Hannes v The Queen

[2008] HCATrans 224

[2008] HCATrans 224

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S475 of 2007

B e t w e e n -

SIMON GAUTIER HANNES

Applicant

and

THE QUEEN

Respondent

Application for special leave to appeal

GUMMOW ACJ
HAYNE J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 13 JUNE 2008, AT 9.36 AM

Copyright in the High Court of Australia

MR S.G. HANNES appeared in person.

MR T.A. GAME, SC:   If the Court pleases, I appear with MR R.J. BROMWICH for the respondent.  (Commonwealth Director of Public Prosecutions)

GUMMOW ACJ:   Yes, Mr Hannes.

MR HANNES:   Your Honours, I will begin with the first insider trading ground, that information cannot be merely a private subjective inference made by the insider and if I could ask you to open volume 2 of the application books at pages 752 to 753.

GUMMOW ACJ:   Yes, we have it.

MR HANNES:   What I have asked you to look at are what we call the further particulars.  They are the Crown’s list of all the information I could conceivably have ever have had access to, from conversations with Macquarie Bank employees or documents in the offices of Macquarie Bank and, by the by, you can disregard the further particular numbered 28 because the evidence is that that occurred after the options were purchased.

Now, what I want to draw your attention to is that particular 1 in the incitement, that it was likely that a takeover would occur in excess of $2, does not appear in any of the those conversations or documents.  So the question arrises, how could I be convicted of possessing information which does not appear in any of the conversations or documents I could conceivably have had access to?  How is that possible?  The Crown’s answer, which was accepted by the court below, was that that is because what I thought, that is what I privately believed, that is the prediction I am said to have made and that is all it had to prove.  I dispute that.  I say information cannot be merely the subjective private thoughts of an insider, but we also say something else that is very important to understand. 

We say that if that is true and particular 1 can be simply what the insider thought, surely there must be some connection between what he thought and the underlying information in the further particulars that the knew?  Surely what he thought must be a possible inference or a reasonable inference or the only reasonable inference from the information he actually knew.  So that is the issue.  We say information cannot be merely what the insider thought or predicted or if it can, it must be shown to have some objective or reasonable basis in the underlying information he knew and that was rejected by the courts below. 

Now, this was not merely a theoretical issue in this case.  It was the basis of what the Crown described to the jury as its central or essential argument.  At the Crown’s repeated insistence, the judge told the jury that they could find I possess particular 1 based only on my conduct in buying the options without finding that I read any document.  Let me repeat that because it is so important.  The judge told the jury that they could find I possessed particular 1 based only my conduct in buying the options without finding that I read any document or, as the Crown put it, “even if there was not one document in the case”.  Now, it is important to understand this is not an argument that you can infer from my conduct that I read the documents.

GUMMOW ACJ:   Can you just look at your draft notice of appeal, Mr Hannes, on page 733.

MR HANNES:   Yes, your Honour.

GUMMOW ACJ:   You see there are three grounds there?

MR HANNES:   Yes.

GUMMOW ACJ:   Are you going to deal with them sequentially?

MR HANNES:   I am, your Honour. 

GUMMOW ACJ:   Thank you.

MR HANNES:   So this is not an argument that you can infer from my conduct that I read the document.  It is an argument that you can infer from my conduct that I believed particular 1 without reading any documents.  The jury was never told I had to know all or any of the 28 pieces of information in the further particulars or that my belief in particular 1 had to arise from such knowledge.  Now, I have three objections to that.  Firstly, it fundamentally changes the nature of the offence.  Insider trading is about trading having learnt certain objective facts.  It is not about trading while entertaining some private uncommunicated belief which may or may not be based on some facts you learned.

The second objection is that it makes a nonsense of the other elements of the offence.  It is simply not possible to assess the materiality of particular 1 without knowing the underlying facts on which it was based.  How do you assess the materiality of what someone thought?  Once again, this is not a theoretical issue in this case.  The expert was asked about the materiality of particular 1 without being told anything about the information on which it was based even though he said that one depended on the other.

My third objection is that it allows a person to be convicted on false information.  If the information was particularised as one of these 28 pieces of information in the further particulars, no issue of truth or falsity arrises.  You either read it or you did not read it and what you read was either material or not material.  But if information is particularised as some inference or conclusion you make from these 28 pieces of information, that can either be justified, unjustified, true, false or fanciful.  Once again, this was not a theoretical issue in this case.  The only documents in this case in which the likelihood of a transaction is commented on contradict particular 1’s assertion that it was likely.  There is a document that refers to it as blue sky and the management documents said that not success fee was likely to be received for the transaction even on an optimistic view.

