Peters v the Queen

[1998] HCA 7

HIGH COURT OF AUSTRALIA

TOOHEY, GAUDRON, McHUGH, GUMMOW AND KIRBY JJ

PHILIP PETERS  APPELLANT

AND

THE QUEEN  RESPONDENT

Peters v The Queen (M6-97) [1998] HCA 7
2 February 1998

ORDER

Appeal dismissed.

On appeal from the Supreme Court of Victoria

Representation:

P G Priest for the appellant (instructed by Jonathan Kemp & Associates)

B R Martin QC with N T Robinson for the respondent (instructed by
M White, Solicitor to the Commonwealth Director of Public Prosecutions)

Notice:  This copy of the Court’s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Peters v The Queen

Criminal law – Conspiracy to defraud – Elements of – Whether dishonesty an essential element – Tests of dishonesty in R v Ghosh and R v Salvo – Actus reus and mens rea – Agreement to use dishonest means – Intention to prejudice or imperil the rights or interest of others – Direction to jury.

Crimes Act 1914 (Cth), ss 86(1)(e) and 86A.

1. TOOHEY AND GAUDRON JJ. The appellant, a solicitor, stood trial in the County Court of Victoria on charges of conspiracy to defraud the Commonwealth pursuant to ss 86(1)(e) and 86A of the Crimes Act 1914 (Cth) ("the Act") and a charge of conspiracy to pervert the course of justice. He was acquitted of the latter charge but convicted of conspiracy to defraud. His appeal against conviction was dismissed by the Court of Appeal (Criminal Division) of the Supreme Court of Victoria. The appellant now appeals to this Court.

   The facts

2. In 1983, the appellant was retained by Mr Spong to act in certain transactions involving the purchase of five blocks of land at Essendon in Victoria.  One block, which had a substantial residence on it, was purchased in the name of Jetoline Pty Limited ("Jetoline").  The appellant was a director of and a shareholder in Jetoline.  The other director was "Freeman", a name which the appellant knew to be an alias for Spong.  It is unclear whether the other blocks were also purchased in the name of Jetoline.  It is not in issue that Spong was involved in illegal drug trafficking and that he arranged to purchase and, in fact, purchased the Essendon properties with moneys obtained from his drug dealings.  This notwithstanding, it follows from the appellant's acquittal on the charge of conspiracy to pervert the course of justice that it must be taken that he was ignorant of the source of those moneys[1].

   [1]      The prosecution case on the charge of conspiracy to pervert the course of justice was that the appellant was party to a conspiracy to conceal the true source of the moneys used to purchase the various properties the subject of the conveyancing transactions in which the appellant was retained.

3. Although Spong provided the whole of the purchase moneys for the Essendon properties, that fact was concealed by the execution of two sham mortgage documents.  One was a memorandum of mortgage over the block of land on which was erected the residence earlier referred to.  That "mortgage" was in favour of a person named Rosenberg - another alias used by Spong.  The other was a "mortgage" over all five blocks of land in favour of Dial Financial Services Pty Ltd ("Dial").  The appellant acted for the purchaser/mortgagor in relation to that "mortgage" and another solicitor acted for Dial.  No money was advanced under either "mortgage".  The solicitor acting for Dial was unable to register the "mortgage" to that company and a caveat was lodged to protect its interests.  Later, the blocks of land other than that on which the residence was erected were sold to genuine purchasers.  On settlement, part or all of the proceeds of each sale were paid to Dial, with Dial executing a withdrawal of caveat to enable the registration of a transfer to the purchaser concerned.  The moneys paid to Dial were then paid back to Spong.

   The issues at trial

4. So far as concerns the charge of conspiracy to defraud the Commonwealth, the prosecution case was that the appellant was party to an agreement to conceal the true amount of Spong's income by sham mortgage transactions and that he and his fellow conspirators intended thereby to deprive the Commissioner of Taxation ("the Commissioner") of tax payable on that income.  The appellant gave evidence admitting that, at some stage, he was informed by Spong that no moneys had been advanced by Dial under the mortgage, and that the moneys paid to Dial, apparently in partial discharge of its mortgage, were in fact returned to Spong.  However, he said he was not party to any agreement to conceal Spong's income by sham mortgage transactions or to deprive the Commissioner of tax payable on that income.  He was, he said, merely acting as Spong's solicitor.

5. In his summing up to the jury, the trial judge outlined the prosecution and defence cases and explained the offence of conspiracy to defraud.  As part of that explanation, the jury was instructed that it was necessary for the prosecution to prove that the appellant was dishonest.  Directions were given in line with the decision of the English Court of Appeal in R v Ghosh[2], the jury being instructed that they had to be satisfied that what the appellant agreed to do was dishonest by the current standards of ordinary and reasonable honest people and, if it was, that the appellant must have realised it was dishonest by those standards.

   [2] [1982] QB 1053.

   The argument on appeal

6. The appellant contends in this Court, as he did in the Court of Appeal, that the trial judge misdirected the jury as to the test of dishonesty.  In this regard, it is put that the jury should have been instructed to apply a subjective test in accordance with the decision of the Full Court of the Supreme Court of Victoria in R v Salvo[3] and not the test adopted in Ghosh[4].  More precisely, it is put that the jury should have been instructed that the prosecution had to prove "an absence of belief [on the appellant's part] that he had a legal right to do what he did".  However, the appellant's belief in that regard was not in issue at the trial.  His case was simply that he was not a party to the conspiracy alleged, rather than that he did not act "dishonestly".

   [3] [1980] VR 401.

   [4] [1982] QB 1053.

7. To understand the appellant's argument, it is necessary to say something of the offence of conspiracy to defraud the Commonwealth. It is a statutory offence created by the Act which, at relevant times, provided, firstly in s 86(1)(e)[5] and later in s 86A[6], that a person who conspired with another "to defraud the Commonwealth or a public authority under the Commonwealth" was guilty of an indictable offence[7].  There being no express provision as to the elements of that offence, it is to be taken that s 86(1)(e) and, later, s 86A enacted the substance of the common law offence of conspiracy to defraud in its application to fraudulent agreements the intended victim of which was the Commonwealth or one or more of its public authorities.

