred, also, to evidence that Dean Ireland had claimed to have panned visible gold from the aborted Phase 2 programme (and to have shown it to his brother, who confirmed this in his evidence) when this could not have been possible, given the Phase 4 and Phase 5 drilling results. I should mention, in this respect, that none of the samples obtained by Davies Drilling were ever analysed or assayed.
Counsel for the respondent also relied upon the fact that the appellants had removed from both Phases 2 and 3 all of the bulk rejects, as well as samples taken by the geologist and unpanned samples, and stored them in the Wangara shed. I have mentioned that it was only after the final payment of the sum of $6 million that the appellants provided the purchasers with access to the Wangara storage shed by giving them the second set of keys to that shed. However, as I have said, all of the stored material had been removed by the time access was obtained. I have also said that, when the appellants were told of this, they said that they would report the matter to the police and on two later occasions said that they had done so, but that the police records did not refer to any such report. The stored material was of no value to any outside person. It weighed, as I have said, some eight tonnes and would consequently have required a significant effort to remove it. It may also be of some significance that Dean Ireland's record book, in which he had recorded his panning results and the depths at which the panning samples had been obtained, was said also to have been lost.
We were also taken to evidence to the effect that Dean Ireland had told Mr Beswick (the owner of the nursery to which the Phase 3 assay and pulp residues had been taken), on 18 March 1992 in the course of a tape‑recorded discussion, that he knew that there was no gold at a time when the purchasing party was drilling on Phase 4.
Finally, the respondent relied upon what it contended was the fact that only the Ireland brothers and Messrs Rumens and Hockley had had the opportunity to salt the tenements and that there was no evidence that Messrs Rumens and Hockley, or either of them, had had any motive to do so.
There is no disputing that these facts, taken together, gave rise to a very powerful circumstantial case against the appellants. Nor can it be disputed that much of this evidence has been left undisturbed. However, it seems to me that this evidence must be looked at in a context in which, as I have said, the trial would probably have been run differently were it not for the non‑disclosure of the market surveillance report.
It will already be apparent that, at the trial, the appellants offered either denials in respect of, or explanations for, much of their conduct now relied upon by the respondent. Their counsel also sought to explain some of this conduct during the course of submissions in the appeal.
I have earlier said that the appellants denied altering the assay results which were faxed to Mr Whitehouse and that they sought to explain the misstatements in the Gibson Flats document. Their counsel contended that these alterations and misstatements were, in any event, relatively minor and said that, even if they were made by the appellants to present a more attractive proposition to the potential purchasers, this did not mean that they had salted the tenements.
I have also mentioned that the appellants conceded that they were mistaken as regards their allegations against Dr Dunnet, but said that their error was made in good faith. They offered explanations for their conduct in refusing access to drilling samples and bulk rejects and denied any dishonesty in the course of interviews with the police. They also sought to explain their conduct in rejecting Noranda Exploration's offers (and it may be noteworthy that the rejection of those offers did not incite any suspicion on the part of Noranda Exploration sufficient to prevent it from entering, on 8 June 1990, into the agreement with Acarus to which I have earlier referred).
Counsel for the appellants suggested, during the course of argument on the appeal, that the fact that visible gold had been panned from the Phase 1 drilling samples and also from the aborted Phase 2 samples is by no means conclusive when regard is had to the evidence of the coarse gold phenomenon and, in particular, the evidence of Mr Longman in respect of coarse or "spotty" gold found on nearby tenements. It may be material to mention, in this respect, that Mr John Watts, a geologist called by the appellants at the trial, said in evidence (transcript 2999 ‑ 3000) that he took samples from costeans excavated during the Phase 5 operations and from one of the Phase 5 drill holes. He split the samples, put them through a hammer mill to reduce the size of the grains and then panned them. The samples contained traces of gold. He then sent a "split" or "splits" to a laboratory for chemical analysis for gold, but no gold, above the detection limits used, was found. The "pulps" from the analysis were returned to him. He combined them, panned them down into a concentrate and returned the material to the laboratory for further analysis. Gold was found at a ratio of 0.115 ppm. It was put to him, in cross‑examination, that he had taken his samples some two weeks after the Phase 5 programme had ended and at a time when the site was no longer secure and that he could consequently not be sure that the samples which he had used had not themselves been salted. He agreed with this, but pointed out, in the course of re‑examination, that he had himself decided from where to take the samples and that the costeans were about 10 to 15 metres long and 3 or 4 metres wide (transcript 3030).