Now, I also want to just dispose of some red herrings, things we do not dispute under this ground.  We do not dispute that information can be non‑specific, a hint, a rumour, uncertain, et cetera, et cetera.  We do not dispute R v Green.  Whether information is non‑specific is a different question from whether it is the product of the mind of the insider.  Nor do we dispute that you can infer possession from admissions or conduct.  What you cannot do is infer from conduct or admissions that I possessed information which the evidence shows I could not have conceivably have known, which is what the judge did when he said you could infer possession of particular 1 without access to the documents and it is what the Crown does in their summary of argument when they say you can infer from my admissions that I possessed particular 1 from conversations with colleagues at Macquarie Bank when those conversations are in evidence and they contain no such information.  I am now going to turn to the second ground on insider trading which goes to the way in which the information was ‑ ‑ ‑

GUMMOW ACJ:   This is the particulars?

MR HANNES:   I am sorry, your Honour?

GUMMOW ACJ:   Your second ground concerns the ‑ ‑ ‑

MR HANNES:   Yes, your Honour, absolutely.  The fundamental point of law we are taking here is that the Crown is required to particularise the actual information it is alleged I possessed, the 28 pieces of information in the further particulars.  Instead, the Crown particularised a wide and uncertain conceptualisation in particular 1 which was said to be a prediction I made from them.  So Justice Basten in his dissent explains why that caused a miscarriage of justice and I am not going to repeat that.  What I want to do is explain why the Crown particularised the conceptualisation in particular 1 rather than the actual information it is alleged I possessed in the further particulars and the easiest way into that is to ask, what would have the jury been instructed to do if the further particulars had been particularised information?

The jury would have been asked to look at these 28 piece of information, agree amongst themselves which, if any, I possessed beyond reasonable doubt.  They would have then have been told to take those and only those of these 28 which they agreed beyond reasonable doubt I possessed and assess whether they are material or generally available.  Now, how is the jury’s task different if you conceptualise particular 1 instead of the further particulars?  The jury’s task is different in two respects.  Firstly, the jury does not have to agree beyond reasonable doubt which information I actually possessed.  It only has to agree that I made the prediction or inference in particular 1 remembering the judge told them they could do that without having decided I accessed the documents.

CRENNAN J:   Can I ask you, what about the respondent’s point, application book 763 at paragraph 31 which deals with this issue about differences between particulars and the Crown case and where it is suggested there that this issue really turns on matters of fact.

MR HANNES:   Can I answer that in just a tick, your Honour, because I will get to that?  So, the first thing that is dispensed with is the necessity to actually identify what of the information available to me I actually possessed.  The second thing that differs is that the jury does not have to assess the materiality of any of the 28 pieces of information I possessed.  Once the jury has found that I possessed particular 1, the 28 pieces of information are left behind.  The Crown only then has to prove the materiality of the conceptualisation in particular 1 without reference to the underlying information as though it were true fact floating in the ether.  They did this by putting particular 1 to the expert without informing of the information underlying it.

Now, if I could answer your question, your Honour.  Let me answer it in a slightly long‑winded way.  One case the Crown puts here is that I could have learned this information from conversations.  If all of the conversations in evidence were accepted, what I would have known was there was a transaction with a large fee evaluation was being done.  That is not knowledge of a takeover; it is knowledge of a transaction which might be a takeover.  On the other hand they say, look, there are all these documents, he might have gone into the office, looked through all these documents and then he would have known that there was a takeover under contemplation and a meeting was going to held to advance it.

Now, they are really two different cases.  The information is different and the material in the information is different.  Now, as you have pointed out, the Crown says by particularising particular 1 they become one case and the Crown says that is okay because these 28 further particulars are not information.  They say they are merely evidence of the real information I have which is particular 1.  I think that is a pretty clearly inaccurate way of characterising what happened here.  To say that, for example, further particular 1 is merely evidence of particular 1, it is not merely evidence of particular 1, it is the actual information I have.  So I suppose that is my response to paragraph 31, that it is wrong to characterise all these different pieces of information in the further particulars as merely evidence of particular 1.  They are not evidence of particular 1, they are the information. 