   [5] Until 24 October 1984. By s 3 and sch 1 of the Statute Law (Miscellaneous Provisions) Act (No 2) 1984 (Cth), s 86(1)(e) was omitted and replaced by s 86A.

   [6] Until 14 September 1995. By s 8 of the Crimes Amendment Act 1995 (Cth), s 86A together with s 86 were repealed and replaced by a new s 86.

   [7] Note that the offence of conspiracy to defraud the Commonwealth now derives from the combined operation of ss 86 and 29D of the Act. Section 86(1) provides that "[a] person who conspires with another person to commit an offence against a law of the Commonwealth punishable by imprisonment for more than 12 months, or by a fine of 200 penalty units or more, is guilty of the offence of conspiracy to commit that offence". And by s 29D, a person who defrauds the Commonwealth or a public authority under the Commonwealth is guilty of an indictable offence punishable by 1,000 penalty units or imprisonment for 10 years, or both.

8. The appellant's argument assumes that dishonesty is an element of the common law offence of conspiracy to defraud and, thus, of the offence of conspiracy to defraud the Commonwealth.  As will later appear, that assumption is correct in the sense that dishonesty is a characteristic of the means agreed to be employed to effect the fraud and is also descriptive of what is involved in fraud.  However, the assumption is not correct in the sense that dishonesty is a separate element of the offence.  The difficulty which emerges in this case is partly due to the failure to appreciate that dishonesty is not a separate element and partly due to the different tests of dishonesty which have been adopted in the decided cases.

   The tests of dishonesty in Ghosh and in Salvo

9. The issue in Ghosh[8] was the test of dishonesty for the offence of dishonest appropriation by deception contrary to s 1 of the Theft Act 1968 (UK) ("the Theft Act").  In that case, a number of earlier cases, including R v Scott[9] and R v Landy[10], were referred to in support of the proposition that "the test for dishonesty ... should be the same whether the offence charged be theft or conspiracy to defraud."[11]  The Court of Appeal declined to apply the subjective test which had been applied in some earlier cases under the Theft Act[12], namely, whether the accused believed his or her actions to be honest, and adopted, instead, the test which formed the basis of the trial judge's direction in this case.

   [8] [1982] QB 1053.

   [9] [1975] AC 819.

   [10] [1981] 1 WLR 355.

   [11] [1982] QB 1053 at 1059. Cf R v McIvor [1982] 1 WLR 409 in which it was held that a subjective test was to be applied for conspiracy to defraud and an objective test for theft.

   [12]    See, for example, R v Greenstein [1975] 1 WLR 1353 and R v Waterfall [1970] 1 QB 148. See also R v Royle [1971] 1 WLR 1764.

10. The test adopted in Ghosh, namely, whether the acts in question were dishonest according to current standards of ordinary decent people and, if so, whether the accused must have realised that they were dishonest by those standards[13] has its origins in R v Feely[14].  That, too, was a case of dishonest appropriation contrary to s 1 of the Theft Act.  It was held in Feely that the question of dishonesty was for the jury and, as "dishonesty" was a word in ordinary use, it was unnecessary for the trial judge to explain what it meant.  Further, it was said that it was for the jury to decide whether the act involved was dishonest by application of "the current standards of ordinary decent people."[15]

    [13] [1982] QB 1053 at 1064.

    [14] [1973] QB 530.

    [15] [1973] QB 530 at 538.

11. The test of dishonesty adopted in Salvo[16] was whether the accused believed he had a legal right to the property in question. In that case, the accused was charged with dishonestly obtaining a motor vehicle by deception contrary to s 81(1) of the Crimes Act 1958 (Vic) ("the Crimes Act"), one of a number of provisions in that Act based on the Theft Act. In his defence, the accused asserted his belief that he had a legal right to possession of the vehicle concerned.

    [16] [1980] VR 401.

1. In Salvo, Murphy J expressed the view that "the word 'dishonestly' is clearly used in a special sense in s 81(1) of the CrimesAct"[17] and that "R v Feely[18] ... ought not to be applied ... if it means that the judge should not tell the jury anything about the word 'dishonestly'."[19]  Fullager J likewise thought that dishonesty was used in a special sense and expressed the view that it "imports that the accused person must obtain the property [in question] ... without any belief that he has in law the right to deprive the other of [it]."[20]  His Honour also described the interpretation of "dishonestly" in R v Feely as "unworkable"[21].

   [17] [1980] VR 401 at 422.

   [18] [1973] QB 530.

   [19] [1980] VR 401 at 423.

   [20] [1980] VR 401 at 440.

   [21] [1980] VR 401 at 439.

2. The approach adopted in Salvo was followed in Victoria in R v Brow[22] and R v Bonollo[23], both cases involving charges of dishonestly obtaining by deception under s 81(1) of the Crimes Act. It was followed in New South Wales in R v Love[24], another case involving a charge of dishonestly obtaining by deception[25], and in Condon[26], a case involving a charge of defrauding the Commonwealth under s 29D of the Act. In each of the two last mentioned cases, the accused asserted a belief that he was legally entitled to the property or money in question.

   [22] [1981] VR 783.

   [23] [1981] VR 633.

   [24] (1989) 17 NSWLR 608.

   [25] See s 178BA of the Crimes Act 1900 (NSW).

   [26] (1995) 83 A Crim R 335.

3. In the present case, the Court of Appeal held that, notwithstanding the decision of the New South Wales Court of Appeal in Condon[27], the subjective test adopted in R v Salvo has no application to Commonwealth offences involving fraudulent conduct[28].  It did so on the basis that the application of a subjective test would be inconsistent with its earlier decision in R v Lawrence[29], with dicta in other cases decided in Victoria[30] and with the course of authority in Queensland[31], South Australia[32] and Western Australia[33].

