Milne v R

Case •

[2012] NSWCCA 24

•

02 March 2012

Court of Criminal Appeal


Supreme Court


New South Wales

Medium Neutral Citation: Milne v R [2012] NSWCCA 24
Hearing dates:15 and 16 August 2011
Decision date: 02 March 2012
Before: Whealy JA
Latham J
Harrison J
Decision:

1.  Appeal against conviction is dismissed.

2.  Leave to appeal against sentence is granted.

3.  Appeal against sentence is dismissed.

Catchwords:

CRIMINAL LAW - APPEAL AGAINST CONVICTION - money laundering - (s 400.3(1) Criminal Code (Cth)) - dishonestly obtain gain from Commonwealth (s 135.1(1) Criminal Code (Cth)) - money laundering involving creation and misuse of offshore structure - dishonest obtaining offence involving deception of accountants and lodgement of false tax return - failure to declare capital gain - share swap designed to hide capital gain - transfer of legal ownership of shares with retention of the beneficial ownership - whether there was evidence to support the first charge - whether trial judge correctly refused verdict by direction - whether the shares involved in the transaction were intended by the offender to facilitate the commission of an offence - meaning of "used to facilitate" - whether facts capable of constituting money laundering offence - whether trial judge failed to give essential directions - whether a miscarriage of justice occurred - whether verdicts were unreasonable - whether capital gains event occurred in relevant financial year or later.

CRIMINAL LAW - SENTENCE APPEAL - not guilty plea - grossly understated capital gain in false tax return - separate criminality in each of two related offences - loss to revenue of at least $1.9 million in capital gains tax - assessment of overlapping criminality - whether sentencing judge erred in assessment of criminality - whether totality principles correctly applied - whether sentences imposed reflected double punishment - substantial aspects of criminality in each offence - need for substantial sentences for each offence - importance of general and special deterrence in revenue avoidance offences - whether sentences were appropriately accumulated - whether good character overlooked - whether facilitation of the course of justice overlooked - whether sentences were manifestly excessive.
Legislation Cited: - Crimes Act 1914 (Cth) - s 16A(1)
- Criminal Appeal Act 1912 (NSW) - s 6
- Criminal Code Act 1995 (Cth) - ss 134.2, 135.1(1), 400.1, 400.3(1), 400.13, Div 400 of Part 10.2 of Chap 10
- Evidence Act 1995 (NSW) - s 184
- Foreign Evidence Act 1994 (Cth)
- Income Tax Assessment Act 1997 (Cth) - ss 104-110
- Proceeds of Crimes Act 1987 (Cth) - ss 81, 82
Cases Cited: - Ansari v R [2010] HCA 18; 266 ALR 446
- Bugmy v R [1990] HCA 18 169 CLR 525
- Cahyadi v The Queen (2007) 168 A Crim R 41
- DAO v R [2011] NSWCCA 63
- Deakin v R [1984] HCA 31; 58 ALJR 367
- Director of Public Prosecutions (Cth) v Gregory [2011] VSCA 145
- Doney v R (1990) 171 CLR 207
- Draper v Police [2009] SASC 264
- Hili v R; Jones v R [2010] HCA 45; (2010) 272 ALR 465
- House v R (1936) 55 CLR 499
- M v R (1994) 181 CLR 487
- Markarian v R [2005] HCA 25; (2005) 215 ALR 213
- Nahlous v R [2010] NSWCCA 58; 77 NSWLR 463
- Nudd v R (2006) 80 ALJR 614
- Pearce v R [1998] HCA 57; 194 CLR 610
- Power v The Queen [1974] HCA 26; 131 CLR 623
- R v Adler [2005] NSWSC 274
- R v Ansari [2007] NSWCCA 204; 70 NSWLR 89
- R v Foster [2008] QCA 90; (2009) 1 QdR 53
- R v Gallagher (1991) 23 NSWLR 220
- R v Guo; R v Quian [2010] NSWCCA 170
- R v Hargraves and Stoten [2010] QCA 328
- R v Jones; R v Hili [2010] NSWCCA 108
- R v Lodhi [2006] NSWSC 691
- R v R (1989) 44 A Crim R 404
- R v Rivkin [2004] NSWCCA 7
- R v Wheatley [2007] VCC 718; (2007) 67 ATR 531
- R v Williams [2005] NSWSC 315; 152 A Crim R 548
- R v Wing Cheong Li [2010] NSWCCA 125
- Schembri v R [2010] NSWCCA 149
- SKA v R [2011] HCA 13; 85 ALJR 571
- Sunshine Worldwide Holdings Pty Limited, Re [2005] NSWSC 117; 62 NSWLR 400
- Thorne v R [2009] NSWCCA 294
- TKWJ v The Queen (2002) 2012 CLR 124
- Weiss v The Queen (2005) 224 CLR 300
- Wong v The Queen (2001) 207 CLR 584
Category:Principal judgment
Parties: Michael John Milne (Appellant)
Crown (Respondent)
Representation: Counsel:
L.P. Robberds QC, M.A. Polden (Appellant)
P. Hastings QC, D. Jordan (Crown)
Solicitors:
Johnson Winter & Slattery (Appellant)
Commonwealth Director of Public Prosecutions (Respondent)
File Number(s):2008/054586 2008/269487
 Decision under appeal 
Jurisdiction:
9111
Before:
Johnson J
File Number(s):
2008/054586
2008/269487

Judgment

  1. THE COURT : In November 2010, the appellant was found guilty by a jury in the Supreme Court on one count of "money laundering", contrary to s 400.3(1) of the Criminal Code Act 1995 (Cth) ("the Code"), and one count of doing an act with the intention of dishonestly obtaining a gain from the Commonwealth, contrary to s 135.1(1) of the Code.

  1. On 17 December 2010, Johnson J (the trial judge) imposed the following sentences on the appellant:

(a) In relation to the conviction for money laundering, contrary to s 400.3(1) of the Code, the appellant was sentenced to imprisonment for a period of 7 years, to date from 17 December 2010 and to expire on 16 December 2017.

(b) In relation to the conviction of doing an act with the intention of dishonestly obtaining a gain from the Commonwealth, contrary to s 135.1(1) of the Code, the appellant was sentenced to imprisonment for a period of 3 years and 6 months, to date from 17 December 2015 and to expire on 16 June 2019.

(c) In relation to both sentences, his Honour fixed a non-parole period of 4 years and 9 months to date from 17 December 2010 and to expire on 16 September 2015.

  1. By Notice of Appeal filed on 6 April 2011, the appellant appeals against both convictions and seeks leave to appeal against sentence. For convenience, we shall describe him as "the appellant" in relation to both the conviction appeal and the sentence appeal.

An overview

  1. It will be necessary in due course to state with some particularity the facts relating to the transactions and events underlining the jury's verdict and the trial judge's remarks on sentence. For the moment, however, we shall briefly state the nature of the case. Essentially, the Crown case was that the appellant had acquired through his private company, Barat Advisory Pty Ltd, a significant parcel of shares in a company, Admerex Limited ("Admerex"), at negligible cost. Thereafter, he took advice and proceeded to establish tax-deferral arrangements involving overseas entities through which, ultimately, the shares were disposed. The short term feature of the arrangements was the necessity to pass the legal and beneficial ownership to the overseas entities. A critical dealing in the shares was the later "swap" of some 48 million Admerex shares for 1 million Temenos shares. The Crown alleged that the appellant, prior to the swap, had in a number of respects deliberately and significantly departed from the terms of the tax advice he had been given and the structure which had been established by his lawyers. He did so with the ultimate intention of avoiding the payment of capital gains tax liabilities that might later arise. In particular, it was the Crown case that Barat Advisory Pty Ltd retained the beneficial ownership of the shares. When the opportunity ultimately arose to dispose of the Admerex shares, once again, the appellant did so, contrary to the terms of the tax advice and with the same intention of avoiding Capital Gains Tax (CGT). The structure of, and the dealings involved in, these transactions were complex. Relevant transactions occurred both in Australia and overseas between January 2003 and September 2005. It was the Crown case that the CGT liability arose in the 2005 financial year. The Admerex shares, on the Crown case, were critical to the exercise. The appellant's activities relating to the shares were critical to an assessment of the appellant's intentions. These circumstances constituted the money laundering offence.

  1. The appellant had a number of dealings with his accountants in the process of producing the accounts and income tax return for Barat Advisory Pty Ltd. These dealings traversed the period between May 2005 and November 2006. The 2005 tax return was lodged on or about 13 November 2006. The Crown case was that the appellant, in this tax return, intentionally omitted the true CGT position, with the consequence that tax was avoided in an amount somewhere between $1.9 million and $2.4 million. Further, it was alleged the appellant had deceived and misled his accountants in a number of respects. These were the circumstances relating to the second charge in the indictment.

The Indictment

  1. The Indictment contained the following counts:

(a) Count 1 - Between about 30 April 2004 and about 30 September 2005 at Sydney in the state of New South Wales and elsewhere [the appellant] dealt with property, intending that the property, namely a parcel of shares, would become an instrument of crime, in that it would be used to facilitate the commission of an offence by Barat Advisory Pty Ltd and at the time of the dealing, the value of the property was $1 million or more (s 400.3(1) Criminal Code Act 1995 (Cth) - maximum penalty - 25 years imprisonment);

(b) Count 2 - On or about 13 November 2006 at Sydney in the state of New South Wales [the appellant] did, with the intention of dishonestly obtaining a gain from the Commonwealth, caused to be lodged an income tax return in the name of Barat Advisory Pty Ltd for the year ending 30 June 2005 containing false information, namely that the net capital gain from the sale of the shares in Admerex was $4,597 (s 135.1(1) Criminal Code Act 1995 (Cth) - maximum penalty - 5 years imprisonment).

Crown Case Statement

  1. The Crown Case Statement set out, in some considerable detail, the factual matters that it asserted would be proved at trial. In addition, it stated succinctly the way in which it would suggest those facts should be applied to each of the counts in the Indictment. As to the money laundering count, the Crown Case Statement (paragraphs 165-172) (with footnotes and evidentiary references omitted) stated:

165. Count 1 avers that, contrary to section 400.3(1) of the Criminal Code, [the appellant] between about 30 April 2004 and about 30 September 2005 at Sydney in the state of New South Wales and elsewhere dealt with property, intending that the property, namely a parcel of shares, would become an instrument of crime, in that it would be used to facilitate the commission of an offence by Barat Advisory Pty Ltd and at the time of the dealing, the value of the property was $1 million or more.
[ The appellant] dealt with property
166. On or around 3 February [the appellant] dealt with property, namely the 48 million Admerex shares, when on behalf of Barat Advisory he disposed of those shares by exchanging them for 1 million Temenos shares.
Intending that the property would become an instrument of crime
167. The Admerex shares remained under the beneficial ownership and effective control of Barat Advisory through the accused, after they were purportedly transferred into the Stichting Group companies on or around 11 June 2004. At the time of that purported transfer, and subsequently, [the appellant] intended to use the Stichting groups to conceal the disposal of the Admerex shares, and the proceeds of such disposal, in order to avoid the payment by Barat Advisory of Capital Gains Tax.
168. When the 48 million Admerex shares were disposed of on 3 February 2005, by exchanging them for 1 million Temenos shares, [the appellant] intended to avoid the payment by Barat Advisory of tax on the capital gain which was derived as a result of that disposal. For that purpose, [the appellant] used the Stichting groups to conceal the disposal of the 48 million Admerex shares and the proceeds of that disposal.
169. As such, [the appellant] intended that the 48 million Admerex shares would be used in the commission of, or used to facilitate the commission of, an offence that may be dealt with as a Commonwealth indictable offence, namely the obtaining by Barat Advisory of a financial advantage by deception, contrary to section 134.2 of the Criminal Code.
170. On this basis [the appellant] intended that the 48 million Admerex shares would become an instrument of crime.
At the time of the dealing the value of the property was $1 million or more
171. When the 48 million Admerex shares were disposed of on 3 February 2005, by exchanging them for 1 million Temenos shares, they were valued on the Australian Stock Exchange at between $8.4 million and $9.120 million.
172. Alternatively, when they were disposed of on 3 February 2005, the 48 million Admerex shares were valued at between $8.480 million and $9,494,012.30 being the value of the 1 million Temenos shares for which they were exchanged.