If I could go now on to ground 3, the ground on the Financial Transactions Reports Act.  In the 20 years since this section has been introduced, the offence in section 31(1) has grown in importance.  Originally it buttressed enforcement of criminal law.  Now it is at the very centre of offences designed to deal with international terrorism.  State courts have universally applied Chief Justice Doyle’s view on the standard of proof to ensure uniformity in the application of the federal statute.  New South Wales judges, most recently Chief Justice Spigelman in R v Lee did so not because they thought necessarily it was correct; they said the contrary view was arguable, but because of the need for consistency.  The view has been taken that if Chief Justice Doyle is wrong, it is up to this Court to declare that and, of course, Chief Justice Doyle is the originator of the view that the standard of proof is reasonable to conclude. 

My submissions are that unless your Honours are firmly of the view that Chief Justice Doyle is correct, you should grant special leave and my submission is that you should not be firmly of the view.  Firstly, there was a division in this Court in Leask when the question came before it.  Secondly, Chief Justice Doyle’s reasoning is based on a logical error.  He thought that imposing an objective test might require a court to convict when there was evidence before it that the accused did not actually have the sole or dominant purpose and this did not make sense for an offence directed against evasion.  But that is wrong because of the limitations on the evidence which can be considered in section 31(1)(b). 

An innocent explanation, if accepted, would result in an acquittal and if there is no innocent explanation which is accepted, there is going to be no admissible evidence which could conceivably ground a conclusion that the accused did not actually have the purpose even though a reasonable person would conclude that they did.  That argument was put to the court below, and the applicant’s summary of argument, and no challenge to it has been made.  Thirdly, the most fundamental protection in the criminal law, that of proof beyond reasonable doubt, has been abandoned without there being a syllable in the explanatory memorandum on section 31 or the parliamentary reports surrounding it suggesting such a statutory intention. 

There are also features of this case which make it an appropriate one to test the issue.  Firstly, the standard of proof is likely to make a difference to the outcome.  As I read the past special leave applications when this Court has been asked to rule on this issue in Leask and Lee, the Court’s reasons for not granting leave have related to the observation of the issue in dispute would make no difference to the outcome.  That is not the case here.  Secondly, I think the ground should be treated as an add on to the insider trading ground.  If your Honours do take the insider trading grounds, I submit you should take this ground.  You would have already examined the facts and it would be an efficient and effective way of dealing with an issue of statutory construction. 

In their written submissions, the Crown also asks you not to take this ground because of the subsequent passing of the Criminal Code.  In fact, that act will make no difference whatsoever to the point you are asked to decide.  In relation to the Criminal Code in R v Lee, four judges of the New South Wales Supreme Court agreed that whether the offence specifies a different standard of proof will not be determined differently at common law and under the Code and that issue does not turn upon the regime for criminal responsibility to be found in the Code.  Now, I am just concerned whether I have answered your Honour’s question about paragraph 31.  That is all I really have to say, but I am not sure whether I have answered it.  Could I just have another ‑ ‑ ‑

GUMMOW ACJ:   Yes, just take a minute to look at it again.

MR HANNES:   The answer is, the point we are making is that this is not an issue about the particular facts of this case.  It is an issues about, in an insider trading case, do you have to particularise what someone actually possessed, the information they actually possessed – they are the further particulars – or do you particularise what has been described as a conceptualisation and what Justice Basten described as a why, an uncertain conceptualisation, a hurdle?

Now, Chief Justice Spigelman in R v Hannes and President Mason in Rivkin said this is an offence where the particulars of the information are essential to a fair trial, and it is, because unlike any offence I am aware of, this is an offence where the particulars define, actually define, five out of the six elements of the offence.  It is the particularised information which has to be possessed, the particularised information which must be material, et cetera et cetera, and if the Crown is allowed to go around not describing the actual information you possess, but some conceptualisation of it, it leads to a miscarriage of justice.

Can  I also just say; this is a non‑trivial inference from the further particulars.  In other words, to go from knowledge that there is a transaction which might possibly be a takeover to knowledge that it is a takeover is in fact not an inference, it is a speculation.  To go from knowledge which is

the highest the evidence disclosed, that a meeting was going to be held in the future to discuss whether or not to make a takeover and what price to make it, to go from that to so‑called information that there was a takeover, it was likely and at a price in excess of $2, is not a non‑trivial inference from the information.  I think that is all I have to say.