As to the evidence of the discussion with Mr Beswick, Dean Ireland contended that he had not intended to suggest, in the course of that discussion, that he knew that there was no gold in the Karpa Spring tenements at the time at which they were sold, and that his words should not be understood in that way in the whole context of the discussion.
It is obvious that, even given these denials, explanations and contentions (some of which, at least, could not have been regarded by the jury as credible), there was a powerful case against each of the appellants, when regard is had to the whole of the evidence against them. However, had the market surveillance report been disclosed, the trial would, as I have said, have been run differently. The Crown would not have been able to rely upon the absence of any possible motive on the part of others. The defence would have concentrated far more upon the existence of a possible motive on the part of others and this would, as I have suggested, have led it to concentrate far more upon other opportunities for salting of the gold and upon the possible means of doing so. Moreover, the Crown evidence may have been considered differently by the jury, at least in some respects, had the defence case been run differently.
To take one example, it is difficult to say that no reasonable jury could have concluded, if invited to do so, that it was reasonably possible that the bulk reject material had been removed from the storage shed in an attempt to conceal the fact that the salting had been done through the drilling rig. If the salting had been done in that way, there would have been gold in the bulk reject material and the finding of that gold might consequently have supported or given rise to a theory that the salting had been done through the drilling rig, but would otherwise have revealed nothing that the analysis of the samples and check samples had not already revealed. Accordingly, the fact of the removal of the material, while undoubtedly significant, could be thought to be consistent also with the thesis, now advanced by the appellants, that the salting had been done through the drilling rig by a person or persons, other than themselves, who wished to conceal that fact and who could have known of, or easily discovered, the whereabouts of the stored material.
It is also possible that the jury might have taken a greater interest in evidence as regards the different means of and opportunities for salting by others (and, as I have said, those issues were not fully explored at the trial, given the defence emphasis on the contention that there had been no salting) if it had been invited to accept as reasonable the possibility that one of the drillers, for example, or a person or persons associated with him, might have profited from trading in Perilya shares, or even if it had been invited to accept only that persons unknown had bought and sold substantial quantities of Perilya shares at precisely the right time. It should also not be overlooked, in this context, that, as I have said, there are now gaps in the available evidence which might not have been there, at least to the same extent, if the market surveillance report had been promptly disclosed, enabling investigations to be immediately commenced. It is difficult to be satisfied that nothing could, in that event, have been discovered which might have influenced a reasonable jury.
In Re Ratten [1974] VR 201 (affirmed in Ratten v The Queen, above), Smith J (delivering the judgment of the Full Court (Smith, Pape and Adam JJ) said, at 214:
"In conformity with this conception of fair trial, if an accused person can show that he has been prevented by surprise, fraud, malpractice or misfortune from presenting at his trial evidence of substantial importance which he desired to present, or which he would have desired to present had he not been prevented by such causes from being aware of its existence or its significance, then ordinarily the fact that he has been tried and convicted without such evidence having been called involves that he has been deprived of his right to a fair trial and that there has, in that respect, been a miscarriage of justice."
In this case the evidence which might have been led as a consequence of disclosure of the market surveillance report was of substantial importance, given the manner in which the trial was run. Had the appellants been aware of the existence and significance of that evidence, they would not only have presented it, but, as I have repeatedly mentioned, they would have run their case differently. The appellants having lost the opportunity to do so, I am not satisfied that they have had a fair trial or that there is no significant possibility that the jury, acting reasonably, would have acquitted each of them (and the case against each had, of course, to be separately considered) had evidence of the kind to which I have referred been placed before it (together with any additional evidence which might then have been obtained but which is not now obtainable) and had the trial been differently run. It follows, in my opinion, that this is not a case in which the proviso can be applied.
I would consequently allow the appeal upon this basis and set aside the conviction of each of the appellants.