   [27] (1995) 83 A Crim R 335.

   [28]    Note that in R v Harris unreported, Court of Appeal of Victoria, 13 February 1997, the Court of Appeal again held that the subjective test in Salvo did not apply to a fraud offence, this offence charged pursuant to s 29D of the Crimes Act 1914 (Cth).

   [29] [1997] 1 VR 459.

   [30]    See R v Smart [1983] 1 VR 265 at 294-295; R v Walsh and Harney [1984] VR 474 at 478 per Young CJ (with whom Murray J agreed); R v Edwards [1988] VR 481 at 489 per Young CJ.

   [31]    See R v Maher [1987] 1 Qd R 171.

   [32]    See R v Aston and Burnell (1987) 44 SASR 436.

   [33]    See Cornelius & Briggs (1988) 34 A Crim R 49. See also Turner v Campbell (1987) 88 FLR 410.

   Dishonesty

4. There is a degree of incongruity in the notion that dishonesty is to be determined by reference to the current standards of ordinary, honest persons and the requirement that it be determined by asking whether the act in question was dishonest by those standards and, if so, whether the accused must have known that that was so.  That incongruity comes about because ordinary, honest persons determine whether a person's act is dishonest by reference to that person's knowledge or belief as to some fact relevant to the act in question or the intention with which the act was done.  They do not ask whether he or she must be taken to have realised that the act was dishonest by the standards of ordinary, honest persons.  Thus, for example, the ordinary person considers it dishonest to assert as true something that is known to be false.  And the ordinary person does so simply because the person making the statement knows it to be false, not because he or she must be taken to have realised that it was dishonest by the current standards of ordinary, honest persons.

5. There are also practical difficulties involved in the Ghosh test.  Those difficulties arise because, in most cases where honesty is in issue, the real question is whether an act was done with knowledge or belief of some specific thing or with some specific intent, not whether it is properly characterised as dishonest.  To take a simple example:  there is ordinarily no question whether the making of a false statement with intent to deprive another of his property is dishonest.  Rather, the question is usually whether the statement was made with knowledge of its falsity and with intent to deprive.  Of course, there may be unusual cases in which there is a question whether an act done with knowledge of some matter or with some particular intention is dishonest.  Thus, for example, there may be a real question whether it is dishonest, in the ordinary sense, for a person to make a false statement with intent to obtain stolen property from a thief and return it to its true owner.

6. The practical difficulties with the Ghosh test arise both in the ordinary case where the question is whether an act was done with knowledge or belief of some specific matter or with some specific intent and in the unusual case where the question is whether an act done with some particular knowledge, belief or intent is to be characterised as dishonest.  In the ordinary case, the Ghosh test distracts from the true factual issue to be determined; in the unusual case, it conflates what really are two separate questions, namely, whether they are satisfied beyond reasonable doubt that the accused had the knowledge, belief or intention which the prosecution alleges and, if so, whether, on that account, the act is to be characterised as dishonest.  In either case, the test is likely to confuse rather than assist in deciding whether an act was or was not done dishonestly.

7. In a case in which it is necessary for a jury to decide whether an act is dishonest, the proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest.  Necessarily, the test to be applied in deciding whether the act done is properly characterised as dishonest will differ depending on whether the question is whether it was dishonest according to ordinary notions or dishonest in some special sense.  If the question is whether the act was dishonest according to ordinary notions, it is sufficient that the jury be instructed that that is to be decided by the standards of ordinary, decent people.  However, if "dishonest" is used in some special sense in legislation creating an offence, it will ordinarily be necessary for the jury to be told what is or, perhaps, more usually, what is not meant by that word.  Certainly, it will be necessary for the jury to be instructed as to that special meaning if there is an issue whether the act in question is properly characterised as dishonest[34].

   [34]    As in Salvo.

8. The question whether any and, if so, what direction should have been given to the jury with respect to dishonesty in this case must be answered by reference to the elements of the offence of conspiracy to defraud and the issues which arose in the trial.  However, it follows from what has been said that it was not appropriate for the jury to be instructed in accordance with the test adopted in Ghosh.  It also follows that it was not appropriate for it to be instructed in accordance with the test in Salvo, a case concerned with an offence against a statutory provision in which, as earlier noted, the word "dishonest" was held to have been used in a special sense.

   Dishonesty and the offence of conspiracy to defraud

9. There are difficulties in the path of an exhaustive statement as to what is involved in the offence of conspiracy to defraud - difficulties which are largely referable to "[h]uman ingenuity in devising dishonest schemes designed to produce an advantage to one person at the expense of another or of the community at large"[35].  Those difficulties have resulted in a "great reluctance amongst lawyers to attempt to define fraud"[36].  Even so, Buckley J attempted a definition in In re London and Globe Finance Corporation Limited, defining "to defraud" by reference to "deceit" in these terms[37]:

   "To deceive is, I apprehend, to induce a man to believe that a thing is true which is false, and which the person practising the deceit knows or believes to be false.  To defraud is to deprive by deceit:  it is by deceit to induce a man to act to his injury.  More tersely it may be put, that to deceive is by falsehood to induce a state of mind; to defraud is by deceit to induce a course of action."

   As will be seen, that definition is not exhaustive.

   [35]    R v Kastratovic (1985) 42 SASR 59 at 62 per King CJ.

   [36]    Stephen, A History of the Criminal Law of England, (1883), vol 2 at 121.

   [37] [1903] 1 Ch 728 at 732-733.