GUMMOW ACJ:   There is a point about delay, is not there?  Do you want to say anything in addition to what is said in the affidavit explaining the need for extension of time?

MR HANNES:   No, I do not, your Honour.

GUMMOW ACJ:   Very well.  Yes, Mr Game?

MR GAME:   If the Court pleases, with respect to the indictment, if your Honours could go to page 1 of the application book, you will see the particulars there.  Those particulars, the Crown was required to prove position of all of those particulars, that is to say:

(i)It was likely that shares in TNT Limited would be the subject of a takeover offer at a price in excess of $2 per share;

and

(ii)The Corporate Advisory Division of Macquarie Corporate Finance was advising TNT Limited in connection with that potential takeover and had placed securities in TNT Limited on an embargo list. 

Now, we were made to prove that Mr Hannes possessed all of that information.  That information existed.  It did not just exist in Mr Hannes’ mind, that information existed in the world.  Now, these further particulars that the trial judge ordered, he subsequently said he regretted having ordered them and he ordered them at a stage when he did not understand the case fully and the further particulars had an important proviso on them which was that they were to be distinguished from how it was that we would approve possession of the information by Mr Hannes. 

We proved possession of the information by Mr Hannes in various ways.  If you go to the supplementary application book I will show your Honours some examples of how we prove that Mr Hannes possessed the information.  If you look at page 3 of the supplementary application book, that is Mr Hannes’ record of interview.  It is on 17 January 1997, three months after the takeover, after there had been what could only be described as an enormous hue and cry, Federal Court proceedings to seize the $2 million that were made on the sale, and in that Mr Hannes said at line 10:

Some time afterwards, he informed me –

Now this is the fictional person, Mark Booth –

that he had made an investment in TNT . . . TNT is a client of Macquarie Bank –

I might just pause there, your Honours.  Mr Hannes himself ticked the box inside Macquarie Corporate Finance confirming that TNT was on the embargo list and that was a piece of evidence in the Crown case and Mr Hannes ‑ ‑ ‑

GUMMOW ACJ:   How long was the trail, Mr Game?

MR GAME:   This was a re‑trial.  There was two to three months of pre‑trial argument in late 2001 and the re‑trial commenced in April and finished in, I think, September.

GUMMOW ACJ:   Conviction was on 11 September 2002, I think.

MR GAME:   Yes, your Honour, so it went for many months.  Now, in this passage he says ‑ ‑ ‑

GUMMOW ACJ:   The sentence obviously has been served?

MR GAME:   Yes, your Honour.  He says:

I was aware that there was working going on for TNT.  I had never on any occasion talked to him about the work that Macquarie Bank was doing for TNT.  If he had any knowledge of that, it was not through me . . . this transaction going on for TNT.

So, you can see that there is no real contest with Mr Hannes about his knowledge about what was going on inside TNT.

CRENNAN J:   That is particular 2 on page 1?

MR GAME:   Yes, but they have to be taken together, your Honour.  Now, may I say this also, we put our case in various ways but the first way was that you could prove Mr Hannes possessed this information by the very fact he went around using an elaborate subterfuge using his sister’s name, M Booth, tacking the name Mark onto the front of it creating a fictional character and fictional correspondence when he was an executive director inside Macquarie Corporate Finance, so we put it in that way.  Then we had these admissions.  You see the same on page 2 of the supplementary application book and that is a conversation with a Mr Moss who rings Mr Hannes up the day he is arrested.  You will see at line 45 on page 2:

Before I went on leave I had some general knowledge that an acquisition of TNT was being discussed –

You see further up the page, “I chose the name M Booth”.  Then if your Honours go to the supplementary application book you will see at page 5 a conversation with Mr Murdock and in that conversation with Mr Murdock Mr Hannes is questioning Mr Murdock, who is a very junior member of the team, maybe the most junior member, about his valuation of TNT and this is two months before Mr Hannes swings into action and buys these securities.  No doubt your Honours have appreciated that these securities are very unusual securities.  The $2 call options with an expiry at the end of November so that the share price is to go up 25 per cent in a very short period of time. 

Part of our case was that Mr Hannes made late night visits to Macquarie Corporate Finance at unusual times and during a period of extended leave.  We have attached to our latest submissions in response to Mr Hannes such a document that would have been in existence at the time of Mr Hannes’ late night visits I think around 22 August.  If you look at that document, when one talks about Mr Hannes drawing an inference, it says – I might just pause also, your Honours – this was the largest transaction that was taking place inside Macquarie Corporate Finance at the time and Mr Hannes was one of a small group of executive directors who met at a restaurant and in fact discussed, amongst other things, in passing, about this transaction.