Ground 3 - The "lies" direction

While it is unnecessary for me to consider the third, and last, ground of appeal, it is, I think, preferable that I should do so. This ground is that to the effect that, in the light of the non‑disclosed evidence and the fresh/new evidence, the "lies" direction given to the jury by the trial Judge was not in terms required by the High Court in Edwards v The Queen (1993) 178 CLR 193 and Zoneff v The Queen (2000) 200 CLR 234. The ground of appeal is particularised as follows:
"(a)The learned Trial Judge failed to draw to the attention of the jury the specific passages of evidence said by the Prosecution to have been lies and to give the jury a balanced summary of that evidence;
(b)The learned Trial Judge failed to direct the jury that in respect of each statement said to have been a lie they could only draw an adverse inference where they were satisfied that:
(i)The statement related to a material issue;
(ii)The statement was, to the knowledge of the maker, false; and
(iii)The only explanation for the making of the statement was a realisation of guilt;
(c)The learned Trial Judge failed to direct the jury that the telling of an untruth inadvertently could not be indicative of guilt."
The prosecutor, in the course of his closing address to the jury at the trial, outlined a number of instances of what he described as dishonesty on the part of the appellants. These included the altered assay results in respect of the Phase 1 drilling, the alteration as regards the date of the Phase 1 drilling, the "lie" told by Dean Ireland as regards the dishonesty of the geologist who had "cheated" the appellants out of the prospect in Bullabulling, what was said to be a lie told by Dean Ireland as regards the stirring of samples in the Rapley Wilkinson laboratory, the denial by the appellants that they knew of the contractual arrangements between Acarus and Noranda Exploration and what was said to be a dishonest denial, by Dean Ireland, that, when panning for gold, he did not constantly add detergent to the pan (there having been some suggestion that gold might have been introduced to the pan in this way).
When addressing the jury on these alleged lies, or acts of dishonesty, the prosecutor said:
"We don't say to you 'Condemn them because they are liars', or 'Condemn them because they have been dishonest to you'. That is not the point. The point is that it is relevant for you to understand that those who are prepared to lie to you are lying for a reason and it is relevant to you to understand that it is their credibility which is in issue. It may be a very obvious point to you but people who are prepared to directly lie to you on oath are, I would suggest to you, prepared to lie to you about other areas of their testimony. These are simply examples of where they have been caught out." (Transcript 3326)
The trial Judge, when he came to address the jury on the issue of lies, addressed them specifically only as regards the Bullabulling incident involving Dr Dunnet. After mentioning that the appellants had, in their evidence at the trial, retracted what they had previously said about Dr Dunnet, saying that they had genuinely believed what they had said, but had since discovered that they were mistaken and that they owed Dr Dunnet an apology, the trial Judge went on to say:
"So the crown says to you, 'These are lies and these are lies that were told deliberately and they were told as part of an overall plan or purpose', and the accused says to you, 'They were not lies. We had an honest belief about Dr Dunnet and we truly believed we had been cheated' and, of course, if what the accused says is correct - that they did have a genuine belief that they had been cheated by Dr Dunnet - then what they were saying about Dr Dunnet at the time was not a lie because, of course, what is a lie? A lie is a deliberate untruth. If you say something which happens to be untrue that is not a deliberate untruth, it might be that you're mistaken; it might be that you are hoodwinked; it might be any number of things but you're not telling a lie, if you honestly believe what you're saying. The crown says to you, 'No. In all the circumstances, you can come to the conclusion that this was a true deliberate lie and that things should flow from that.'
In looking at the Bullabulling factor and the evidence concerning Dr Dunnet, I would think you would first have to determine whether or not it was a lie or whether or not it was a genuine mistake on their part and a genuine misunderstanding causing them to say things about Dr Dunnet.
If you came to the conclusion that it was a deliberate lie and you were satisfied that it was a deliberate lie, the law says that you should take into account a number of factors before you use it against the people who said it … . In looking at this question, if you have decided that it was a lie, before you can use it against the person saying it you must be convinced that it was a deliberate lie, that the person said it knowing it was to be false. You have got to be convinced that it is relevant to this matter of alleged conspiracy and sometimes it is said that a lie must be shown to - the motive for it must be a realisation of guilt and a fear of the truth. You have got to see whether there were any other possible reasons for telling the lie, a reason of embarrassment or confusion or politeness or some social reason, and you must remember that the person who told the lie was not on oath when he told it.