10. The deficiency in the definition attempted in Inre London and Globe Finance Corporation Limited[38] emerged in R v Scott[39].  It was argued in that case that an agreement with persons employed by the owners of certain cinema theatres to temporarily remove cinematograph films from their possession so that unauthorised copies could be made of those films did not involve any deception of the cinema owners and, thus, did not constitute a conspiracy to defraud.  The argument was rejected, it being said by Viscount Dilhorne that where the intended victim is a private individual or corporation, as distinct from a public official or public authority, "'to defraud' ordinarily means ... to deprive a person dishonestly of something which is his or of something to which he is or would or might but for the perpetration of the fraud be entitled"[40] (emphasis added).  The clear focus of that statement is that, for an agreement to constitute a conspiracy to defraud, it must be an agreement to bring about a result by dishonest means - means which, as that case decides, do not necessarily involve deception.

    [38] [1903] 1 Ch 728.

    [39] [1975] AC 819.

    [40] [1975] AC 819 at 839.

1. The need for the employment of dishonest means, not necessarily deception, also emerges in the speech of Lord Diplock in R v Scott.His Lordship observed:

   "Where the intended victim of a 'conspiracy to defraud' is a private individual the purpose of the conspirators must be to cause the victim economic loss by depriving him of some property or right, corporeal or incorporeal, to which he is or would or might become entitled.  The intended means by which the purpose is to be achieved must be dishonest.  They need not involve fraudulent misrepresentation such as is needed to constitute the civil tort of deceit.  Dishonesty of any kind is enough."[41] (emphasis added)

   There are difficulties with Lord Diplock's statement in so far as it purports to define the offence of conspiracy to defraud in terms of the purpose of the conspiracy.  That is a matter to which it will be necessary to return.

   [41] [1975] AC 819 at 841.

2. Since R v Scott, the view has developed that dishonesty is a separate and distinct element of the offence of conspiracy to defraud and must be proved as such.  The contrary view, as stated by the authors of Archbold, is that "the word 'dishonestly' adds nothing to the definition of fraud" and that, in cases of conspiracy to defraud, it is "superfluous" to direct a jury with respect to dishonesty[42].  The view that it is superfluous has been rejected by the Model Criminal Code Officers Committee of the Standing Committee of Attorneys‑General.  In a footnote to their report on Conspiracy to Defraud[43], the Officers state:

   "... to say that dishonesty is superfluous in the offence of conspiracy to defraud, and that an intent to inflict an economic loss on another or to imperil such an interest is sufficient fault element to constitute conspiracy to defraud is far too broad.  It would mean that legitimate business competition where loss to a competitor is intended or contemplated amounts to conspiracy to defraud.  Dishonesty is an essential element of conspiracy to defraud, especially in a case where there is no deceit."

   The Officers also assert in that footnote that the view that dishonesty is an essential element of conspiracy to defraud is confirmed by the recent decisions of the Privy Council in Wai Yu-Tsang v The Queen[44] and Adams v The Queen[45].

   [42]    Archbold Criminal Pleading, Evidence and Practice, (1996), vol 2 at 17-102.

   [43]    Australia, Model Criminal Code Officers Committee of the Standing Committee of Attorneys-General, Model Criminal Code.  Chapter 3:  Conspiracy to Defraud Report, (May 1997) at 5, footnote 11.

   [44] [1992] 1 AC 269.

   [45] [1995] 1 WLR 52.

3. The contention of the Model Criminal Code Officers Committee fails, in our view, to pay sufficient regard to the elements of the offence of fraud.  First, it overlooks the need for the use of dishonest means or, more precisely in the context of conspiracy to defraud, the need for there to be an agreement to use dishonest means.  And it also pays insufficient regard to the consideration that fraud involves an element of dishonesty over and above the use of dishonest means.  Before turning to these issues, however, it is convenient to direct attention to some matters which, if not mentioned, might result in other misunderstandings with respect to the offence of conspiracy to defraud.

4. The first matter which should be mentioned is that, contrary to what was said by Lord Diplock in R v Scott, the offence of conspiracy to defraud is not limited to an agreement involving an intention to cause economic loss, even where the intended victim is a private person.  It has always been sufficient that the accused be aware that there is a risk of economic loss[46].  And even where the victim is a private person, there may be cases of fraud which do not involve an intention to put another person's economic interests at risk in any ordinary sense of that term.  To take an example given by King CJ in R v Kastratovic[47], someone who believes that a person is indebted to him and that a defence which that person is genuinely asserting is without merit, nevertheless has an intention to defraud if he intends by dishonest means to deprive that other person of the opportunity of having the matter adjudicated.

   [46]    See Archbold Criminal Pleading, Evidence and Practice, (1996), vol 2 at 17-92.  See also Welham v Director of Public Prosecutions (1960) 44 Cr App R 124 at 131; R v Théroux (1993) 79 CCC (3d) 449 at 459-461 per McLachlin J; Zlatic v The Queen (1993) 79 CCC (3d) 466 at 476 per McLachlin J.

   [47] (1985) 42 SASR 59 at 65.

5. Another matter which should be noted is that it is misleading to speak in terms of the purpose of a conspiracy to defraud, particularly as the purpose of the conspirators may be quite different from the fraud perpetrated.  The purpose of conspirators is usually to obtain some financial advantage; the fraud, on the other hand, is in depriving others of their property or of the opportunity to protect their interests.  And, as is pointed out in Archbold, the conspirators may never intend or, even, foresee the probability that others will suffer economic loss[48].  Rather, they may genuinely believe that there will be no loss because their venture will be brought to a successful financial conclusion to the advantage of all concerned, even those whose interests have been put at risk.

   [48]    Archbold Criminal Pleading, Evidence and Practice, (1996), vol 2 at 17-92.

6. It is convenient now to return to the statement of the Model Criminal Code Officers that it is too broad to define conspiracy to defraud by reference to an intention to inflict economic loss or to imperil the economic interests of others.  As already indicated, one difficulty with that statement is that it pays insufficient regard to the need for there to be an agreement to use dishonest means.  We have earlier dealt with dishonesty in a general way.  It is now necessary to indicate what is involved in dishonest means for the purposes of conspiracy to defraud.