  1. In relation to Count 2, the Crown sought to apply the facts in the Crown Case Statement to the elements of the dishonest obtaining offence as follows:

174. On or about 13 November 2006 [the appellant] caused to be lodged an income tax return in the name of Barat Advisory for the financial year ending 30 June 2005.
175. That tax return contained false information, namely that the net capital gain in the financial year ended 30 June 2005 when the sale of share in Admerex was $4,597. This information was false because Barat Advisory derived a net capital gain of between $6.560 million and $7.574 million from the disposal of the 48 million Admerex shares on or around 3 February 2005.
With the intention of dishonestly obtaining a gain from the Commonwealth
176. [The appellant] intended to obtain a gain for Barat Advisory from the Commonwealth, namely, keeping the capital gain derived from the disposal of the 48 million Admerex shares and avoiding the payment of tax on that capital gain.
177. The intention of [the appellant] was dishonest because:
(i) [The appellant] was aware that tax was payable on any capital gain derived from the disposal by Barat Advisory of the Admerex shares, including the 48 million Admerex shares; and
(ii) [The appellant] used the Stichting groups to conceal the disposal of the Admerex shares, including the 48 million Admerex shares, and the proceeds of such disposal, in order to avoid the payment by Barat Advisory of tax on any such capital gain.

Outline of Crown case

  1. We shall provide a more detailed outline of the Crown case at this stage. The trial judge, in a lengthy and comprehensive exercise, detailed the facts in his remarks on sentence. That section of the sentencing decision encompassed some 43 pages of closely expressed factual material. The present outline will not descend to that detail. Where it is necessary for us to refer to more detail, having regard to the particular grounds of appeal relied on, we shall do so at a later stage.

  1. It is convenient to start in 2003. On or around 16 January 2003, the appellant entered into a Mandate Agreement with Sinitus Treuhand AG ("Sinitus") concerning Clairmont Holdings and Finance Limited ("Clairmont Holdings and Finance").

  1. Sinitus was a Swiss financial services company. Urs Meisterhans was a partner at Sinitus. Mr Meisterhans became a significant participant in events connected to the offences. Clairmont Holdings and Finance was a company incorporated in the British Virgin Islands.

  1. The Mandate Agreement provided that, in return for a fee to be paid by the appellant, Sinitus would act as directors and/or officers of Clairmont Holdings and Finance, and would act exclusively on instructions received from the appellant or his attorney. On this basis, the appellant controlled Clairmont Holdings and Finance. There was thus a history of Mr Meisterhans receiving instructions from the appellant and acting on those instructions.

  1. In or around May 2003, the appellant was introduced to Kim Goodall. Mr Goodall became a significant witness for the prosecution at trial, although his credit and reliability was attacked by the appellant. Mr Goodall had previously been involved in a Swiss software development company known as Temenos Group AG ("Temenos").

  1. In 2003, the appellant encountered a situation which was to lead to what the trial judge later described as a "windfall". As at 21 May 2003, Global Technology Limited ("GTL") was owed a debt of approximately $11 million (later found to be closer to $8 million) by Global Technology Australasia Limited ("GTAL"). GTL was a company registered in South Africa and was the holding company of GTAL, which was a publicly listed company registered in Australia. GTAL had no funds to pay the debt. As part of a complex series of negotiations, on 21 May 2003, GTL and Clairmont Holdings and Finance signed a Debt Assignment Agreement.

  1. Pursuant to this agreement, GTL sold the debt to Clairmont Holdings and Finance for $1, payable if and when demanded. Consequently, GTAL owed a debt of approximately $11 million (later found to be closer to $8 million) to Clairmont Holdings and Finance. The appellant, in July 2003, was appointed as an Executive Director and Acting Chief Executive Officer of GTAL and its subsidiaries. On 10 July 2003, GTAL changed its name to Admerex Limited.

  1. On 15 August 2003, on instructions from the appellant, Barat Advisory Pty Ltd ("Barat Advisory") was registered with the Australian Securities and Investment Commission. From the time of its incorporation, the appellant has been the sole director and shareholder of Barat Advisory. It was accepted that, at all relevant times, the appellant was the controlling mind of Barat Advisory.

  1. In or around October 2003, the appellant and Mr Goodall decided to acquire approximately $7.9 million of the debt owed by Admerex to Clairmont Holdings and Finance. On 18 November 2003, Clairmont Holdings and Finance sold $2,236,459 of the debt owed to it by Admerex to Barat Advisory. In consideration for obtaining the debt owed to it by Admerex in the sum of $2,236,459, Barat Advisory was required to pay $1.5 million to Clairmont Holdings by 20 November 2003.

  1. Barat Advisory did not pay the $1.5 million it owed to Clairmont Holdings and Finance as consideration for its acquisition of the relevant part of the debt owed by Admerex.

  1. On 18 November 2003, Clairmont Holdings and Finance sold $5,665,692 of the debt owed to it by Admerex to Atticus Investments Inc ("Atticus"), a company operated by Mr Goodall. Similarly, this debt was part of the debt acquired by Clairmont Holdings and Finance on 21 May 2003, before GTAL changed its name to Admerex. Atticus was required to pay $3.8 million to Clairmont Holdings and Finance by 20 November 2003, and such a payment was made on or around 20 November 2003.

  1. On 24 November 2003, Mr Goodall was appointed as Director of Admerex, and he continued thereafter to be a Director of Admerex.

  1. On 19 December 2003, Barat Advisory opened a bank account with the Commonwealth Bank of Australia (the Barat Advisory CBA account). This bank account was opened at the direction of the appellant. Barat Advisory operated this account during the period from 19 December 2003 until 19 November 2007. The appellant was the only person authorised to operate the account. Barat Advisory also operated a second bank account with St George Bank (the Barat Advisory St George account).

  1. On 30 April 2004, allotments of shares in Admerex were made to both Barat Advisory and to Atticus to repay the debts owed by Admerex respectively to Barat Advisory and Atticus.

  1. In the case of Barat Advisory, an allotment of 55,911,475 shares in Admerex was issued at a value of 4 cents per share. It was this parcel of shares that became the focus of the prosecution case in relation to Count 1 and indirectly to Count 2 in the indictment.

  1. The issue of Admerex shares on 30 April 2004, in order to repay the debts owed by Admerex to Barat Advisory and Atticus, was the subject of an independent expert's report, which concluded that the issue of shares was fair and reasonable to other Admerex shareholders and was approved at an Annual General Meeting of Admerex shareholders on 30 April 2004.

  1. On 7 January 2005, the appellant resigned as a Director of Admerex.

  1. The Crown case was that the appellant now found himself in a position whereby his company, Barat Advisory, had acquired an asset in the form of the Admerex shares with the value of at least $2.2 million in circumstances where Clairmont Holdings and Finance, which was also controlled by the appellant, had acquired the original asset, being the debt of approximately $11 million (later to be assessed at $8 million) at a cost of $1. It was the Crown case that the appellant was, by this fortunate situation, now confronted with the problem of determining how to realise the profit from those transactions without having the proceeds substantially diminished by an obligation to pay tax, particularly CGT.

  1. The Crown case was that, with these concerns in mind, the appellant approached Anne Harley, a solicitor and partner at Atanaskovic Hartnell, who had considerable experience in taxation law. The appellant had met Ms Harley in 2000, and she had provided professional advice to him from time to time thereafter. Ms Harley was a Crown witness at the trial. The appellant sought advice from her as to how the 55 million Admerex shares could be placed within a structure to facilitate the sale of those shares to offshore investors. There were tax advantages involved in the discussions.

  1. In response to the appellant's request for advice, Ms Harley developed an offshore structure which used offshore companies and entities known under Dutch law as "Stichtings". Ms Harley had previously used a Stichting Group structure for another client.

  1. The offshore structure developed by Ms Harley consisted of 5 Stichting and 5 offshore companies ("the Stichting Group").

  1. The 5 Stichtings established by Ms Harley were known, respectively, as:

(a) Stichting Black;

(b) Stichting Adelaar;

(c) Stichting Badinage;

(e) Stichting Wijsheid; and

(d) Stichting Aurelius

  1. These 5 Stichtings were established on 11 June 2004, and were administered on behalf of the appellant by a Dutch administration services company known as Citco Nederland BV ("Citco").

  1. The offshore companies were:

(a) Challinor Equities Limited;

(b) Schlossman Partners Limited;

(c) Thouvanel Investments (Asia Pacific) Limited;

(d) Metevier Securities International Limited; and

(e) Vaillendourf Europe Limited.

  1. These companies were incorporated in St Vincent and the Grenadines by Mr Meisterhans, at the request of Ms Harley, on 3 June 2004. Mr Meisterhans was appointed as a Director of each of these companies.

  1. Each Stichting was the sole shareholder of one of the offshore companies. Each Stichting Group was in similar form, and was established by documentation which was essentially the same in content and purpose. The documentation in each case included a Master Investment Futures Agreement and Form of Confirmation between the appellant and each Stichting. The termination date in each case was 1 July 2005, although it was anticipated, as part of the structure, that the termination date would be extended for a further period or periods, not exceeding 10 years.

  1. Under this Agreement, on 1 March of each year until the termination date, the appellant was obliged to pay the Stichting the shortfall, if any, between the dividend paid or payable by the relevant company to the Stichting in respect of the financial year immediately preceding that date, and the amount equivalent to 10 per cent of the committed capital of the company. As the committed capital of each Stichting, however, was US$100, the appellant's maximum exposure in respect of each annual payment, and the ultimate termination payment, was US$10. The appellant was not entitled to any payment by the Stichting or the company, and was not entitled to any of the assets of the Stichting or the company, until after the termination date.

  1. There was also a Deed of Charge in each case, dated 11 June 2004. This was a deed made between the appellant and the relevant Stichting. Under this Deed of Charge, the Stichting could not deal with, sell or otherwise dispose or part with possession of the shares it held in the company, unless it had prior written consent of the appellant. There were other restrictions as well.

  1. It appears that, in the period between May and August 2004, Ms Harley explained to the appellant, both orally and in writing, that:

(a) There would be tax payable on the initial disposal of the shares, but during the term of the arrangement there would be no tax liability.

(b) The appellant would not be entitled to the benefits of the assets of the Stichting Group until after the termination of the Stichting Group structure. (It appears the structure was intended to have an overall life of about ten years).

(c) For both company law and taxation purposes, neither the Stichtings nor the companies were associated.

(d) None of the Stichting Group companies were required to lodge a substantial shareholder notice and subsequent disposal of Admerex shares by the Stichting Group companies would, so long as Admerex remained listed on the Australian Stock Exchange, be free of CGT.

(e) Any payment the appellant would receive upon the termination of the Stichting Group structure would be subject to CGT in Australia if that payment represented a capital gain on the value of the assets which had been held in that Stichting group; and

(f) The Stiching group companies were required to act independently of the appellant and independently of one another. His only interest would be financial and protected by the documentation, especially the Deeds of Charge.

  1. On or around 11 June 2004, the appellant signed a document in relation to each of the 5 Stichtings, entitled "Declaration of Source of Funds". This identified the appellant to be the beneficial owner of funds used to establish the Stichtings, and of any funds which might from time to time be transferred into the names of the Stichtings. The appellant was also identified as the beneficial owner of assets in documentation which opened accounts, on or around 15 June 2004, in the name of each of the Stichting Group companies. These accounts were with a Swiss bank known as EFG Bank AG ("EFG Bank"). These accounts were opened by Mr Meisterhans, who was also nominated as the sole signatory in relation to each of the accounts.