So that when we talk about inferences or Mr Hannes talks about inferences, if you look at the first page of “Next Steps”, for example, you see the words “Draft Part B”, well, we are actually talking about a person with Mr Hannes’ knowledge appreciating that a Part B is the other side of a takeover.  You see on the bottom of that page “Final negotiations with K”, and then on the next page “Draft Part A”.  So, one is talking about working out things at a very basic level by Mr Hannes.  We have another document in the supplementary application book that shows this as well, which is a document that was in existence on the – it is at page 9 of the supplementary application book.

Can I just correct myself, that visit was on 21 August.  Now, that document there is a document in existence.  It is exhibit 123 on 11 September and the evidence was that Mr Hannes could get access to any of this material by turning on his computer and clicking on the TNT on “Tennis”.  So, we see, for example, on that document, “An offer of $2.40 per share should now be equivalent to $2.46”.  So, yes, there is an aspect of which the Crown said he could have come by this knowledge this way, but the Crown said that we did not have to prove that.  It was a way in which he could have come by this information. 

Now, your Honours, those are the facts and that is how the case was put and that is how the case was explicitly put by the trial judge to the jury.  It was never restricted in the way that has been put by Mr Hannes.  The judge specifically said that in the ruling of 6 December 2001 and in his directions to the jury.  Your Honours, if you go to the bundle of authorities, you will see the first document are the insider trading provisions.

There was a time in the securities industries code when the legislation referred to specific information, and the case of Ryan v Triguboff is about that, and it has come a long way since then, but information now includes, you will see, 1002A.  It does not matter, your Honours.  The section has changed, but it does not matter; the number has changed:

information includes:

(a)matters of supposition and other matters that are insufficiently definite to warrant being made known to the public ‑ ‑ ‑

GUMMOW ACJ:   That was the sequel to Triguboff, I suppose.

MR GAME:   Yes, it was.  It was specifically said to be that.  There was another case, a Victorian case called Green, which did not accept what was said in Triguboff.  If you talk about matters of supposition, then it involves things that can be worked out.  Let me give your Honours an example.  An insider who understands about aluminium production is told there is a contract for electricity (a) and (b) a contract for the purchase of bauxite will be able to work out that what is happening is some transaction or activity involving aluminium.  So they have to put – their mind works on information but their mind works on information and the information is the product, that is to say, the situation in which they are and what they make of the information.  The information exists but it is not written down on a piece of paper.  The same with a very weak piece of information plus a wink and a nudge.  The information is not the wink and the nudge, the information is what is inferred from it.  In fact, in this legislation, if your Honours look at general availability at 1002B(3), you will see:

Information is also generally available if it consists of deductions, conclusions or inferences made or drawn from –

So the legislation itself contemplates that information can be, shall we say, an inference drawn from other information. 

CRENNAN J:   Well, in a sense, the further particulars on 752, insofar as they refer to the accused inferred, you could use the word “suppose”.

MR GAME:   Yes, your Honour, you could.  May I say a matter about pleading and conducting a case.  A case that was a list, a great big long list of things, would be an improbable way to run a prosecution.  There must be a level at which the information is, shall I say, conceptualised.  It has to be proved that it exists and that the person possessed it.  In this case, beyond the ordinary requirements of criminal law we were required to prove that Mr Hannes possessed all of it.  So that is what we say about that subject. 

In relation to the second point about the particulars, in effect, what was attempted to be done was to restrict us in respect of in excess of $2 to mean at $2.01, but that was never the case that we put.  We were in fact required to prove non‑general availability and materiality of $2.01.  That in fact was again an unrealistic imposition on the prosecution because it was something about something that happened in excess of $2, that information that Mr Hannes possessed of the kind I have just shown you in the Next Steps documents is information, as the majority accepted in the court below, was information that went to establish those particulars.  So, it really is nothing more than the orderly application of the laws relating to particulars to a specific situation. 