7. As in other contexts, the question whether the agreed means are dishonest is, at least in the first instance, a question of knowledge, belief or intent and, clearly, that is a question of fact for the jury.  On the other hand, the question whether, given some particular knowledge, belief or intent, those means are dishonest is simply a question of characterisation.  And as in other contexts, the question whether an act done with some particular knowledge, belief or intent is properly characterised as dishonest is usually not in issue.  Thus, putting to one side the exceptional case where it is in issue, it is sufficient for a trial judge simply to instruct the jury that they must be satisfied beyond reasonable doubt as to the knowledge, belief or intent alleged by the prosecution before they can convict.  Alternatively, the trial judge may instruct the jury that, if satisfied as to the knowledge, belief or intent alleged, the means in question are properly characterised as dishonest and they should so find.

8. Because of the view expressed by McHugh J and Gummow J in this case, we should indicate that we incline to the view that should an issue arise whether the agreed means are properly characterised as dishonest, that issue should be left to the jury.  At least, that is so if the means are capable of being so characterised.  And the jury should be instructed that the question whether they are to be characterised as dishonest is to be determined by application of the standards of ordinary, decent people.  However, these issues need not be pursued in this case.

9. The second difficulty with the statement of the Model Criminal Code Officers that it is too broad to define conspiracy to defraud by reference to an intention to inflict economic loss or to imperil the economic interests of others is that it tends to assume that fraud does not involve an element of dishonesty over and above the use of dishonest means.  As has already been pointed out, there are difficulties in attempting an exhaustive statement of what is involved in the notion of defrauding or in the offence of conspiracy to defraud.  Ordinarily, however, fraud involves the intentional creation of a situation in which one person deprives another of money or property or puts the money or property of that other person at risk or prejudicially affects that person in relation to "some lawful right, interest, opportunity or advantage"[49], knowing that he or she has no right to deprive that person of that money or property or to prejudice his or her interests[50].  Thus, to take a simple example, a "sting" involving an agreement by two or more persons to use dishonest means to obtain property which they believe they are legally entitled to take is not a conspiracy to defraud.

   [49]    R v Kastratovic (1985) 42 SASR 59 at 62 per King CJ.

   [50]    See Archbold Criminal Pleading, Evidence and Practice, (1996), vol 2 at 17-89, 17-94.  See also R v Sinclair (1968) 52 Cr App R 618.

10. It is necessary to note one practical matter with respect to the knowledge that must be proved before there can be a conviction for conspiracy to defraud.  As a matter of ordinary experience, it will generally be inferred from an agreement to use dishonest means to deprive another of his or her property or to imperil his or her rights or interests that the parties to that agreement knew they had no right to that property or to prejudice those rights or interests.  And as with the defence of honest claim of legal right, it will be taken that there is no issue in that regard unless the absence of knowledge or, which is the same thing, belief as to legal right is specifically raised and there is some evidence to that effect[51].

    [51]    See, with respect to honest claim of legal right, R v Bernhard [1938] 2 KB 264.

11. It is necessary to make some reference to Wai Yu-Tsang v The Queen[52] and Adams v The Queen[53], decisions referred to by the Model Criminal Code Officers.  In Wai Yu-Tsang, it was said by the Privy Council that "if [the parties to the alleged conspiracy] were not acting dishonestly, there will have been no conspiracy to defraud"[54].  There is nothing in that statement to suggest that it is prescriptive of the elements of the offence, rather than descriptive of it.  In Adams v The Queen[55], the Privy Council proceeded on the basis that it was necessary to establish dishonesty, holding that it was dishonest to conceal that which there was a duty to disclose[56].  In that case, the Privy Council was concerned with the need for conspirators to agree to use dishonest means, not to identify "dishonesty" as a separate element of the offence in addition to the dishonesty involved in an agreement to use dishonest means to bring about a situation prejudicing or imperilling the rights or interests of others.

    [52] [1992] 1 AC 269.

    [53] [1995] 1 WLR 52.

    [54] [1992] 1 AC 269 at 280.

    [55] [1995] 1 WLR 52.

    [56] [1995] 1 WLR 52 at 65.

12. As already explained, "dishonesty" does not appear in the statute establishing the offence of conspiracy to defraud the Commonwealth.  But when properly analysed, the offence of conspiracy to defraud involves dishonesty at two levels.  First, it involves an agreement to use dishonest means.  Ordinarily, the means will be dishonest if they assert as true something which is false and which is known to be false or not believed to be true or if they are means which the conspirators know they have no right to use or do not believe that they have any right to use the means in question.  And quite apart from the use of dishonest means, the offence involves an agreement to bring about a situation prejudicing or imperilling existing legal rights or interests of others.  That, too, is dishonest by ordinary standards.  If those matters are properly explained to a jury, further direction that the accused must have acted dishonestly is superfluous.  Conversely, if those matters are not properly explained, a direction that the jury must be satisfied that the conspirators were dishonest is unlikely to cure the defect. 

13. It need hardly be said again that a statute establishing an offence may use the term "dishonestly" in its ordinary meaning[57] or use it in a special sense[58].  In either case it will ordinarily be necessary for the trial judge to explain precisely what the legislation requires.  In the case of conspiracy to defraud, it will ordinarily be sufficient to instruct the jury as to the facts they must find if the agreed means are to be characterised as dishonest.  Alternatively, it will be sufficient to instruct them that, if satisfied as to those facts, they will be satisfied that the agreed means were dishonest.  Only in the borderline case will it be necessary for the question whether the means are to be so characterised to be left to the jury.  In this area, but only in this area, we differ from the approach taken by McHugh J and Gummow J.

    [57]    As in Ghosh.

    [58]    As in Salvo.

    No miscarriage of justice

14. In the present case, the jury was instructed that the prosecution had to establish that the appellant was dishonest in the sense that he knew the mortgage transactions were sham and also in the sense that he agreed to participate in those sham transactions to bring about a situation in which the Commissioner would or might not receive income tax payable on the moneys used by Spong to purchase the Essendon properties.  In the circumstances, that direction was adequate even though there was no instruction that they should be satisfied that the appellant knew that he had no right to prejudice or imperil the Commissioner's right to receive that tax.