… In other words, care has to be taken in looking at a situation where you have lies, proven lies, told by an accused. You cannot then immediately jump to conclusions adverse to the accused without looking at it in that fashion as I have outlined to you." (Transcript 3393 ‑ 3394)
The trial Judge then went on to refer to submissions in respect of the Bullabulling incident which had been advanced on behalf of the prosecution and the defence respectively.
In Edwards v The Queen, above, at 210 ‑ 211, Deane, Dawson and Gaudron JJ said:
"Thus, in any case where a lie is relied upon to prove guilt, the lie should be precisely identified, as should the circumstances and events that are said to indicate that it constitutes an admission against interest … [a]nd the jury should be instructed that they may take the lie into account only if they are satisfied, having regard to those circumstances and events, that it reveals a knowledge of the offence or some aspect of it … and that it was told because the accused knew that the truth of the matter about which he lied would implicate him in the offence, or, as was said in Reg. v Lucas (Ruth), because of 'a realization of guilt and a fear of the truth'.
Moreover, the jury should be instructed that there may be reasons for the telling of a lie apart from the realization of guilt … [a] lie may be told out of panic, to escape an unjust accusation, to protect some other person or to avoid a consequence extraneous to the offence. The jury should be told that, if they accept that a reason of that kind is the explanation for the lie, they cannot regard it as an admission."

In Zoneff, above, at 244, Gleeson CJ and Gaudron, Gummow and Callinan JJ said that there may be cases in which the risk of misunderstanding on the part of a jury as to the use to which they may put lies might be such that a Judge should give an Edwards type direction notwithstanding that the prosecutor has not put that a lie has been told out of consciousness of guilt but that, as a general rule, a direction of that kind should only be given if the prosecution contends that a lie is evidence of guilt in the sense that it was told because the accused knew that the truth would implicate him in the commission of the offence and if, in fact, the lie is capable of bearing that character.
However, the trial Judge did give an Edwards type direction in this case and the appellants contend that the direction that was given, while adequate so far as the alleged Bullabulling lie was concerned, was deficient in that no attempt was made to address, specifically, each of the other alleged lies and to say how these should be dealt with.
Counsel for the respondent made a number of responses to this ground of appeal. He pointed out, quite rightly, that the ground attacks the "lies" direction only in the light of the non‑disclosed evidence and the fresh/new evidence referred to in grounds 1 and 2. Next, he submitted that an Edwards type direction does not require the Judge to identify to the jury that each and every lie related to a material issue at trial. He submitted, also, that the mere fact that the trial Judge did not draw the attention of the jury to each and every lie relied upon by the Crown did not amount to an error of law in the circumstances of the case. He submitted that the relevant question was whether the direction given by the Judge in respect of the evidence of the appellants' behaviour was sufficient to avoid the risk that the jury might use that evidence in an impermissible way, as to which see R v Nguyen (2001) 118 A Crim R 479 at [34] per Chernov JA. Next, he submitted that, although the trial Judge did not mention each and every lie relied upon by the Crown, he did repeatedly tell the jury that they must not conclude that if the accused had lied, they must be guilty. In doing so, the submission went, the trial Judge addressed the major objective of the Edwards direction: see Nguyen, above, at [81] per Smith AJA. Finally, for present purposes, counsel for the respondent submitted that this was not a case in which the jury could have been left in any doubt concerning the identification of the issue on which the lies were told and the substance of them: see Green v The

Queen, unreported; CCA SCt of WA; Library No 970052; 23 August 1996, per Malcolm CJ at 34.

It is enough to say of this ground that I am not at all persuaded that any of the new evidence (whether fresh, undisclosed, or otherwise) impacts, in any way, upon the direction given by the trial Judge as regards the treatment of any of the alleged lies. Not one of the items particularised in grounds 1 and 2 bears upon any of the lies allegedly told by the appellants. The evidence referred to in grounds 1 and 2 does no more than seek to establish the means by which the salting took place and the fact that persons other than the appellants had profited from or attempted to profit from the salting and had therefore had a motive to engage in the salting. That, in itself, is sufficient to dispose of the ground, as it has been formulated.