  1. One of the critical issues at trial was whether, when the 55 million Admerex shares were transferred to the Stichting Group, Barat Advisory (with the appellant as its controlling mind) retained beneficial ownership of them. The documentation to which we have referred in the last paragraph was clearly evidence that pointed in that direction. Ms Harley, however, gave evidence that, in her opinion, the appellant had no such beneficial ownership and that the documentation which identified the appellant as the beneficial owner was only provided at the insistence of Citco and EFG Bank. In his remarks on sentence, the trial judge indicated that the guilty verdicts demonstrated that the jury must have been satisfied in relation to this issue. In other words, the jury must have been satisfied that, contrary to Ms Harley's opinion, Barat Advisory retained the beneficial interest in the 55 million Admerex shares after the legal title was transferred to the Stichting Group companies on or around 11 June 2004. As we have said, this was a critical issue at trial and it has become a critical ground of appeal in these proceedings.

  1. On 11 June 2004, the appellant signed 5 documents entitled, "Standard Transfer Form for Non-Market Transactions" on behalf of Barat Advisory. These documents were evidence that, on that day, Barat Advisory transferred the 55 million Admerex shares to the 5 Stichting Group companies in 5 parcels of shares at a value of 5 cents per share. The total stated consideration for these 5 parcels of shares (comprising in all the 55 million Admerex shares) was $2,795,573.75.

  1. Following the transfers, the appellant signed a document which stated that he had disposed of his indirect interest as the sole shareholder of Barat Advisory in the 55 million Admerex shares. Similarly, on 15 June 2004, he signed a "Notice of Ceasing to be a Substantial Shareholder".

  1. The appellant gave instructions to the Company Secretary of Admerex for the placement of the 55 million shares with ANZ Nominees. They were to be held on behalf of the 5 Stichting Group companies in an ANZ Nominees account operated by EFG Bank. These instructions were followed.

  1. There was evidence at trial that the appellant, in June 2004, told Mr Goodall that he had sold the 55 million Admerex shares to give himself a tax position in Australia; that CGT would be payable on that disposal, but that he did not have a tax liability on any further increases in the value of the Admerex shares.

  1. The financial statements for Barat Advisory for the financial years ending 30 June 2004 and 30 June 2005 did not record any debt owed to Barat Advisory by any of the Stichting Group companies for the transfer of the 55 million Admerex shares. Similarly, the Barat Advisory CBA account statements did not show any payment to Barat Advisory by any of the Stichting Group companies in respect of the transfer of the shares. A similar position applied to the statements for the St George account.

  1. Contrary to the terms that governed the Stichting group, as they had been established by Ms Harley, there was no dividend paid by any of the Stichting group companies to any of the Stichtings. Similarly, the appellant did not make any annual payment to any of the Stichtings representing the shortfall between the dividend paid, or payable, by any of the Stichting Group companies and the amount equivalent to 10 per cent of the committed capital of any of the Stichting Group companies. Nor was there any payment made on the termination date.

  1. During 2004, Admerex began to explore a capital raising transaction involving a Swiss Bank known as "SwissFirst Bank AG" ("SwissFirst Bank"). Earlier that year, in April 2004, Admerex (Ireland) Limited ("Admerex (Ireland)") was incorporated in Ireland. The appellant was appointed as one of the Directors of this company. The capital raising transaction envisaged required Admerex (Ireland) to provide to SwissFirst Bank 5 million shares in Temenos. These shares were owned by Mr Goodall and were to be provided by Admerex (Ireland) as security to SwissFirst Bank.

  1. On 8 December 2004, Mr Goodall gave instructions for 5 million Temenos shares, owned by him, to be transferred to SwissFirst Bank as security for a loan by SwissFirst Bank to Admerex (Ireland) in accordance with the terms of the proposed capital raising transaction. There was a Letter of Intent entered into between Admerex and SwissFirst Bank which confirmed the terms of the venture. A bridge loan was contemplated to be secured by 5 million Temenos shares, owned by Mr Goodall, to be assigned and transferred to SwissFirst Bank by Admerex (Ireland).

  1. On or around 24 December 2004, 5 million Temenos shares owned by Mr Goodall were transferred to SwissFirst Bank as security for the bridge loan to Admerex (Ireland) in accordance with the Letter of Intent. The shares were placed in a SwissFirst Bank holding account. On a cost-price basis, the value of the 5 million Temenos shares at that time was approximately equivalent to $53,550,000.00.

  1. On or around 27 December 2004, the SwissFirst bank account in the name of Admerex (Ireland) had as its signatories the appellant and Mr Meisterhans.

  1. On 30 January 2005, the appellant travelled into Switzerland on behalf of Admerex and Admerex (Ireland) to renegotiate with SwissFirst Bank the capital raising transaction described in the Letter of Intent. On or around 2 February 2005, while he was in Switzerland, the appellant telephoned Mr Goodall from Zurich. The appellant told Mr Goodall that the capital-raising deal was to be changed, and that the security provided by Admerex (Ireland) would only need to be 3 million Temenos shares, not the 5 million Temenos shares as had been previously required under the Letter of Intent.

  1. During the same telephone conversation, the appellant told Mr Goodall that Mr Goodall would get a million Temenos shares back, and said he (the appellant) would take a million Temenos shares for 49 million Admerex shares. Mr Goodall replied, "OK, the deal needs to be renegotiated and we will discuss it when we get back". This, the trial judge found, was the share swap which, according to the jury's verdict, constituted a contract for the disposal of at least 48 million Admerex shares. It was this transaction that precipitated a CGT event.

  1. Thereafter, the appellant (with the aid of Mr Meisterhans), acted promptly in a manner consistent with there being such an arrangement, with sale transactions occurring concerning the 1 million Temenos shares, and funds thereafter being directed for the appellant's use.

  1. On 2 February 2005, Admerex (Ireland) and SwissFirst Bank agreed to terminate the Letter of Intent. The agreement to terminate was signed by the appellant, on behalf of Admerex (Ireland) and was authorised by Mr Goodall. On the same day, Admerex (Ireland) sent a security delivery order which instructed SwissFirst Bank to transfer 1 million Temenos shares to a safe custody account with SwissFirst Bank in the name of Challinor Equities. Mr Meisterhans wrote to SwissFirst Bank on the same day, directing that the account was to be opened so that it could hold the 1 million Temenos shares which were to be transferred by the bank to Challinor Equities.

  1. On 2 February 2005, account number 6048 was opened at SwissFirst Bank in the name of Challinor Equities. Mr Meisterhans was nominated as one of the authorised signatories to the account, together with two other Directors of Sinitus. The appellant was identified as the beneficial owner of the assets held in the Challinor Equities SwissFirst Bank account, but was not nominated as a signatory to the account.

  1. On 3 February 2005, SwissFirst Bank confirmed that, as instructed by Mr Meisterhans, it had transferred 1 million Temenos shares from SwissFirst Bank account number 7900 into the Challinor Equities SwissFirst Bank account. In addition to the 1 million Temenos shares transferred to the Challinor Equities account, a further 1 million shares was transferred to EFG Bank, to be held on behalf of Mr Goodall.

  1. The SwissFirst Bank transfer documentation indicated that the cost-price of the Temenos shares was CHF9.4 per share, as at the time they were placed into the Challinor Equities SwissFirst Bank account. On this basis, in Australian dollar terms, the cost-price of the 1 million Temenos shares was equivalent to approximately $10,141,331.00 as at 3 February 2005. However, the account opening documentation for the Challinor Equities SwissFirst Bank account stated that the starting inventory for the account was 1 million Temenos shares valued at CHF8.8 million. On this basis, the value of the 1 million Temenos shares was equivalent to $9,494,012.30 as at 3 February 2005.

  1. On 3 February 2005, Temenos shares were traded on the Swiss Stock Exchange at a value between CHF7.85 and CHF8.09 per share. On this basis, 1 million Temenos shares were valued on the Swiss Stock Exchange at the equivalent of between approximately $8,469,090.00 and $8,728,018.00 on that date.

  1. In exchange for the transfer on 3 February 2005 of the 1 million Temenos shares into the Challinor Equities SwissFirst Bank account, the appellant arranged for 48 million Admerex shares to be held, on behalf of Mr Goodall, in accounts in the name of Stichting Group companies, as follows:

(a) 11,900,000 Admerex shares were held by ANZ Nominees on behalf of the Schlossman Partners EFG Bank account;

(b) 11,500,000 Admerex shares were held by ANZ Nominees on behalf of the Thouvanel Investments EFG Bank account;

(c) 13,500,000 Admerex shares were held by ANZ Nominees on behalf of the Metevier Securities EFG Bank account; and

(d) 11,100,000 Admerex shares were held by ANZ Nominees on behalf of the Vaillendourf Europe EFG Bank account.

  1. On 3 February 2005, Admerex shares traded on the Australian Stock Exchange at a value of between 17.5 cents and 19 cents per share. On this basis, the 48 million Admerex shares were valued on the Australian Stock Exchange at between $8,400,000.00 and $9,120,000.00 as at 3 February 2005.

  1. The Admerex shares transferred on 3 February 2005 to the Stichting Group companies on behalf of Mr Goodall remained in that situation until later in 2005. On or around 14 September 2005, arrangements were made for the 48 million Admerex shares to be transferred so that they were held on behalf of a third party. These arrangements were carried out by Mr Mehm of EFG Bank on instructions from Mr Goodall.

  1. During the period 3 February 2005 until about mid June 2005, the 1 million Temenos shares in account 6048 were disposed of and funds were deposited to the Challinor Equities SwissFirst Bank account. On the case presented by the Crown, about 8 million Swiss Francs were generated by the sale of the shares. The value of the shares, by reference to their market value on the Australian Stock Exchange throughout that period, was between $8.4 million to $9.1 million, depending on the precise fluctuation of the share price at any given time.

  1. The Crown case at trial was that the appellant established the Stichting Group arrangement for the purpose of giving the appearance that he had caused Barat Advisory to divest itself of the Admerex shares to a group of entities which were independent and at arm's length, when in fact, at all material times, the appellant continued to exercise effective control over the shares and the proceeds of their disposal, sometimes for his own personal use. The Crown case was that, in disregard of the terms governing the conduct of the Stichting Group, the proceeds of the share trading following the swap were then distributed. A total of approximately $5.6 million was transferred in the period from March 2005 to January 2006, to the Barat Advisory CBA account. Amounts from the proceeds of the sale of the shares were allegedly used for the personal benefit of the appellant, including a house purchase, the purchase of a yacht, jewellery, a luxury vehicle and artworks. The full details of these numerous transactions are to be found in the remarks on sentence, paragraphs [102]-[128]. The total of the transfer of funds from Challinor Equities to Barat Advisory was $5.6 million. The total of the deposits which were consequently received into the Barat Advisory CBA account was $5,599,902.61 (being $5.6 million, less bank transfer fees).

  1. The trial judge meticulously listed the following assets as having been purchased, or partly purchased, with the proceeds of the sale of the 1 million Temenos shares deposited into the Challinor Equities SwissFirst Bank account:

(a) a painting from Art et Antiquites, Paris, for an amount of €160,000;

(b) deposit in the amount of $200,000 for the purchase by the appellant's wife of a residential property in Neutral Bay for $4.7 million;

(c) purchase on or around 11 March 2005 by Barat Advisory of the yacht known as 'Black Snake' for the amou nt of $270,000;

(d) stamp duty in the amount of $269,492 for the purchase of the Neutral Bay property;

(e) purchase of jewellery for $100,000 by Barat Advisory;

(f) payment of $454,052.94 to repay an overdraft with St George Bank fixed rate loan account in the name of the appellant;

(g) payment of $1,526,235.77 to repay an overdraft with St George Bank in the name of the appellant;

(h) deposit of $409,743.73 into St George Bank call deposit account in the name of the appellant (to meet conditions of fi nance to be provided by St George Bank for the purchase of the Neutral Bay property);

(i) membership fees with Exclusive Resorts in the amount of US$385,000;

(j) purchase of artwork or other items from Gallerie Ariane Dandois, Paris, for the amount of €29,300;

(k) payment of $390,000 for the purchase by Barat Advisory of 'The New School' by Geoffrey Smart; and

(l) payment of $71,534.61 by Barat Advisory in connection with acquisition of a 2005 Bentley motor vehicle.