In respect of the FTRA offences, things have moved a long way since Leask and in Leask there was a difference of opinion between Chief Justice Brennan and Justice Dawson, but it was not a difference of opinion about the standard of proof, because Chief Justice Brennan – and it is a view expressed in other cases at other times – was that reasonable to conclude was – there is no need to take your Honours to the judgments themselves – but was, shall I say, a quality of judgment.  Reasonable to conclude was an assessment as in, for example, goods in custody reasonably suspected.  It was a quality of judgment.  He was not attaching a standard of proof to it.  Such a direction would not have assisted Mr Hannes. 

At trial Mr Hannes argued that it should be established beyond reasonable doubt that it was reasonable to conclude.  That is the argument that he reserved and that is the argument that was rejected in this line of cases.  But beyond that, your Honours, what has happened since that time and in no sense is it immaterial, the Criminal Code has come in and since then there is a new money laundering provision which creates a statutory defence. 

Now, untangling the application of the fault and conduct provisions in respect of these provisions is complicated and whether or not it works at all is itself a moot question, but the case Lee is a decision where it has been worked out in the context of the Code.  In Lee special leave was sought and refused.  Lee has, in effect, been overtaken itself by the new money laundering legislation, so we are two steps removed.  We are in a hypothetical argument about whether or not Justice Dawson or Chief Justice Brennan ‑ ‑ ‑

GUMMOW ACJ:   What is the citation?

MR GAME:   It is in the bundle, your Honour.

HAYNE J:   Lee 170 A Crim R 287.

MR GAME:   Yes.  It is page 31.  Now, in that case, again it is complicated.  If I could explain it very briefly.  There was difference of opinion between Chief Justice Spigelman and Justice Sully.  Chief Justice Spigelman thought that the mental element was purpose and Justice Sully thought the mental element of the second element was intent.  Again, it is a very theoretical question in the context of what Mr Hannes did in this case.  If I could just show your Honours very briefly what Mr Hannes did.  It can be seen at page 702 of the application book. 

He obtained cash from a series of banks in the sums of $9,000.  After he had been to the CBA at Pitt Street, discovered that there was an FTRA reporting form which he signed and, thereafter, in the subsequent transactions bought lots of $9,000 in cash.  At 12.08 on the 9th he has completed those acts except for one further withdrawal he makes a little later and then at 12.27 on the same day he starts obtaining bank cheques, $9,000.  Now, a shortage of cash or anything could not explain how it comes about that a person in Mr Hannes position would be engaging in such, shall I say, unusual transactions. 

As I say, the question that was reserved is not the question that Mr Hannes wants to argue.  The question reserved appears in paragraph 714 at page 703 and, as I say, Chief Justice Brennan was not talking about the standard of proof at all in what he had to say in Leask.

GUMMOW ACJ:   Now I was a party to Leask, but I think the immediate point here is only considered to different effect by Chief Justice Brennan and Justice Dawson, that is right, is it not?

MR GAME:   That is correct.

GUMMOW ACJ:   Where is the reference by the Chief Justice?  Justice Dawson I think is at pages 598 and 599 of 187 CLR.

MR GAME:   We have extracted that, your Honour.

HAYNE J:   Pages 591 and 592 of Chief Justice Brennan.  Is it the foot of 591 over to 592?

MR GAME:   That is correct, your Honour.  It is extracted in our documents, your Honour, page 25 and following.

GUMMOW ACJ:   Thank you.

MR GAME:   Just pausing on that, we were required to prove that Mr Hannes was aware of the reporting requirements.  His only explanation for the cash was that he was unable to obtain cash in larger sums.  His explanation for the bank cheques was that is what he, that is to say, the person that does not exist, wanted.

GUMMOW ACJ:   Thank you Mr Game.  Yes, Mr Hannes, anything in reply?

MR HANNES:   Yes, your Honour.  Just a few things.  Firstly, in relation to the subsequent legislation, the Anti‑Money Laundering and Counter‑Terrorism Financing Act, section 142(1) and (3) of that new Act, which will come into effect in December, re‑enact section 31(1) in identical language. There can be no doubt, since it is in identical language, and the explanatory memorandum does not suggest there is any intention to change the effect of the section, that the existing authorities will be applied. In fact, the special leave application in R v Lee, the same argument Mr Game has put, was put by the Crown and, as I interpret Chief Justice Gleeson’s comment which is slightly ambiguous, but he seems to have dismissed it as a reason for not taking the ground and did not reject the application for that reason.  Secondly, Chief Justice Brennan did make a comment on the standard of proof and it can be found on page 592 of the CLR report in the third bottom line in the sentence

But as to these elements, the mental state of the alleged offender is irrelevant except as a factor in an explanation offered by the alleged offender which precludes (by raising a [reasonable] doubt) –

He must be saying that the standard of proof is ‑ ‑ ‑

GUMMOW ACJ:   “By raising a doubt” he says.