I should reiterate, in any event, that the only shortcoming which has been identified in the direction given by the trial Judge is effectively that his Honour failed to identify, specifically, and deal with, the other lies allegedly told by the appellants. However, this was done by the prosecution and the trial Judge did repeatedly warn the jury that they should not conclude that, if the appellants had lied, they must accordingly be guilty. His Honour consequently addressed the major objective of the Edwards direction and I am not persuaded that the deficiencies in his direction (which was given prior to the decision in Edwards) were such as to give rise to a substantial miscarriage of justice, even if the point was now still open.

Conclusion

It follows that I would allow the appeal for the reasons expressed in dealing with grounds 1 and 2. I would consequently quash the convictions of all three appellants.
ROBERTS-SMITH J: I have had the benefit of reading in draft the reasons for decision of Scott and Steytler JJ. Their Honours have each comprehensively set out the course of the proceedings to date and the evidence given, both at trial and on this appeal. I gratefully adopt what their Honours say about those matters.
I agree with Steytler J that grounds 1 and 2 have been made out for the reasons given by him. I also agree, for the reasons given by him, that ground 3 has not been made out.

There can be no doubt that the Crown was under an obligation to disclose the ASX report ASX 54/90 ("the ASX report") to the appellants. The significance of the report (and of the effect of its non‑disclosure) has to be gauged in the context that at the trial and on the appeal, the Crown very strongly argued that no‑one other than the appellants had a motive to salt the samples. Had the report been disclosed, it is highly likely that at the very least, much greater emphasis would have been placed by the appellants at trial and on the first appeal, on the proposition that there were others who had a motive to salt the drill samples. There would undoubtedly have been much more extensive cross‑examination of Detective Sergeant Zappa, whose answers set out in the reasons of Scott J included:
"The final word was that [the ASX] were not concerned as to the stock market movements."
which was positively misleading. The ASX at that time clearly did have a real concern as to the stock market movements and the ASX report set out in some detail the factual basis for it.
The contents of the ASX report had a real prospect of providing a lead to the identification of some of the parties who profited from the sudden rise of Perilya shares between 7 June and 3 August 1990. But much of the information is not now available - if it ever was - and it is impossible to speculate about where it might have led.
This is not a case in which the non‑disclosure of the report, or the new or fresh evidence the subject of the grounds of appeal, shows the appellants to be innocent or must have raised such a doubt in the mind of a reasonable jury that the verdict should not be allowed to stand (see Malcolm CJ in Button v The Queen (2002) 25 WAR 382, 392) nor even that it might raise a significant possibility that a jury acting reasonably, would have acquitted the appellants (M v The Queen (1994) 181 CLR 487) nor that their effect was so fundamental as to lead to the conclusion there was no proper trial at all (Wilde v The Queen (1988) 164 CLR 365, 373; Glennon (1994) 179 CLR 1, 8). The point here, it seems to me, is whether there has been a miscarriage of justice because without the evidence being available to the defence there was not a fair trial of the appellants.
A fair trial requires disclosure to the accused of any material in the possession of the prosecution which is relevant or possibly relevant to an issue in the case. Steytler J has referred to the relevant authorities at [194] of his reasons and I respectfully agree with what his Honour there says (and see generally "Statement of Prosecution Policy & Guidelines 1999" issued by the Director of Public Prosecutions of Western Australia pursuant to s 24(1) of the Director of Public Prosecutions Act 1991 (WA), [73] ‑ [81] and Hinton "Unused Material and the Prosecutor's Duty of Disclosure" (2001) 25 Crim LJ 121). The non‑disclosure of the ASX report accordingly resulted in a miscarriage of justice, not because it would have been admissible in itself, but because it would have afforded a basis for cross‑examination of Detective Sergeant Zappa and because it would have been a lead to evidence which showed persons other than the appellants had, or may have had, a motive for salting the drilling samples.
Having concluded that there was a miscarriage of justice, it is necessary to consider the application of the proviso to s 689(1) of the Criminal Code (WA), which provides that notwithstanding the Court is of opinion that the point raised in the appeal might be decided in favour of the appellant, it may dismiss the appeal if it considers that no substantial miscarriage of justice has actually occurred. Once a miscarriage of justice has been shown, the onus is on the Crown to satisfy the Court it does not constitute a substantial miscarriage of justice so as to allow application of the proviso (Mraz v The Queen (1955) 93 CLR 493, 514 and R v Storey (1978) 140 CLR 364, 376).