  1. We turn now to consider the facts relating directly to the second count in the Indictment. This narrative begins in May 2005 when the appellant became a client of Grant Thornton Accountants. The firm was retained to prepare financial statements and tax returns for Barat Advisory for 2004, 2005 and 2006. Instructions were also given that outstanding tax returns for the appellant himself should be prepared.

  1. The gist of the Crown case in relation to the second count in the Indictment was that the appellant deliberately and dishonestly failed to tell Grant Thornton Accountants the truth concerning the share swap on or around 3 February 2005, and failed to make honest disclosure of the substantial capital gain which had flowed to Barat Advisory as a result of the share swap.

  1. On 27 May 2005, the appellant met with Mr William Shew, a Director of Grant Thornton. The appellant told Mr Shew that assets, including art (referred to as the 'Clairmont Collection') were funded by loans from Clairmont, which were secured over the residential property at Neutral Bay, with interest capitalising at 3.5% to be repaid from capital growth on that property. Shortly afterwards, the appellant provided Grant Thornton with a folder of documents which included information relating to banking records and share transactions.

  1. At the next meeting in June 2005, the appellant met with Mr Shew and Mr Stephen Thurn. More information was sought from the appellant to enable tax returns to be prepared. At this meeting, the appellant referred to tax advice he had received from Ms Harley and said that he had received a number of loans from overseas.

  1. Between July and September 2005, Grant Thornton prepared file notes which, in effect, raised queries on a number of matters emerging from the folder of documents which the appellant had given to the accountants. At a meeting on 13 September 2005, Mr Thurn queried the appellant in relation to payments which had been received by Barat Advisory. Mr Thurn was told that certain substantial amounts of money were loans from Challinor Equities.

  1. The next recorded meeting was in September 2006. At about this time, Colin Samuel, a Manager at Grant Thornton, took over from Mr Thurn the task of preparing tax returns for Barat Advisory and the appellant. Mr Samuel set about endeavouring to obtain information from the appellant and from the appellant's bookkeeper. In response to a request from Mr Samuel, the appellant sent an email which attached information in relation to share transactions by Barat Advisory from the period 10 October 2005 until 16 August 2006. This information made no reference to the Admerex shares. On 6 October 2006, Mr Samuel sent an email to the appellant and his bookkeeper seeking details of all share transactions by Barat Advisory for the financial year ending 30 June 2005. On 19 October 2006, Mr Samuel sent an email to the appellant which raised queries about details for the financial year ending 30 June 2005. Specifically, it recorded a query about a deposit of $1 million which had been said to relate to Clairmont.

  1. The appellant sent an email to Mr Samuel on 19 October 2006 asking for a meeting to discuss the queries that had been raised by the accountant. The meeting was to take place on 31 October 2006.

  1. On 25 October 2006, Mr Samuel received an email from Bell Potter Securities attaching a printout of share transactions by Barat Advisory from the period from 1 January 2004 to 25 October 2006. That printout made no reference to the Admerex shares. Prior to the proposed meeting, Mr Shew sent an email to the appellant, indicating that more information was required to support tax returns, both by Barat Advisory and the appellant. At the meeting, a timeline was given by the appellant to the accountants which confirmed his instructions that "he funded his lifestyle with loans received from Clairmont".

  1. On the basis of all the information provided by the appellant, Grant Thornton prepared a number of draft documents, including an income tax return for Barat Advisory for the financial year ending 30 June 2005. The documents were provided under cover of a letter from Mr Shew dated 10 November 2006, which included the following statement:

"Please read the financial statements carefully. The Director's Statement that you signed states that you believe that the accounts are a true reflection of the financial position of the company and that the company can pay its debts as and when they fall due.
We wish to remind you that we have not audited the financial statements of the company. Ultimate responsibility for the accuracy of the accounts and tax return rests with you as Director."

  1. On or around 13 November 2006, Grant Thornton received the 2004 Barat Advisory income tax return, and the 2005 Barat Advisory income tax return, both signed by the appellant. As instructed by the appellant, the two returns were then lodged electronically with the Australian Tax Office ("ATO").

  1. In the 2004 Barat Advisory income tax return, the appellant declared that:

(a) the total taxable income of Barat Advisory for the financial year ending 30 June 2004 was a loss of $7,375.00, and

(b) the net capital gain derived by Barat Advisory for the financial year ending 30 June 2004 was $9.00.

  1. In the 2005 Barat Advisory income tax return, the appellant declared that:

(a) the total taxable income of Barat Advisory for the financial year ending 30 June 2005 was $17,323.00, and

(b) the net capital gain derived by Barat Advisory for the financial year ending 30 June 2005 was $4,597.00, realised on the sale of Admerex shares which were acquired on 13 September 2004 at a cost of $14,862.00 and sold on 15 October 2004 for $19,459.00.

  1. In June 2007, Grant Thornton prepared financial statements and income tax returns for Barat Advisory for the financial year ending 30 June 2006. The tax return for that year was lodged with the ATO in June 2007. It did not disclose any capital gain derived by Barat Advisory on the sale of the 55 million Admerex shares, or any portion of the Admerex shares. In January 2008, Barat Advisory income tax return for the financial year ending 30 June 2007 was lodged. It did not disclose any capital gain derived by Barat Advisory on the sale of the 55 million Admerex shares, or any portion of the Admerex shares.

  1. In his remarks on sentence, the trial judge said:

"The offender deliberately and dishonestly failed to tell Grant Thornton and Mr Shew, Mr Thurn and Mr Samuel about the disposal of the 48 million Admerex shares on or about 3 February 2005 in order to avoid the payment by Barat Advisory of tax on the net capital gain arising from that disposal.
His Honour found that Barat Advisory ought to have paid tax in the amount of between approximately $1,964,727.00 and $2,466,399.00 on the net capital gain."

The course of the trial

  1. In July 2010, prior to the empanelment of the jury, the appellant made a number of applications upon which the trial judge was required to adjudicate. The most significant of these was an application for a permanent stay of the trial on the basis of an abuse of process. The abuse of process was said to arise because of the juxtaposition of the money laundering charge and the dishonest obtaining charge in the one Indictment. Ultimately, in a lengthy decision given in August 2010, the trial judge declined to order a permanent stay. There was no appeal from that decision. However, the application itself, and the arguments presented in relation to it, underscored a recurring theme in the trial and the sentencing proceedings after verdict. We consider that it may be helpful to a better understanding of a number of the arguments which were relied on in this appeal if we briefly refer to the conclusion reached by the trial judge in his pre-trial judgment and the reasons for it.

  1. One of the principal arguments advanced by the appellant in his pre-trial application was founded upon principles stated in the well known decision of the High Court in Pearce v R [1998] HCA 57; 194 CLR 610. The submission made was that there was an abuse of process because the criminality of the first charge encompassed the criminality of the second. The argument was that there was no additional criminality involved in the prior dealing that was not necessarily encompassed in the s 135.1 offence. The appellant, it was claimed, was "being twice vexed for the one cause". The appellant sought to bring about a situation where the money laundering charge should be stayed on the basis that it was an abuse of process, with it being open to the Crown to proceed on the dishonest obtaining charge.

  1. The trial judge gave detailed considerations to the authorities dealing with abuse of process in the context of the stay application. His Honour said (Appeal Book Vol 1, 69):

"Part of the resolution of that question will involve an understanding of the ability of a court, in accordance with Pearce v The Queen, if the point is reached where sentence is to be passed on both matters, to adopt a commonsense approach to the assessment of criminality with respect to each offence, without the use of excessive subtleties and refinements, in determining whether the same acts are common to the two offences and whether there are remnants of criminality in one of the offences, which are not present in the other."

  1. The second aspect of the trial judge's analysis related to an examination of a number of cases involving the money laundering provisions contained in Division 400 of Part 10.2 of Chapter 10 of the Code. We shall, at a later stage, set out the relevant sections of these provisions. For the moment, it is sufficient to observe that the trial judge gave careful consideration to the relevant authorities. They included R v Ansari [2007] NSWCCA 204; 70 NSWLR 89; R v Foster [2008] QCA 90; (2009) 1 QdR 53; R v Wing Cheong Li [2010] NSWCCA 125; Thorne v R [2009] NSWCCA 294; Nahlous v R [2010] NSWCCA 58; 77 NSWLR 463; R v Guo ; R v Quian [2010] NSWCCA 170; R v Jones ; R v Hili [2010] NSWCCA 108; and Schembri v R [2010] NSWCCA 149.

  1. The trial judge stated that these authorities represented "strong reminders" to prosecutors that the money laundering offences in s 400 were to be used "in a measured way". An assessment was required, his Honour held, in the circumstances of each particular case as to whether a money laundering charge ought to be brought, or a combination of charges including a money laundering offence and other offences. While his Honour recognised that in a number of cases the court had intervened to prevent a particular prosecution proceeding on the charges selected by the prosecutor, those cases, in his Honour's view, were significantly different from the circumstances of the trial upon which he was about to embark. His Honour said (Appeal Book Vol 1, 91 at [170]):

"I accept the submissions of the Crown that there are significant additional features with respect to the areas of alleged criminality lying within the first and second counts. With respect to the money laundering charge, the alleged conduct of the accused with respect to the Stichting Group is an elaborate additional feature. With respect to the dishonest obtaining charge, I accept the Crown submission that there was effectively a second phase of conduct, commencing with alleged communications between the accused and his accountants which culminated in the lodging of the allegedly false return."

  1. The trial judge was not satisfied that the prosecution of both charges in the present matter constituted an abuse of process. His Honour found that the appellant had not made out a case for a permanent stay on the Indictment. For present purposes it is appropriate to observe, as we have indicated, that the particular aspects of criminality mentioned by his Honour arise in both the conviction and sentence appeals as a recurring theme.

  1. Thereafter, the jury were empanelled and the trial commenced on 18 October 2010. The trial was very much facilitated by a series of sensible agreements between the parties. This included the formal admission of a number of facts pursuant to s 184 of the Evidence Act 1995. Those Agreed Facts were admitted in the Crown case as Exhibit B. Mr Peter Hastings QC appeared for the Crown and made the Crown opening. Mr Lionel Robberds QC, with Mr M Wigney SC and Mr M Polden appeared for the appellant. There was a brief defence opening. This highlighted the fact that a central issue in the trial would be whether the sale and transfer of the Admerex shares on 11 June 2004 carried with it both the beneficial and legal interest in those shares. The defence case was that Ms Harley established the five overseas companies and the five Stichting Groups, with the consequent sale of the Admerex shares to the five companies, so that, if the opportunity arose, those five companies and Stichting Groups could be part of a proposed takeover of the Swiss company, Temenos. Mr Robberds explained to the jury in his opening that, if the fact were that Barat Advisory had transferred the Admerex shares both legally and beneficially on 11 June 2004, as the defence maintained, there could be no question of it making a capital gain as a result of any transaction which may have occurred in February 2005.

  1. Given the complexities of the trial, it might have been thought that it would have taken many weeks to conclude. This was not to be the case, however, and the efficient running of the trial meant that the evidence concluded within some 12 days. The principal witnesses called for the Crown were Peter Carney, Anne Harley, Kim Goodall, Sean Mark (a financial analyst with the Australian Federal Police) and a number of accountants who had been involved in the preparation of Barat Advisory's and the appellant's financial statements and tax returns.