15. There may be cases where the evidence is such that, even though the issue is not specifically raised, it is necessary to instruct the jury that they must be satisfied that the accused neither had nor believed that he had a legal right to prejudice or imperil the rights or interests of the victim of the intended fraud.  But that is not the case where, as here, the appellant asserted no such right or belief and the assertion of a right or belief that he had a right to prejudice the Commissioner in relation to tax payable by Spong would have been patently absurd.

16. In the circumstances, the instruction to the jury that they had to be satisfied that the appellant's conduct was dishonest according to the standards of ordinary, honest people and that he knew it was dishonest by those standards afforded the appellant a forensic advantage to which he was not entitled.  There was, thus, no miscarriage of justice by reason of that direction.

17. The appeal must be dismissed.

1. McHUGH J.   The questions in this appeal are whether dishonesty is an essential element of the crime of conspiracy to defraud and, if it is, whether the test of dishonesty is that described in R v Ghosh[59]. The appeal is brought against an order of the Court of Appeal of the Supreme Court of Victoria dismissing the appellant's appeal against a conviction for conspiracy to defraud the Commonwealth. In my opinion, the Crown does not have to prove dishonesty as an element of conspiracy to defraud at common law or under s 86A of the Crimes Act 1914 (Cth)[60].  The appeal should be dismissed.

   [59] [1982] QB 1053 at 1064:

   "In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest.  If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.

   If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest."

   [60] Section 8 of the Crimes Amendment Act 1995 (Cth) repealed ss 86 and 86A and substituted a new s 86.

   The factual background

2. In 1983, Larry James Spong and Franco Butera, a solicitor, were involved in unlawful drug trafficking and made significant profits.  They agreed to conceal the profits from the Commissioner of Taxation.  Under this agreement, Spong purchased five blocks of land in Essendon in false names.  Butera acted for Spong in respect of the conveyancing of the five blocks.  One of the blocks, containing a substantial residence, was purchased for $300,000 and was known as "Marlodge".  When Spong and Butera learned that they were under police surveillance, they arranged for all the conveyancing files to be transferred to the appellant, Philip Peters, who was also a solicitor.

3. In October 1983, the appellant acquired a shelf company, Jetoline Pty Ltd ("Jetoline"), for Spong.  The appellant was a shareholder and director of Jetoline.  Jetoline was registered as the purchaser of Marlodge.  To enable Jetoline to purchase the property, a "mortgage" over the land in the sum of $180,000 was executed in favour of one Rosenberg which, to the appellant's knowledge, was an alias of Spong.  In December 1983, a mortgage for $500,000 over all five blocks of land was executed in favour of Dial Financial Services Pty Ltd ("Dial").  The appellant knew that that mortgage was a sham, with no money being advanced under it.

4. Subsequently, the four blocks other than Marlodge were sold and successive withdrawals of caveat were prepared to enable Spong, in his relevant false identity, to give title to the purchasers.  Monies in partial discharge of the $500,000 mortgage were paid to Dial and then on to Spong.  The appellant acted as the solicitor in each of the sales and knew that the monies which Spong had provided would be repaid to Spong.

5. Much of the Crown case relied on the evidence of Butera and another conspirator named Coppens, an accountant, who had been involved in the sham transaction with Dial.  Their evidence was critical because much of the documentary evidence was consistent with the appellant's claim that he was acting merely as a solicitor and had no knowledge that the money used by Spong was the product of drug trafficking[61].

   [61]    However, the conveyancing files contained original letters which had not been sent to the designated "purchasers" of the blocks of land, thus supporting an inference that the appellant knew the purchasers were Spong in his various identities.

6. Butera claimed that, at a meeting on 23 December 1983 at the office of another solicitor, Campbell, the appellant and Coppens produced two mortgages, the appellant's mortgage being for $180,000 and Coppens' mortgage for $500,000.  Butera said that, while the parties were discussing the mortgages, which were executed in his presence, reference was made to the need to conceal the source of the purchase funds and concern was expressed as to whether the mortgage for $500,000 could be explained if later scrutinised.  Coppens did not recall the appellant being present at that meeting and the appellant denied that he was present.

7. However, Coppens gave evidence that, at a meeting in the appellant's office before December 1983, the appellant devised a scheme to enable Spong to hide the source of the monies from the Commissioner of Taxation.  Central to the scheme was the rotation of money through Dial.  Coppens said that, from time to time thereafter, he had further discussions with the appellant regarding the scheme, which was completed by the execution of the mortgages in Campbell's office on 23 December 1983.

   The history of the proceedings

8. The appellant was charged with conspiring with Spong, Butera, Coppens and another person "to defraud the Commonwealth, namely the Commissioner of Taxation, contrary to paragraph 86(1)(e) of the Crimes Act 1914 until 24 October 1984, and thereafter contrary to section 86A of the said Act"[62].

   [62]    The Statute Law (Miscellaneous Provisions) Act (No 2) 1984 (Cth) repealed s 86(1)(e) and inserted s 86A. Section 86(1)(e) relevantly provided:

   "A person who conspires with another person -

   ...

   (e)to defraud the Commonwealth or a public authority under the Commonwealth,

   shall be guilty of an indictable offence."

   Section 86A relevantly provided:

   "A person who conspires with another person to defraud the Commonwealth or a public authority under the Commonwealth is guilty of an indictable offence."

1. The appellant was also charged with conspiring with Spong, Butera, Coppens and another person "to pervert the course of public justice, in that it was agreed to conceal the proceeds of LARRY JAMES SPONG's drug trafficking and thereby mislead and deflect police from investigating and prosecuting LARRY JAMES SPONG for such drug trafficking."  The jury subsequently acquitted the appellant of this charge.