MR HANNES:   “By raising a doubt”, yes.  I think that that is where he makes that comment and has been interpreted as making that comment.  In relation to the indictment having to two particulars, particular 1 and particular 2, your Honours will be aware that the judge in the trial directed the jury that regardless of what they determined about particular 2, particular 1 was essential, namely, the jury had to find that particular 1 was possessed, that particular 1 was material and particular 1 was not generally available.  So it is a sine qua non to conviction.  In relation to the so‑called extended definition of inclination in the Act, the section that says:

information includes:

matters of supposition and other matters that are insufficiently definite to warrant being made known to the public –

that section does not say information includes suppositions the insider made.  It says “information includes matters of supposition” and “matters of supposition” is obviously envisaged to be something which is insufficiently definite to warrant being made known to the public.  That is what it is intended to cover.  So supposition is a conclusion or inference based on a hypothesis, an assumption, something that has not been fully proved.  So this section is meant to catch this sort of circumstance.  A company decides to make a takeover subject to getting bank approval, that information is a supposition.  It depends on getting bank approval.  It would not have to be announced under the listing requirements but it is nevertheless information.

Similarly, the section on general availability that you had been taken to, where it says something is generally available, it can be made as an inference from other publicly available information.  This argument was run on appeal and was not accepted by the court.  That section simply says that if I know something which even if it is not out there in that particular form could be inferred from public information, it is generally available.  It does not say that the thing I know is a result of an inference. 

Finally, the Crown has run a lot of arguments that the position in particular 1 can be inferred from conduct alone.  Let me just point out, as a matter of logic, on the Crown’s case that is impossible.  If I could just take you to page 757 of the application books, the second last sentence in that paragraph where the Crown says – and this is the Crown’s case:

A takeover offer for more than the existing share price will necessarily have a similar effect –

that is a material effect –

even if the offer is less than the option exercise price.

In other words, the Crown case was that a likely takeover at $1.70 – less than $2 – would still make the price increase and increase the price of the options.  That admission alone means it cannot be the only reasonable inference from purchase of the options that you had particular 1, because a takeover at less than $2 would have been material.

GUMMOW ACJ:   Thank you, Mr Hannes.

We will take a short adjournment.

AT 10.20 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.26 AM:

GUMMOW ACJ:   This application concerns the conviction on 11 September 2002 of the applicant for special leave on charges of insider trading contrary to the Corporations Act 2001 (Cth) and of conducting transactions so as to avoid reporting requirements contrary to the Financial Transaction Reports Act 1988 (Cth). The sentence imposed on the applicant has been served.

On 24 November 2006 the Court of Criminal Appeal of New South Wales dismissed an appeal against the convictions.  The draft notice of appeal puts forward three grounds.  As to the first, the question of whether there were any limitations on the concept of information for the purposes of the Corporations Act, section 1002G, now section 1043A, has not been considered by the High Court and is a question of public importance. However, in the circumstances of this case there are insufficient prospects of success to warrant a grant of special leave in relation to that question.

Secondly, the difference between the majority and the minority in the Court of Criminal Appeal as to the distinction between particularised information and the Crown case is essentially a difference to the application of settled law to the particular facts making the case inappropriate for consideration by the High Court. 

As to the third ground, factual disputes between the parties also render this case an inappropriate vehicle for considering the relevant language in the Financial Transaction Reports Act 1988 (Cth), in particular, the formula “reasonable to conclude” dealt with by the High Court in Leask v Commonwealth (1996) 187 CLR 572 by Chief Justice Brennan and Justice Dawson. The differing views as to whether the formula imposed an objective test (see Chief Justice Brennan at 591 to 592) or whether it modified the standard of proof (see Justice Dawson at 598 to 599) are not likely to lead to different results on the facts of this case.

Having regard to the particular circumstances, we are not persuaded that in any of these respects, or more generally, that the interests of justice require a grant of special leave.  The necessary extension of time is granted, but the order made on 7 March 2008 is affirmed and we direct that the order now be entered.

AT 10.29 AM THE MATTER WAS CONCLUDED