  1. Mr Carney was an accountant who had worked for a time for Admerex Limited. Ms Harley was the solicitor from Atanaskovic Hartnell who had provided advice to the appellant in the period 2003 to 2006. Mr Goodall was, as we have indicated earlier, at one time a Vice-Chairman of Temenos. He was a founder of the company, a shareholder and had associations with it at the time he gave his evidence. Mr Mark had prepared a flowchart which demonstrated in graphic but helpful form the sequence of events relied upon by the Crown in the proof of its case. The flow chart became Exhibit A in the trial.

  1. At the conclusion of the Crown case, an application was made by the appellant for verdicts by direction. The principal basis on which a verdict by direction was sought on the first count related to the beneficial ownership issue. The defence maintained that, on the face of the documents effecting the share transfers on 11 June 2004, there could be no suggestion other than that the legal and beneficial ownership thereby passed to the transferee companies. Since it was no part of the Crown case that these transactions were a sham, it was argued, the beneficial interest in the Admerex shares must have been transferred to the five Stichting Group companies in June 2004. This resulted in a situation that the February 2005 transaction could not have been a Capital Gains event. This submission embraced the further proposition that the Crown case accepted that no person, other than the appellant, intended to deceive third parties in relation to the transfer and ownership of the Admerex shares, or acted in any way dishonestly or fraudulently in relation to the transfers. Accordingly, it was submitted that there was no evidence to support the charge contained in the first count. The critical point made was that, if there were no evidence that Barat Advisory had any beneficial interest in the shares after 11 June 2004, this was, as a matter of law, fatal to the Crown case on the first count.

  1. The trial judge rejected this submission. He held, first, that there were documents signed by the appellant in which he had certified that he was the beneficial owner of funds used to establish the Stichtings. There was the "beneficial owner" document signed by Mr Meisterhans. In addition, there was evidence demonstrating an element of control by the appellant with respect to both the shares and the conduct of Mr Meisterhans. This pointed to the latter acting as the agent of the appellant with respect to the shares. There was evidence to support the Crown proposition that after June 2004, the appellant was acting, as it was put by the Crown, "on both sides of the table".

  1. Mr Robberds QC, however, had presented additional arguments in connection with his submission that there should be a verdict by direction on the first count. These were, firstly, that for the offence to be made out, the shares the subject of the first count had to be "capable" of becoming an instrument of crime, that is, capable of facilitating the commission of the offence contrary to s 134.2 of the Code. Mr Robberds submitted that a person can only deal with property within the meaning of s 400.3(1) if the property could, in the future, become an instrument of crime. The argument advanced was that, after the disposal of the shares on 3 February 2005, it was simply impossible for the shares to be used by the accused to facilitate the commission by Barat Advisory of the s 134.2 offence because the appellant no longer controlled them.

  1. Secondly, Mr Robberds maintained that, on the Crown case, the appellant had always intended that Barat Advisory would avoid the payment of Capital Gains Tax. This meant, on the Crown case, that Barat Advisory, come what may, would never disclose in its income tax returns of either the sale of the shares or any capital gain which it might make at some point after 11 June 2004, however that might occur. Accordingly, the intended commission by Barat Advisory of the s 134.2 offence did not require the use of the 48 million shares and thus, on 3 February, they could not in any way "facilitate" Barat Advisory in relation to its decision to lodge the 2005 income tax return without disclosing the sale or any consequent capital gain.

  1. Thirdly, it was argued that the shares themselves had no properties that made them capable of facilitating the commission of any offence by Barat Advisory relating to the lodgement of tax returns - they were simply shares and nothing more.

  1. Finally, in relation to the first count, it was submitted that there was no evidence adduced by the Crown that the appellant ever intended that the 48 million shares would become an instrument of crime, in that they would be used to facilitate the alleged breach of s 134.2 by Barat Advisory.

  1. The Crown, in response, argued that there was evidence that a number of preparatory steps had been taken by the appellant after the purported assignment of the shares on 11 June 2004. Subsequently, and specifically on 3 February 2005, the shares were used as an instrument of crime, and had an ongoing function in that regard. This was because a consequence of the share exchange was that the Temenos shares came into the possession of the appellant and enabled him to gain access to the proceeds of the allotment of the Admerex shares by selling off the Temenos shares. In this way, the Crown argued, there was an ongoing use, as a result of the transaction, throughout the period leading up to the end of the financial year. The Crown argued that, while it was its case that the appellant always had in mind that Barat Advisory would avoid the payment of Capital Gains Tax, it was not until the share swap on 3 February 2005 that the conduct became an offence against s 400.3(1). It was this dealing with property that triggered the offence. The Crown submitted that, by swapping the Admerex shares with the Temenos shares, with their increased ability to be sold discreetly, the appellant facilitated the commission of the offence.

  1. The trial judge rejected the defence submissions. His Honour found that there was evidence capable of supporting the proposition that Barat Advisory, despite the documentation, had retained the beneficial ownership in the Admenex shares. Secondly, his Honour accepted the Crown submissions with respect to the use of the Admenex shares and the way in which it was said that this was capable of facilitating the commission by Barat of a s 134.2 offence.

  1. In relation to the second count, apart from the beneficial ownership issue, the defence relied on an additional argument that there was, in any event, no "disposal" of the 48 million Admerex shares on 3 February 2005. It was submitted that the evidence demonstrated that the shares were not disposed of until the occurrence of the transfer by Mr Goodall to First European Finance Investments Ltd in September 2005. The effect of this, it was argued, was that there was no capital gain from the disposal of the Admerex shares in the tax year ending 30 June 2005, so that the charge contained in the second count was, for that reason, fatally flawed.

  1. The trial judge was satisfied that there was evidence that the disposal of the Admerex shares by means of the share swap on or about 3 February 2005 constituted a contract or a disposal of the property so as to be capable of constituting a capital gains event occurring in the financial year ending 30 June 2005. He refused to direct a verdict on the second count.

  1. Following the unsuccessful application for a verdict by direction on the two counts in the Indictment, the Crown made its closing submissions to the jury. The appellant did not give evidence. The defence commenced its closing address on 9 November 2010 and concluded on the following day. However, there was a late flurry of argument before the trial judge (in the absence of the jury) concerning the form of final directions that should be given by the trial judge in his summing up. His Honour delivered a brief judgment during the course of his summing up which dealt with these outstanding issues. We shall briefly mention the nature of this late contest.

  1. First, counsel for the appellant took issue with a term used by the Crown in his closing submissions. This was the expression "blind trust" a reference to the transfer to the Stichting companies. His Honour accepted the defence submission on this point and indicated that he would direct the jury to put the term "blind trust" to one side and to have regard to the submissions which had been made to them, both orally and in written form by reference to the term "trust".

  1. Secondly, the defence expressed concern that, although the Crown had not argued that the arrangements for the transfer of the Admerex shares to the five overseas companies on 11 June 2004 had been a sham, the Crown had advanced its case before the jury in submissions that, in effect, suggested that the arrangements constituted a sham. Consequently, the defence argued that specific directions in that regard were required.

  1. The trial judge considered that the word "sham" had not been used by the Crown in the presence of the jury. Further, he indicated that he did not propose to inject the term into the trial during his summing up. His Honour, however, accepted the need to give some further directions and he said:

"The focus of those directions, however, should be upon the need for the Crown to prove beyond reasonable doubt what he contends happened here, namely that the accused was the controlling mind on or after 11 June 2004 of Barat Advisory and was also the controlling mind of the five overseas companies and, in this regard, that it was the intention of the accused, as the controlling mind of each of the five overseas companies, that only the legal title, and not the beneficial title, to the 55 million shares in Admerex was to be transferred to the five overseas companies, and that those companies would hold the shares on trust for Barat Advisory."

  1. His Honour concluded, contrary to the defence submissions, that it would not be necessary for the jury to be satisfied beyond reasonable doubt that the Directors of the five overseas companies had acquiesced in their duties in favour of the appellant, and that this had amounted to an abdication by the Directors of their duties and responsibilities as Directors. He declined to give a direction to suggest that the Crown carried the burden of proving each of these matters beyond reasonable doubt.

  1. In the course of his summing up, which extended over a number of days, the trial judge provided the jury with written directions on tax law, and written directions in relation to the elements of each of the two offences charged in the Indictment. A further series of directions was given at the conclusion of his Honour's summing-up relating to the "controlling mind issue" on the contract/tax law issue. The jury retired to consider its verdict on the afternoon of 17 November 2010. On 19 November 2010, shortly prior to midday, the jury returned with a verdict of guilty to both charges. The jury were thereafter discharged and arrangements were made for sentencing submissions to be taken on 2 December 2010. On that day, his Honour formally entered convictions against the appellant in relation to each of the offences upon which the jury had found him guilty. Proceedings were further adjourned for the pronouncement of sentence on 17 December 2010. Bail was continued until that day. On 17 December 2010, the trial judge imposed the sentences which we have set out at the commencement of this decision. The appellant was then taken into custody.

Principal issues at trial

  1. It can be seen that, notwithstanding the complexity of the factual circumstances surrounding the establishment of the Stichting group structure and the acquisition and disposition of the Admerex and Temenos shares, the principal issues at trial were, in a number of respects, straightforward. The Crown case was that, on or about 3 February 2005, the appellant, on behalf of Barat Advisory Pty Ltd, dealt with property by disposing of 48 million shares in Admerex. It did so by exchanging them for 1 million shares in Temenos. It was the Crown case that the 48 million Admerex shares could be used to facilitate the commission of a Commonwealth Indictable offence. This would be the case if there were an intentional failure to disclose the capital gain which had been derived in connection with the disposal of those shares and the consequent failure by Barat Advisory to pay tax on that capital gain. The trial judge gave written directions to the jury indicating that they had to be satisfied beyond reasonable doubt as to each of those matters.

  1. Further, the Crown case was that although Barat Advisory had transferred the Admerex shares to the five overseas companies on 11 June 2004, in doing so, it had, as subsequent activities demonstrated, retained beneficial ownership of those shares. It was accepted that, if Barat Advisory had disposed of both the legal title and beneficial ownership of the shares in June 2004, it could not again dispose of them on 3 February 2005.

  1. In this regard, the trial judge directed the jury:

If you are not satisfied beyond reasonable doubt that Barat Advisory only transferred the legal and not the beneficial title of the shares to the five companies on 11 June 2004, you must acquit the accused.

  1. The Crown accepted at trial that it was necessary to prove beyond reasonable doubt that the appellant intended that the property, namely the 48 million Admerex shares, would become an instrument of crime. That is, on or about 3 February 2005, the appellant intended that the 48 million Admerex shares would be used to facilitate (make easier) the commission of an offence.

  1. In the written directions (paragraph 22), the trial judge stated:

The Crown alleges that the accused intended that the 48 million shares would be used to facilitate the commission of an offence which involved the accused, at some time in the future, dishonestly obtaining a financial gain by causing Barat Advisory to lodge an income tax return that contained false information because it did not include information about the capital gain that Barat Advisory is alleged to have made when it swapped the 48 million Admerex shares for the 1 million Temenos shares on 3 February 2005...

  1. As to this, the written directions (paragraph 23) stated:

The Crown must prove beyond reasonable doubt that, on or around 3 February 2005, the accused intended that the 48 million shares would facilitate (that is, make easier) that type of offence to be committed.

  1. In relation to count 2, the principal issues may be stated as follows:

First, whether on 3 February 2005, Barat Advisory had the beneficial ownership of the 48 million shares in Admerex so as to have the capacity to dispose of them on that date, thereby creating a capital gains event. Once again, the defence case was that the legal and beneficial ownership of the shares had been transferred by Barat Advisory on 11 June 2004 to the five overseas companies. If Barat Advisory had disposed of the Admerex shares on the earlier date, it could not again dispose of them on 3 February 2005.