2. Judge Hassett presided at the appellant's trial by jury in the County Court at Melbourne.  In the course of his summing up, his Honour directed the jury on the charge of conspiracy to defraud as follows:

   "So what in summary are the elements of the charge in the first count?  There are five elements really in the context of this case.  First, an agreement to defraud which had as its outcome or incidental to its outcome, a depriving of the Commissioner of Taxation of income tax payable on monies of Mr Spong or the risk of that deprivation.

   Secondly, that the accused man was party to that agreement.  Thirdly, that the accused man intended to defraud the Commissioner of Taxation.  That is that he knew that the course of conduct agreed to be embarked upon involved the deprivation of the Commissioner of Taxation of that income tax or the risk of that deprivation.  Four, that what was intended to be done was dishonest according to the standard of ordinary reasonable and honest people in the community and fifthly, the accused knew that what was intended was dishonest by those standards."

3. This was essentially the manner in which the learned trial judge put the prosecution case to the jury, although his Honour expanded on these directions at other stages of the summing up.  The fourth and fifth elements of his Honour's direction follow the test of dishonesty set out in Ghosh.

4. The jury convicted the appellant on the charge of conspiracy to defraud.  Judge Hassett sentenced the appellant to imprisonment for 18 months.  The appellant appealed to the Court of Appeal of the Supreme Court of Victoria (Tadgell, Ormiston JJA and Southwell AJA).  The Court of Appeal dismissed the appeal, holding that the trial judge had correctly directed the jury on the test of dishonesty[63].

   [63]    R v Peters [1997] 1 VR 489.

   The evolution of the crime of conspiracy

5. Having regard to the state of the authorities dealing with the issues raised in this case, it is necessary to trace the development of the law of conspiracy in some detail.  A conspiracy to defraud is one of the heads of the crime of conspiracy, a crime which was described by Willes J in Mulcahy v The Queen[64], as being an "agreement of two or more to do an unlawful act, or to do a lawful act by unlawful means."[65]  The second limb of this celebrated description, however, adds nothing:  agreeing to use unlawful means necessarily involves agreeing to do an unlawful act.

   [64] (1868) LR 3 HL 306 at 317. Willes J delivered the opinion of the Judges (Willes, Blackburn and Keating JJ and Bramwell B and Pigott B). The opinion was given in response to questions put to them by Cairns LC after the plaintiff brought a writ of Error in the House of Lords seeking to reverse a decision of the Court of Queen's Bench of Ireland. The House of Lords approved the opinion delivered by Willes J.

   [65]    The source of this description is the judgment of Denman CJ in R v Jones (1832) 4 B & Ad 345 at 349 [110 ER 485 at 487].

6. The crime of conspiracy is commonly accepted as deriving from three statutes enacted in the reign of Edward I[66] although only the third statute made any attempt to define what constituted a conspiracy.  That statute, the Ordinacio de Conspiratoribus 1305[67], defined a conspiracy, inter alia, as an agreement, to combine falsely and maliciously to indict or acquit people.  It is likely, however, that the notion of conspiracy as a breach of the law was known to the common law.  The omission from the first two Edwardian statutes of any definition of a conspiracy suggests that the common lawyers of the day already had some understanding of the term.  Indeed, some early writings "evidence a conception of conspiracy which had attained to some growth in the virgin soil of the common law quite independently of the Edwardian statutes."[68]  In any event, by the early 17th century the common law had developed to the extent that, independently of the statutes, it was an offence to conspire to abuse legal procedure.  In the Poulterers' Case[69], the Court of Star Chamber held, contrary to the early law, that mere agreement could constitute the offence.

   [66]    De Conspiratoribus Ordinatio, 1293 (21 Edw I, I Rot Parl at 96); Articuli Super Cartas, 1300 (28 Edw I, c 10); Ordinancio de Conspiratoribus, 1305 (33 Edw I).

   [67]    33 Edw I, Stat 2.

   [68]    Bryan, The Development of the English Law of Conspiracy, (1909) at 11.

   [69] 9 Co Rep 55b [77 ER 813].

7. Upon the abolition of the Star Chamber, the Court of Kings Bench "began to extend the offense so as to cover combinations to commit all crimes of whatsoever nature, misdemeanours as well as felonies."[70]  The offence quickly developed beyond that of interfering with the administration of justice.  In the course of time, the common law developed various heads of criminal conspiracy such as conspiracy to pervert the course of justice, conspiracy to cheat and defraud, conspiracy to injure individuals other than by fraud, and conspiracy to commit a crime[71].  Until the House of Lords' decision in Director of Public Prosecutions v Withers[72], many lawyers assumed that the law of conspiracy was still capable of vigorous expansion to match changing circumstances.  Criminal conspiracy as defined by Willes J in Mulcahy had an inherent potential for dynamic development[73], a potential accentuated by the common law's acceptance at an early stage that the requirement of an unlawful act did not require a criminal act[74].  The description of conspiracy approved by the House of Lords in Mulcahy was therefore flexible enough to allow the courts to expand the crime in accordance with general notions of public policy.  The decision of the House of Lords in Shaw v Director of Public Prosecutions[75], dealing with conspiracy to corrupt public morals, is a well known illustration of the assumption that in this area of law the courts had the power to declare conduct criminal which had not previously been regarded as criminal.  In Withers, however, the House of Lords made it clear that, although there is only one offence of conspiracy which for convenience is categorised into separate heads[76], the courts cannot develop the law of conspiracy by adding new heads to those already recognised by the law.  It is for Parliament to expand the offence by statute, if it so desires.

   [70]    Sayre, "Criminal Conspiracy", 35 Harvard Law Review 393 at 400 (1922).

   [71]    Wright, The Law of Criminal Conspiracies and Agreements, (1873) at 19-67.

   [72] [1975] AC 842.

   [73]    cf Director of Public Prosecutions v Withers [1975] AC 842 at 867-868 per Lord Simon of Glaisdale.