The test for the application of the proviso is whether it is clear that a jury, properly instructed, would necessarily have returned a verdict of guilty notwithstanding the error or defect (see Gilbert v The Queen (2000) 201 CLR 414 [20] and JCG (2001) 127 A Crim R 493 per Spigelman CJ at 514 and the cases there cited).
One significant aspect of the reason for the decision of the High Court in Grey v The Queen (2001) 75 ALJR 1708 quashing the appellant's conviction was that by the non-disclosure of a police letter of comfort to the prosecution's key witness, the appellant had been deprived of a full opportunity to discredit the witness. The witness had been presented as reliable and one whose involvement in the events had been entirely innocent. In fact he had pleaded guilty to a number of similar offences and had been involved in the events giving rise to the charges against the appellant. The letter had been provided to the court by which the witness was sentenced. It set out the considerable assistance given to the police by him, including their investigation of the appellant. The witness thereby obtained a significant reduction in his sentence.
In addition to the "fertile area of cross‑examination" which the appellant had been denied by the non‑disclosure, it had probably also denied him the benefit of a direction to the jury warning them of the potential unreliability of the witness as one who was "criminally concerned".
As Gleeson CJ, Gummow and Callinan JJ pointed out ([18]) the revelation of the letter and its admission into evidence could have put quite a different complexion on the appellant's case and the way in which it was conducted. There was for that reason a miscarriage of justice.
The outcome of that appeal turned on the application of the proviso to s 6(1) of the Criminal Appeal Act 1912 (NSW), which is in similar terms to s 689(1) of the Criminal Code (WA).
The majority said (at [25]):
"The language of s 6(1) is similar to the language of s 4(1) of the Criminal Appeal Act 1907 (UK), which established the Court of Criminal Appeal in England. It has analogues, or virtual analogues, enacted between 1912 and 1924 in the other Australian States. Its history after its original enactment is traced in the judgment of Brooking JA in R v Gallagher [1998] 2 VR 671 in which his Honour remarks on the difficulty of drawing a distinction between a (mere) miscarriage of justice, and a 'substantial' miscarriage of justice, being the two expressions which appear in the subjection, a difficulty upon which many judges before him have commented. In Wilde v The Queen (1988) 164 CLR 365, Brennan, Dawson and Toohey JJ however stated the effect of the authorities to be: Wilde v The Queen(1988) 164 CLR 365 at 371‑372:
'Those authorities establish that where there has been a departure from the requirements of a properly conducted trial, it cannot be said that there has been no substantial miscarriage of justice if the applicant has thereby lost 'a chance which was fairly open to him of being acquitted' to use the phrase of Fullager J in Mraz v The Queen (1955) 93 CLR 493 or 'a real chance of acquittal' to use the phrase of Barwick CJ in R v Storey (1978) 140 CLR 374 at 376. Unless it can be said that, had there been no blemish in the trial, an appropriately instructed jury, acting reasonably on the evidence properly before them and applying the correct onus and standard of proof, would inevitably have convicted the accused, the conviction must be set aside: see Driscoll v The Queen (1977) 137 CLR 517 at 524; R v Storey(1978) 140 CLR 364 at 376; Gallagher v The Queen (1986) 160 CLR 392 at 412‑413. Unless that can be said, the accused may have lost a fair chance of acquittal by the failure to afford him the trial to which he was entitled, that is to say, a trial in which the relevant law was correctly explained to the jury and the rules of procedure and evidence were strictly followed: see Mraz v The Queen (1955) 93 CLR 493 at 514. The loss of such a chance of acquittal cannot be anything but a substantial miscarriage of justice. The question whether the jury would inevitably have convicted falls to be determined by the Court of Criminal Appeal. It is a question which the Court of Criminal Appeal must answer according to its assessment of the facts of the case. In this case the Court of Criminal Appeal answered it adversely to the applicant, and there is nothing to show that the answer was wrong'."