Secondly, the Crown case was that the 48 million Admerex shares were disposed of on 3 February 2005, because either the appellant, on behalf of Barat Advisory, entered into a contract with Mr Goodall to transfer the shares to him on that day; or because there was a change of ownership of the Admerex shares on that day in that the Temenos shares were accepted by Barat Advisory as consideration for the Admerex shares. The defence argument was that there was no disposal on 3 February 2005 and that the earliest time when the shares were disposed of was 14 September 2005. If this were the case, as the defence urged, there would have been, whoever was the transferor, no liability for Capital Gains Tax in the financial year ending 30 June 2005.

Written directions were given by the trial judge to reflect these issues in relation to count 2.

  1. There were, of course, other elements of each offence beyond those we have identified. For the purposes of this appeal, however, the principal issues at trial were those we have mentioned.

Grounds for appeal against conviction

  1. The amended statement of the grounds of appeal against conviction contains seven grounds. We shall deal with each of these separately.

Ground 1

  1. Ground 1 asserts that the trial judge erred in refusing to direct the jury to acquit the appellant on each count in the Indictment. There are some seven particulars given under ground one wherein it is alleged that the trial judge erred in the decision given on 4 November 2010 refusing directed verdicts. Five of these particulars relate to count 1. The remaining two relate to the second count in the Indictment. We shall deal with each separately or collectively, depending whether the particulars are separate or linked.

  1. Particular (a):

"His Honour erred in taking into account that in the first count in the Indictment, the offence was said to have been committed between about 30 April 2004 and about 30 September 2005 when the Crown case was that the offence was committed on or about 3 February 2005 at which time the Crown alleged the share swap occurred."

  1. In the decision given on 4 November 2010, the trial judge had held (paragraph 33) that the evidence in the Crown case, taken as a whole, was capable of supporting each of the elements of the s 400.3(1) offence in the circumstances of the case. In that context his Honour added (paragraph 35):

"I bear in mind that the offence charged in the first count is said to have been committed between about 30 April 2004 and about 30 September 2005. There are, of course, a number of key points in time within that period, and in particular the share swap on or about 3 February 2005."

His Honour added (paragraph 37):

"I am satisfied that there is some evidence in support of each element of the section 400.3(1) offence so that the first count in the Indictment should be left to the jury."

  1. We do not consider that any error has been demonstrated in paragraph 35 of the trial judge's decision. Read fairly, the comment recognises that the date of ultimate significance was the 3 February 2005, but that nevertheless it was appropriate to take into account the broader context in which the disposal took place. On the basis of the Crown case, what gave the disposal of the shares an unlawful character was both the motive behind the disposal and the structure which the appellant had put in place in which the transfer was able to be put into effect. In that regard, it could not be ignored that, according to the Crown case, the appellant, in his capacity as the controlling mind of Barat Advisory and of each of the Stichting Group companies, intended, notwithstanding Ms Harley's statements to him, that the beneficial interest in the Admerex shares would remain with Barat Advisory. Moreover, this broader context was central to both the prosecution and the defence cases. What his Honour was saying was that the Crown circumstantial case had to be examined in its broader context and, in that context, there was evidence capable of supporting the charge being left to the jury. That broader context included, of course, the precipitous events of 2 and 3 February 2005. The defence case too, based as it was on Ms Harley's advice and her subsequent actions in the middle of 2004, placed emphasis on the same broad context, although it sought to characterise those matters in a very different way to the position advocated by the Crown.

Particulars (b)-(e)

  1. These particulars embrace a number of the matters that had been put to the trial judge at the time of the directed verdict application. However, they were reformulated for the purposes of this appeal. In their modified format, these particulars require, if accepted, that this Court enter a verdict of acquittal on the first count.

  1. The arguments advanced may be distilled into the following propositions. First, once the Admerex shares were disposed of by the share swap, thereafter the appellant had no ability to use them in any way at all. Accordingly, the disposal of the shares ruled out any intended use of the shares by the appellant to facilitate the future commission of an offence. In other words, once the shares were gone, they were gone for all purposes, and could not be used in any way at all.

  1. Secondly, and more importantly, Mr Robberds argued that there was nothing that the shares themselves could do to facilitate the Barat Advisory offence. They were simply shares. The consequence was that, as a matter of law, the 48 million Admerex shares could not in the present matter become an instrument of crime: they were incapable of facilitating by deception the financial advantage involved in the s 134.2 offence. They might, it was conceded, facilitate some other offence. But not this one.

  1. In support of this argument, Mr Robberds submitted that there were three steps necessary for Barat Advisory to take in order to commit the offence under s 134.2. These were:

(a) Barat Advisory had to lodge its 2005 tax return;

(b) The return had to deliberately omit the capital gain;

(c) The ATO had to issue an assessment accepting the basis of the return.

  1. Mr Robberds argued that none of these three steps involved the use of the shares. Indeed, he maintained that the shares could not have been used in relation to any of those necessary steps. The lodgement of the return facilitated the offence but the shares did not. In a broader sense, the "share swap" facilitated the offence but the shares themselves did not and could not do so.

  1. Thirdly, Mr Robberds took issue with the Crown categorisation of the "use" of the shares as one that was, in any event, fundamentally flawed. The Crown had argued that the circumstances of the swap (the disposal itself) facilitated the commission of the offence. This was because, as the Crown submitted, the transaction was off market and because it occurred behind the screen of the Stichting Groups (Crown Submissions, paragraph 10).

  1. In relation to this proposition, Mr Robberds submitted, first, that "the intended use has to be a use of the property after it had been disposed of" and secondly, that the circumstances in which the swap was carried out "could not be said to be a use of the shares." Senior Counsel argued that it was neither a relevant use of the shares, nor importantly was it a use of the shares after the swap had taken place.

  1. Mr Robberds put his propositions into two fundamental questions:

First, what were the possible ways the 48 million Admerex shares could be used to facilitate the s 134.2 offence by Barat Advisory?

Second, in what way did the appellant intend as at 3 February 2005 that the shares would be used to facilitate the s 134.2 offence?

Mr Robberds submitted that the answer to each of these question must be in the negative.

  1. As a consequence, Mr Robberds submitted that it was simply impossible to accommodate the facts of the case to the charge in count 1. As a matter of law, he argued, the Crown case placed reliance on facts that could not possibly constitute a use within the meaning of the expression 'instrument of crime'. It followed that there was no evidence that, when the appellant dealt with the 48 million Admerex shares by swapping them for 1 million Temenos shares on 3 February 2005, he intended that those Admerex shares themselves would become an instrument of crime. He could not have had that intention because the shares were incapable of such a use.

  1. We shall now set out the terms of s 400.3 of the Code:

" 400.3 Dealing in proceeds of crime etc. - money or property worth $1,000,000 or more
(1) A person is guilty of an offence if:
(a) the person deals with money or other property; and
(b) either:
(i) the money or property is, and the person believes it to be, proceeds of crime; or
(ii) the person intends that the money or property will become an instrument of crime; and
(c) at the time of the dealing, the value of the money and other property is $1,000,000 or more.
Penalty: Imprisonment for 25 years, or 1500 penalty units, or both.
(2) A person is guilty of an offence if:
(a) the person deals with money or other property; and
(b) either:
(i) the money or property is proceeds of crime; or
(ii) there is a risk that the money or property will become an instrument of crime; and
(c) the person is reckless as to the fact that the money or property is proceeds of crime or the fact that there is a risk that it will become an instrument of crime (as the case requires); and
(d) at the time of the dealing, the value of the money and other property is $1,000,000 or more.
Penalty: Imprisonment for 12 years, or 720 penalty units, or both.
(3) A person is guilty of an offence if:
(a) the person deals with money or other property; and
(b) either:
(i) the money or property is proceeds of crime; or
(ii) there is a risk that the money or property will become an instrument of crime; and
(c) the person is negligent as to the fact that the money or property is proceeds of crime or the fact that there is a risk that it will become an instrument of crime (as the case requires); and
(d) at the time of the dealing, the value of the money and other property is $1,000,000 or more.
Penalty: Imprisonment for 5 years, or 300 penalty units, or both.
(4) Absolute liability applies to paragraphs (1)(c), (2)(d) and (3)(d).
Note 1: Section 400.10 provides for a defence of mistake of fact in relation to these paragraphs.
Note 2: Section 400.2A affects the application of this section so far as it relates to a person dealing with money or other property that:
(a) is intended by the person to become an instrument of crime; or
(b) is at risk of becoming an instrument of crime."

  1. Section 400.2 is, relevantly, in the following terms:

" 400.2 Meaning of dealing with money or other property
(1) For the purposes of this Division, a person deals with money or other property if:
(a) the person does any of the following:
(i) receives, possesses, conceals or disposes of money or other property;
... and
(b) the money or other property is proceeds of crime, or could become an instrument of crime, in relation to an offence that is a Commonwealth indictable offence or a foreign indictable offence ..."

  1. Section 400.1 provides the following definitions:

"instrument of crime" : money or other property is an instrument of crime if it is used in the commission of, or used to facilitate the commission of, an offence against a law of the Commonwealth, a State, a Territory or a foreign country that may be dealt with as an indictable offence (even if it may, in some circumstances, be dealt with as a summary offence).

  1. His Honour noted that the capital gains tax avoided was in the sum of at least $1,964,727. He was not satisfied that the appellant had any contrition for the offences. There were a number of other generally non-contentious matters which his Honour considered and about which he reached conclusions. These included the extent to which the appellant's good character was of assistance in the sentencing process; the need to send a message of general deterrence and the Court's need to protect the integrity of the revenue system by imposing punishments for deliberate dishonesty which would be likely to deter others; and the fact that the admissions made on the appellant's behalf and the general conduct of his legal representatives entitled him to consideration in that regard as demonstrating a willingness to facilitate the course of justice and to reduce the cost and the demands on the community by significantly shortening the trial.

  1. Finally his Honour turned to consider the selection of an appropriate non-parole period appropriate to the circumstances. In this regard, his Honour placed reliance upon remarks in a recent decision of the High Court in Hili v R ; Jones v R [2010] HCA 45; (2010) 272 ALR 465. His Honour determined the sentences should be concurrent for two years and cumulative as to one year and six months. This meant that the total period of imprisonment would be one of 8 years and 6 months. His Honour said that he proposed to set a single non-parole period of 4 years and 9 months. In that regard he said he was "satisfied that this is the minimum period the offender should spend in prison having regard to all the elements of punishment including the objective seriousness of his crime, specific and general deterrence, denunciation and the offender's subjective circumstances, including his good prospects of rehabilitation".

  1. His Honour then imposed the sentences to which we have made reference at the outset of these reasons.

Ground 1 (Sentence Appeal)

  1. The trial judge is said to have erred in his remarks on sentence when he stated that the applicant "sought advice from Ms Harley as to how the 55 million Admerex shares could be moved offshore and placed within a structure to facilitate the sale of those shares to offshore investors".

  1. We have referred (para 188) to Ms Harley's evidence relating to her discussions with the appellant. Ms Harley had also said that she had given the appellant advice in relation to transferring the shares to "an offshore" entity. We agree with the Crown that, on this evidence, it was open to the trial judge, especially in the context of his lengthy summary of the background facts, to summarise the overall effect of the evidence in the manner his Honour did. Mr Robberds maintained that there was a significant difference between the concepts of asking how to prepare the shares for sale to a non-Australian resident, and asking how the shares could be move offshore. We accept that there may be a difference but the difference is slight and could have made no difference to the outcome of the sentencing exercise. We do not consider that any error has occurred.

Ground 2 (Sentence Appeal)

  1. Mr Robberds took issue with the trial judge's finding that the applicant obtained a substantial benefit in 2003 for a modest outlay of $1 and that it was apt to describe the alleged benefit as a "windfall". There was also criticism of the trial judge's finding that what lay behind the events that followed was a need to take action, in the applicant's own interest, for tax purposes arising from the "windfall".