There was there a strong case against the appellant. However, because of the "over-arching importance" of the witness' evidence and the weight placed by the prosecution on his reliability, the majority were unable to say that had the appellant been able to cross‑examine the witness on the letter and introduce it into evidence, he would inevitably have been convicted. Their Honours concluded he had lost thereby a fair chance of acquittal and the proviso could not be applied.
It is apparent from their Honours' reasons and from the observations of Kirby J (particularly at [55] ‑ [56] and [62] ‑ [72]) that the credibility of the witness in that case was central to the verdict and it was upon precisely that factor which the undisclosed letter would potentially have impacted. The present case is different. The forensic effect of the ASX report would not have gone to the credibility of prosecution witnesses (apart perhaps from Detective Sergeant Zappa, but his evidence was peripheral in the sense that it was not direct evidence going to the guilt of the appellants).
It is self‑evident that the fact that parties traded in, and made a profit out of, trading in Perilya shares between June and August 1990 would not of itself have assisted the appellants. At its most sinister, such activity may have simply been insider trading. There was evidence at the trial that the fact that phase 2 drilling for example, had showed gold, had been communicated to a number of people initially through Rumens.
I respectfully agree with the assessment of Mr McGowan's evidence by Scott and Steytler JJ. He was obsessive and in relation to Mr Horsley's notes, he posed questions to his panel of experts founded on an interpretation of those notes which he knew to be wrong. Despite that, his theory that samples were salted by the introduction of gold through the grease on the drill pipes is certainly tenable. The real point of the appellants' contention in that regard was that if the salting was done that way, the drillers were the persons who had the best opportunity to do it. However, apart from Dean and Leonard Ireland, the drillers must always have been in a good, if not the best, position to salt the samples. It is extremely unlikely that the salting was done away from the mine site. The appellants were well aware of that at trial. The possibility was raised, but not put directly and never pursued. On the evidence at trial there were only four persons who were present at the drilling of both phases 2 and 3. They were Clive Rumens, Grant Hockley and the Ireland brothers. However, as Steytler J points out, there was no real exploration of whether other persons may have gained access to the site.
As Mr Freeman explained, rod grease is inexpensive and so is ordinarily not kept secure. On the evidence it was readily accessible to the Ireland brothers but it would have been readily accessible to anyone at the drilling site.
The Crown case against the appellants was powerful. The circumstances leading to the inference of guilt were compelling. Motive was only one factor. The appellants plainly had a motive and a most substantial one. The fact that other parties may also have had a financial motive for salting the test results, by profiting from the sale of shares, would not weaken the force of the appellants' motives. It was not merely the combination of motive, means and opportunity in the appellants, but those features in combination with the other circumstances relating to them which led the jury to satisfaction of the appellants' guilt beyond reasonable doubt.
Although it is true that considered individually the appellants advanced explanations consistent with their innocence, for some of the particular circumstances adumbrated by Steytler J, a properly instructed jury would be directed not to take the individual circumstances in isolation, but to consider what inference should be drawn from them in combination, bearing in mind that the inference of the appellants' guilt could not be drawn unless it be the only inference reasonably open (Chamberlain v The Queen (No 2) (1984) 153 CLR 521; Shepherd v The Queen (1990) 170 CLR 573).
The difficulty is, that particularly given the prosecution's emphasis on the appellants - and no‑one else - having had a motive, it is impossible to say that had the jury been made aware that others also had substantial financial motives for the salting, they would still inevitably have convicted. That possibility would have been greater were the enquiries flowing from the report to have identified or indicated links between those with access and those who profited from the sale of shares. Of course, whether the report may have led to any such evidence is entirely speculative and it is now too late to know. But that being so, it seems to me that this Court cannot be satisfied that disclosure of the ASX Report would not have made any difference to the result, despite the compelling nature of the prosecution case as it stood.
In my opinion this is not a case in which the proviso can be applied.
I would allow the appeal. For the reasons given by Scott and Steytler JJ there should be no order for a re‑trial.

Hole	Interval (meters)	Width (meters)	Grade (g/t Au)
RCH2	15-48	33	14.68
RCH3	51-75	24	10.08	All assays cut to
RCH6	27-65	38	22.44	30 grams Au/T
RCH7	48-63	15	28.06
RCH11	16-35	19	20.64
also	38-68	30	13.95
RCH12	19-50	31	11.98