  1. We have earlier set out the detail of the complex factual circumstances surrounding the somewhat elaborate transfer of the shares to the overseas entities. We have also set out the earlier circumstances that showed that the appellant, through Clairmont Holdings, had first acquired the substantial debt owed by Admerex for $1. Approximately $2.2 million of this debt had been assigned to Barat Advisory at no real cost to either Barat Advisory or the appellant. This portion of the debt was later satisfied by Admerex's issue of approximately 55 million shares to Barat Advisory at a value of 4 cents per share.

  1. The jury's verdict indicated that it must have been satisfied beyond reasonable doubt that Barat Advisory had retained the beneficial ownership of the Admerex shares. This remained the position as at the time of the share swap on 23 February 2005. There appears to be no dispute that at the time of the disposal the 48 million Admerex shares were valued at in excess of 8 million.

  1. Against this background, it was plainly open to the trial judge to find, as he did, that the term "windfall" was appropriate. It is not easy to ascribe a more appropriate description to the benefit which Barat Advisory (and the appellant) obtained from the initial acquisition of the Admerex debt in 2004 by Clairmont for $1.

  1. Mr Robberds argued that the independent experts' report had suggested that the shares had a "negative value" as at 31 December 2003. This raised a query about whether the shares had any real value, whereas by contrast, they were being issued on the basis that they were worth 4 cents. The Crown responded by suggesting that an examination of the underlying facts mentioned in the report demonstrated that the company was on the "up and up" and that the negative value, although genuinely identified, did not take into account the more optimistic factors likely to affect the share value. In any event, we consider that it was open to his Honour to reach the conclusion he did. He was also entitled to make the associated finding that this benefit was the motivating factor behind the appellant shortly afterwards seeking tax related assistance from Ms Harley. The timing of these two events was obviously significant. We consider that this ground has not been made out.

Ground 3 (Sentence Appeal)

  1. This ground attacks his Honour's finding that the offence in the first count was committed between about 30 April 2004 and September 2005, an extended period of time. It also attacks his Honour's associated finding that the money laundering offence involved "a series of steps" taken by the appellant over a period of months, involving intentional wrongdoing on his part.

  1. This ground is redolent of conviction ground 1(a). Mr Robberds argued that the money laundering charge related to one event only, namely the 3 February 2005 share swap. It could not relate to any other period. This submission, however, ignores the principal conclusion that must have been reached by the jury (and was reflected in his Honour's findings of fact) that as at 11 June 2004 the appellant, in his capacity as a controlling mind of Barat Advisory and each of the Stichting group companies, intended that the beneficial interest in the Admerex shares would remain with the transferor, notwithstanding the passing of legal title.

  1. As we have said, the existence of this intention, and the subsequent actions which demonstrated that the beneficial ownership had been retained, reflected a deliberate spate of activity that was entirely contrary to the formal structure of the Stichting groups which had been so carefully assembled by Ms Harley. In particular, it will be recalled that the appellant was not entitled to any asset of any of the Stichting group until after the proper termination of the Stichting arrangement. Further, at all times the Stichting group companies were required to act independently of the appellant and independently of each other. The events that we have described (and which were central to the Crown case) demonstrated clearly that the Stichting arrangements had been deliberately ignored and the structure flouted.

  1. This argument raises a theme that was central to many of Mr Robberds' submissions, namely that the Stichting group structures were not used in the money laundering offence. We do not accept this because of the necessary finding that the appellant at all times intended to ignore the structures set up by Ms Harley and intended throughout, if the opportunity presented itself, to dispose off the Admerex shares and to avoid the payment of capital gains tax. Indeed, in this regard, Mr Robberds' arguments, with respect, were not entirely consistent. As will be seen when the next series of grounds are examined, it was his principal argument on sentence that the appellant's dishonest intentions persisted over a lengthy period of time. For present purposes, however, it may be said that the criminality in relation to count 1 is not to be confined to the share swap itself. His Honour was entitled to examine the events of the preceding 6 or 7 months to assess whether there had been significant criminality throughout the entire period. We consider that he was entitled to come to the conclusion he did. Those events included the issue of the shares to Barat Advisory in April 2004, the appellant's request to Ms Harley for tax advice, and his intentions and actions contrary to that advice which placed him in a position to act opportunistically when the occasion presented itself in February 2005. This ground is not made out.

Grounds 4 to 5, 7 to 8, and 15 to 19 (Sentence Appeal)

  1. These grounds, in a number of respects, reflect the principal matters of concern raised by the appellant on the sentence appeal. They are, it might be said, central to the attack on the length and structure of the sentence, including the non-parole period.

  1. The simple issue raised is whether the trial judge erred in finding that the money laundering offence involved significant additional elements of criminality which needed to be reflected on sentence, in addition to the sentence to be imposed for the offence in count 2. In some respects, this argument was the flipside of the pre-trial application which sought to have count 1 on the indictment struck out or stayed as an abuse of process. It will be recalled that his Honour had rejected this application and, in the course of so doing, had reminded himself of the need to examine carefully the circumstances said to underlie the combination of the money laundering and dishonest obtaining charges. The trial judge had been alive to the fact that, in a particular prosecution, it might very well be the case that an abuse of process had been demonstrated by the presence of two counts. At paragraph 82 of this decision, we have set out briefly his Honour's conclusions that brought him to the belief that no abuse of process was involved in the present matter.

  1. When his Honour came to the sentencing exercise, he had by that time the full benefit of the evidence adduced in the trial. He was in a much better position than he had been originally. At the earlier time, reliance had to be placed entirely on the Crown case statement.

  1. We would respectfully conclude that his Honour's careful and thorough analysis of both the relevant principles and their application to the circumstances of this trial do not demonstrate error in this regard. His Honour set out, in accurate and careful terms, the proper principles in relation to the complex considerations of totality, overlapping criminality and the need to avoid double punishment. There is no suggestion his Honour erred in that respect. His Honour recognised there was, in this matter, a clear overlap between the offences but concluded that count 1 involved significant additional criminality over and above the criminality in the second offence. This was principally based on the appellant's misuse of the offshore structure preferred by Ms Harley. This misuse had two features to it. First, there was the fact that it did provide a measure of masking to the disposal of the Admerex shares and, secondly, because the misuse of the structure enabled the ultimate disposal to take place, a result which simply could not have been achieved had the structure been respected and followed.

  1. Mr Robberds' argument was based on a simple foundation. The Crown case, it was submitted, focused on the proposition that, by no later than 11 June 2004, the appellant intended that Barat Advisory would sell the Admerex shares and not include in its relevant tax return any capital gain it might make on the sale. The consequence of this was, according to the argument, that the one single intention underlay the commission of both offences. Given the nature of the offences, the dishonestly obtaining offence should be regarded as the principal offence. The consequence of these arguments, accordingly to Mr Robberds, was that there was no additional significant criminality in the count 1 offence and the sentences should have been structured, both as to their length and concurrency, by reference to the maximum penalty for the offence in count 2.

  1. Mr Robberds' arguments, plainly enough, reflected a recognition that the maximum penalty for the money laundering charge was a term of 25 years imprisonment whereas the maximum penalty for the count two offence was imprisonment for 5 years. If the two offences could be curtailed within the penalty for count 2, there would be a significant, forensic and tactical benefit for the appellant.

  1. Mr Robberds' argument fails for two reasons. First, as we have pointed out, the trial judge was correct to conclude that the misuse of the Stichting structure and, indeed the reasons in the appellant's mind for its creation, were circumstances of criminality that the trial judge was entitled to take into account. Secondly, Mr Robberds' argument is, with respect, an over-simplification which seeks to proceed without reference to the importance of the facts found by the trial judge. Indeed, Mr Robberds attempted to hive off those facts and argue they were not relevant to the offences.

  1. There can be little doubt that, had the appellant simply disposed off the Admerex shares in Australia (without any overseas structure being created), and had at that time without more intended to obtain a benefit by deception, an indictment filed containing the two offences may, in those circumstances, have had little chance of surviving an abuse of process application. Had it done so, however, there can be little doubt that, upon conviction, the criminality of the first charge in such an indictment would most likely have encompassed the criminality within the second.

  1. This was not the situation, however, that faced the trial judge when it came to make his assessment of the factual circumstances relevant to the issue of criminality in each offence. As his honour acknowledged, the authorities required him to take "the commonsense approach to the assessment of criminality with respect to each offence". It is clear from a reading of his Honour's analysis that, in his view, the evidence revealed, in a significant manner, the areas in which there were discrete aspects of criminality in relation to the commission of each offence. We agree with his Honour's analysis. His Honour was right to conclude that there were significant additional features with respect to the areas of criminality discernible within the facts relating to each of the two charges. There was of course, as we acknowledge, a clear area of overlap but there were also areas of significant additional criminality. The sentences had to reflect, in a principled way, these areas of significant additional criminality as well as recognizing the principles of cumulation, concurrency and totality. In these circumstances, it would have been wrong for his Honour to conclude that all the circumstances which bore upon the appellant's criminal conduct in the period from April 2004 to November 2006 should be placed under the one umbrella of criminality surrounding the second count. The trial judge was right to conclude that such a course ought not be followed.

  1. We are unable to discern any error in relation to his Honour's conclusion.

Ground 9 (Sentence Appeal)

  1. The appellant contends that the trial judge did not give sufficient weight to his good character. Mr Robberds' argument was that his Honour gave this consideration less weight than he ought to have done. It is trite law to say that the weight to be given to the issue of good character is a matter for the trial judge: R v Baker [2000] NSWCCA 85 at [111]. However, there can be no doubt that his Honour did take into account in favour of the appellant his good character and favourable antecedents. There can be no criticism of his Honour for noting that good character is of lesser significance on a sentence for white colour crimes than it is for other criminal behaviour: R v Rivkin [2004] NSWCCA 7 at [410]; R v Adler [2005] NSWSC 274 at [51]; R v Williams [2005] NSWSC 315; 152 A Crim R 548 at 579 [60-61]. Moreover, his Honour was entitled to make the observation he did that, in a number of respects, the applicant's good character, and his reputation as a successful businessman, assisted to some degree the commission of the offences. His Honour referred (para 219 ROS) to the evidence that Ms Harley had assured several European entities that the appellant was a successful businessman and a person of good character. Those assurances were no doubt required to enable the banking arrangement and the establishment of the Stichting group structure.

  1. Mr Robberds raised a muted challenge to the existence of evidence of this kind. However, it may clearly be seen in the written character reference Ms Harley gave to Citco in June 2004 (Exhibit C3.486); it may be seen in the evidence relating to Ms Harley attending at the offices of EFG Bank in Geneva in June 2004 to facilitate the opening of bank accounts by the Stichting group companies (Transcript 182); and it may be seen in Ms Harley's attendance at the offices of Citco in Amsterdam in June 2004 to facilitate the establishment of the structure.

  1. Finally, Mr Robberds argued, once again, that the Stichting structure was not used to commit either of the offences. We reject this argument so far as it relates to count 1 and it had, as well as, an indirect bearing on the count 2 offence.

Ground 6 and 10 to 14 (Sentence Appeal)

  1. Grounds 10 to 12 challenge the trial judge's finding that the appellant's course of criminal conduct extended over a significant period of time. Grounds 11 and 13 challenge his Honour's findings in relation to the appellant's planning and deception. Grounds 6, 12 and 14 assert error in his Honour's finding that the appellant's conduct involved the establishment and misuse of a "sophisticated offshore structure".

  1. The challenges in grounds 10 to 12 have no substance. We have, in our earlier findings, made it clear that these findings were open to the trial judge. In relation to count 1, the jury's verdict required his Honour to find the appellant's criminal conduct commenced no later than June 2004 when, in his capacity as the controlling mind of Barat Advisory and of each of the Stichting group companies, he formed an intention to retain the beneficial interest in the Admerex shares for Barat Advisory. His criminal conduct continued into February 2005 and included those events which plainly demonstrated Barat Advisory's retention of the beneficial ownership through the appellant's control. The conduct then involved the swap of the shares and the consequent sale of the Temenos shares. It extended to the activities which produced the material benefits for the accused including the purchase of property, artworks, jewellery, a yacht and other matters.

  1. The appellant's criminal conduct continued into his dealings with the accountants and, over a period of time was particularly focused on his deception of those professional men. It culminated in the lodgement of the Barat Advisory tax return in November 2006.

  1. We are also satisfied that his Honour was entitled to find that the Stichting structure represented "a sophisticated offshore structure". It could scarcely be described otherwise. An examination of the taxation advice prepared by Ms Harley, and an analysis her memo of fees, demonstrates not only that the advice was essentially tax based but that its implementation was relatively complex. We agree with the Crown that there can be no basis to criticise the description of the Stichting Group arrangement as "sophisticated". Nor can there be any quarrel with his Honour's findings that the structure was "misused". We have earlier detailed the manner in which the appellant ignored the structure of the arrangements and effectively flouted Ms Harley's advice.

Grounds 19, 20 and 21, 22 and 23 (Sentence Appeal)

  1. The appellant contends that the sentences imposed on each count were manifestly excessive. In support of this contention the appellant submits that:

(i) Insufficient discount was given for the appellant's facilitation of the course of justice by admissions and other practical steps which assisted in the trial being conducted in an orderly and efficient manner.

(ii) His Honour did not give sufficient discount for the appellant's prior good character.

(iii) The sentences imposed were manifestly excessive in comparison with other cases which arose out of the multi-agency tax investigation taskforce known as Project Wickenby.

(iv) There was no significant aspect of the appellant's criminality concerning count 1 which was not included in his criminality concerning count 2.

  1. In general terms, where a ground of appeal is taken that the sentence imposed is manifestly excessive, the appellate court will be required to examine the sentence in the light of the two categories of appellable error referred to in House v R (1936) 55 CLR 499. We are concerned here with the second type of appellable error. This occurs where the order under consideration is said to be unreasonable or plainly unjust: House at 505 per Dixon, Evatt and McTiernan JJ. "It may not appear how the primary judge reached the results embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred."

  1. As Heydon J observed in Hili v R (at 543 [75]), appellate intervention in the second category takes place because the character of the order indicates that some underlying error within the first category has taken place, even though it is not possible to identify it.

  1. In the present matter, Mr Robberds, by postulating the particulars he has, relied on errors within the first category whilst assenting overall that an error of the second category has occurred.

  1. We would conclude at the outset that none of the particular matters relied on by Mr Robberds has been established.

  1. As to the first particular, the trial judge recognised that an allowance should be made for the appellant's facilitation of the course of justice by the practical steps which were permitted to be taken so as to result in the orderly and efficient conduct of the trial. His Honour, however, was not obliged to formulate a fixed mathematical discount to recognise that such a matter should be taken into account. In sentencing a federal offender, s 16A of the Commonwealth Crimes Act 1914 requires the Court to "impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence". Section 16A(2) requires the Court, in undertaking that exercise, to take into account a number of matters identified in the sub-section as are relevant and known to the Court. All such matters are to be taken into account. There is no statutory requirement which obliges a sentence that would give particular weight to one or other of those matters: Wong v R (2001) 207 CLR 584 at 610 [72].

  1. The High Court has been critical of a "two stage" approach to sentencing and, in that regard, the formulation and application of a mathematical approach to sentencing: Wong at 611 [74]; Markarian v R [2005] HCA 25; (2005) 215 ALR 213. The plurality in Wong (at [75]) stated (in dealing with a mathematical approach to sentencing):

"It departs from principle because it does not take account of the fact that there are many conflicting and contradictory elements which bear upon sentencing an offender. Attributing a particular weight to some factors while leaving the significance of all other factors substantially unaltered may be quite wrong. We say "may be" quite wrong because the task of the sentencer is to take account of all of the relevant factors and to arrive at a single result which takes due account of them all ... The sentencer is called on to reach a single sentence which, in the case of an offence like the one now under discussion, balances many different and conflicting features."

  1. The plurality also referred to the decision of Gleeson CJ in R v Gallagher (1991) 23 NSWLR 220 at [228] and further observed (at [76]):

"So long as a sentencing judge must or may, take account of all the circumstances of the offence and the offender, to single out some of those considerations and attribute numerical or proportionate value to some features, distorts the already difficult balancing exercise which the judge must perform.
The core of the difficulty lies in the complexity of the sentencing task. A sentencing judge must take into account a wide variety of matters which concern the seriousness of the offence for which the offender stands to be sentenced and the personal history and circumstances of the offender. Very often there are competing and contradictory considerations. What might mitigate the seriousness of one offence may aggravate the seriousness of another. Yet from these the sentencing judge must distil an answer which reflects human behaviour in the time or monetary units of punishment".

  1. These considerations require the rejection of both particulars (i) and (ii). Particular (iv) has no validity, having regard to our earlier comments on the trial judge's appropriate assessment of criminality in relation to each of the offences.

  1. The final particular refers to other cases which arose out of Operation Wickenby. Mr Robberds referred to three cases:

(a) R v Wheatley [2007] VCC 718; (2007) 67 ATR 531: Mr Wheatley was sentenced to imprisonment for 1 year and 6 months to be released after 15 months on recognisance. The amount involved was $318,092.

(b) R v Hargraves and Stoten [2010] QCA 328: this case represented the highest sentence for a breach of s 135 with a 10-year maximum penalty. The sentence imposed was for a period of 5 years with a non-parole period of 2 years and 6 months. The amount involved was in excess of $2 million.

(c) R v Jones; R v Hili : this was the only money laundering case on the table submitted by Mr Robberds. The maximum penalty was 20 years and the trial judge had imposed a sentence of 1 year and 6 months on Jones. The Crown appeal on sentence was dismissed. However, Jones had fresh sentences imposed by the Court of Criminal Appeal for breaches of s 26B of the Crimes Act and s 134.2(1) of the Criminal Code . The effective re-sentence was 3 years, with the offender to be released after 18 months on recognisance.

  1. His Honour was mindful of these other decisions but took the view that "there was no other sentencing case which was closely comparable to that of the present appellant" (para [253] ROS). His Honour made specific reference to the cases tabulated by the Crown before him which related to sentences imposed within the broad description of "Project Wickenby sentencing decisions". His Honour, in his remarks on sentence, said that he kept in mind the remarks of the High Court in Hili v R; Hili v Jones at [53] and [54].

  1. In those paragraphs, the High Court of Australia had expressed the need to take care in examining previous sentences passed in cases arising out of tax evasion, customs and excise fraud and social security fraud. The plurality said at [54]:

"In Director of Public Prosecutions (Cth) v De la Rosa , Simpson J accurately identified the proper use of information about sentences that have been passed in other cases. As her Honour pointed out, a history of sentencing can establish a range of sentences that have in fact been imposed. That history does not establish that the range is the correct range or that the upper or lower limits to the range are the correct upper and lower limits. As her Honour said:
'Sentencing patterns are, of course, of considerable significance in that they result from the application of the accumulated experience and wisdom of first instance judges and of appellate courts.'
But the range of sentences that have been imposed in the past has not fixed "the boundaries within which future judges must, or even ought, to sentence. Past sentences 'are no more than historical statements of what has happened in the past'. They can, and should, provide guidance to sentencing judges and to appellate courts, and stand as a yardstick against which to examine a proposed sentence. When considering past sentences, it is only by examination of the whole of the circumstances that have given rise to the sentence that 'unifying principles' may be discerned."

  1. The trial judge recognised in his remarks on sentences that sentencing decisions for money laundering offences had the capacity to provide assistance by way of statements of general sentencing principle for this class of offence. But they did not, at least at the present time, enable "the identification of a range of sentence".

  1. Accordingly, we conclude that none of the particular matters relied on under these grounds demonstrate that the sentence imposed by his Honour was manifestly excessive.

  1. We turn finally to consider the sentence in all its characteristics to determine whether it might be said that any aspect of it is "unreasonable or plainly unjust". Mr Robberds' submission attacked the overall sentence, the non-parole period and the structure of the sentence. In relation to the latter, Mr Robberds argued that a single course of conduct should have been identified. In other words, counsel submitted that the two offences of which the appellant was convicted should properly be seen as manifestations of the one criminal enterprise, transaction or episode. Accordingly, the sentences ought to have been entirely concurrent: Cahyadi v The Queen (2007) 168 A Crim R 41at [27]; R v Lodhi [2006] NSWSC 691 at [70].

  1. In Hili v R ; Hili v Jones, the Court stated (at [40]) that, in imposing a sentence of a severity appropriate in all the circumstances of the case, the sentencing judge must have regard to the principles identified in Power v The Queen [1974] HCA 26; 131 CLR 623; Deakin v R [1984] HCA 31; 58 ALJR 367, and Bugmy v R [1990] HCA 18; 169 CLR 525. An important consideration in this regard is the determination of the period of imprisonment that justice requires an offender must serve in custody (at 41). The High Court observed that in the cases before it, the deterrent and punitive effects of sentences for serious taxation fraud were to be reflected both in the head sentence and also in the fixing of a non-parole period (at 41).

  1. In endorsing the Court of Criminal Appeal's decision that the sentences imposed at first instance had been inadequate, the plurality referred to a number of features of the tax fraud offences before the Court (at 63):

"The applicants' offending was sustained over a long time. It was planned, deliberate and deceitful, requiring for its implementation the telling of many lies. The applicants acted out of personal greed. The amount of tax evaded was not small. Detection of offending of this kind is not easy. Serious tax fraud, which this was, is offending that affects the whole community. As was pointed out in Ruha (2010) QCA 10 at [45], the sentences imposed had to have both a deterrent and a punitive effect and those effects had to be reflected in the head sentences and the recognizance release orders that were made."

  1. More recently in Director of Public Prosecutions (Cth) v Gregory the Victorian Court of Appeal (Warren CJ, Redlich JA and Ross AJA) [2011] VSCA 145 stated (at 57):

"A sentence imposed for fraud upon the taxation revenue is intended to reaffirm basic community values that all citizens according to their means should fairly share the burden of the incidence of taxation so as to enable government to provide for the community, that the revenue must accordingly be protected and that the offender should be censured through manifest denunciation. When these considerations are not reflected in the responses of the courts, the criminal justice system fails to achieve its objectives."

  1. We agree with these observations, as we do with the general observations throughout the Victorian Court of Appeal's decision emphasising the need for sentences for tax fraud to reflect denunciation, general and personal deterrence. The imposition of firm custodial sentences in instances of serious white collar crime is required to ensure that an offender will not return to his or her criminal ways, and that others who are minded to commit tax fraud offences will be deterred from so doing. There is a high community expectation that serious tax fraud will be properly punished and offenders, no matter their business acumen and high status in the commercial world, will be dealt with sternly and appropriately.

  1. In determining the sentences for each count, the structure of the sentences and the non-parole period, the trial judge here gave consideration to the relevant principles to which we have made reference. In addition, his Honour carefully assessed the actions of the appellant, the duration of those actions and the degree of separate criminality involved in each offence (paragraphs 257-262 ROS). Applying the correct principles to those matters, the trial judge was satisfied that the appellant's conduct involved serious criminality and that his offences should be characterised as "serious examples of money laundering and tax evasion" (263 ROS). The trial judge took into account the maximum penalties involved and the subjective circumstances of the offender together with other matters outlined in the sentencing decision.

  1. We conclude that the sentences imposed by his Honour in all their manifestations were open to him and that they were not manifestly excessive. We also consider that the structure of the sentences was one that was open to his Honour to make, having regard to all the matters we have discussed.

  1. These grounds have not been established.

Orders

  1. The orders the Court makes are as follows:

1. Appeal against conviction is dismissed.

2. Leave to appeal against sentence is granted.

3. Appeal against sentence is dismissed.

**********

Decision last updated: 02 March 2012

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