   [74]    R v Sterling (1665) 1 Lev 125 [83 ER 331]; Thody's Case (1674) 1 Ventris 234 [86 ER 157]; R v Orbell (1703) 6 Mod 42 [87 ER 804]; R v Journeymen-Taylors of Cambridge (1721) 8 Mod Rep 10 [88 ER 9].

   [75] [1962] AC 220. See also Kamara v Director of Public Prosecutions [1974] AC 104.

   [76] [1975] AC 842 at 856.

8. It does not follow, however, that because the courts can no longer develop new heads of conspiracy, they are also restrained from formulating or developing principles that apply to the recognised heads of conspiracy.  On the contrary, because there is only one offence of conspiracy, it seems imperative that, so far as possible, the actus reus and mens rea of each of the recognised heads should be governed by the same principles.  A real question arises, however, whether dividing the elements of conspiracy into an actus reus and a mens rea serves any useful purpose[77].  In his treatise on the law of criminal conspiracy, Goode contends that[78] "the concept of actus reus is an elusive one, particularly in the area of criminal conspiracy; so much so, in fact, that it may well be possible to say that the crime has no distinguishing mental and physical elements."  In R v Churchill and Walton[79] the accused was charged with conspiracy to commit an offence against a statute, the offence being one of strict liability.  Viscount Dilhorne said[80] that "mens rea is only an essential ingredient in conspiracy in so far as there must be an intention to be a party to an agreement to do an unlawful act" and that in "cases of this kind, it is desirable to avoid the use of the phrase 'mens rea' ... and to concentrate on the terms or effect of the agreement".

   [77]    cf Harno, "Intent in Criminal Conspiracy", 89 University of Pennsylvania Law Review 624 at 632 (1941):  "It is difficult to make an analysis of the elements of conspiracy because the crime is so predominantly mental in composition."

   [78]    Criminal Conspiracy in Canada, (1975) at 16.

   [79] [1967] 2 AC 224.

   [80] [1967] 2 AC 224 at 237.

9. One of the difficulties in dividing the offence of conspiracy into the traditional elements of an actus reus and a mens rea is that the agreement of the parties to pursue a common and unlawful design is traditionally regarded as the actus reus of the offence.  Yet such an agreement, assuming it to be voluntary, necessarily includes a mental element[81].  At the very least, there must be an intention to enter into the agreement[82], and the present state of the authorities suggests that there can be no conspiratorial agreement unless the accused and his or her co-conspirators also intend that the common design should be carried out.

   [81]    Note, "Developments in the Law:  Criminal Conspiracy", 72 Harvard Law Review 920 at 935 (1959).

   [82]    Harno, "Intent in Criminal Conspiracy", 89 University of Pennsylvania Law Review 624 at 631 (1941).

10. Because intention is involved in the actus reus of the offence, authority in Canada[83], England[84] and the United States[85] holds that two persons cannot be guilty of conspiracy unless both intend to make an agreement to do an unlawful act and both intend to carry it out.  Thus, in R v O'Brien[86] the Supreme Court of Canada held that it was open to a jury to find that there was no conspiracy where two persons had agreed to kidnap another person but one of them, Tulley, swore that he never had any intention of carrying it out.  A majority of the Court held that the trial judge had misdirected the jury by instructing them "that the offence was complete, if, in point of fact, the accused and Tulley did make the agreement which is charged against him, even though Tulley never at any time had any intention of carrying the agreement into effect" (emphasis omitted).  Rand J said[87]:

    "[A] conspiracy requires an actual intention in both parties at the moment of exchanging the words of agreement to participate in the act proposed; mere words purporting agreement without an assenting mind to the act proposed are not sufficient."

    This statement accords with the summing up of Erle J in R v Dowling[88] where his Lordship instructed the jury that a witness "was not an accomplice, for he did not enter the conspiracy with the mind of a co-conspirator, but with the intention of betraying it to the police, with whom he was in communication."

    [83]    R v O'Brien [1954] SCR 666.

    [84]    R v Thomson (1965) 50 Cr App R 1.

    [85]    Woodworth v The State 20 Tex App 375 (1881); Delaney v State 51 SW 2d 485 (1932).

    [86] [1954] SCR 666.

    [87] [1954] SCR 666 at 670.

    [88]    (1848) 3 Cox CC 509 at 516.

11. In O'Brien, Taschereau J said[89]:

    "I think there has been some confusion as to the element of intention which is necessary to constitute the offence.  It is, of course, essential that the conspirators have the intention to agree, and this agreement must be complete.  There must also be a common design to do something unlawful, or something lawful by illegal means.  Although it is not necessary that there should be an overt act in furtherance of the conspiracy, to complete the crime, I have no doubt that there must exist an intention to put the common design into effect.  A common design necessarily involves an intention.  Both are synonymous.  The intention cannot be anything else but the will to attain the object of the agreement." (emphasis in original)

    [89] [1954] SCR 666 at 668.

12. In O'Brien, the majority of the Supreme Court regarded the lack of any common intention to carry out the kidnapping as preventing the criminal agreement from arising, notwithstanding that both Tulley and the accused had agreed to kidnap the victim.  The accused clearly intended to make an agreement to kidnap and also intended to carry it out.  The elements of the offence were made out in so far as they concerned the accused's conduct and state of mind.  However, the Supreme Court concluded that it was open to the jury to acquit the accused if Tulley never intended to carry out the kidnapping.  Arguably, this conclusion means that Tulley's lack of intention went not merely to his mens rea but also to the making of the criminal agreement (ie, the actus reus of the offence with which both Tulley and the accused were charged).  However, the conclusion is also explicable on the related ground that there must be at least two conspirators and, if Tulley was not guilty of conspiracy, neither was the accused.

1. In R v Thomson[90], there was evidence on which the jury could conclude that the accused had led his alleged co-conspirators to believe that he was agreeing with them to carry out an unlawful purpose when he had no intention of assisting in carrying out that purpose.  Lawton J seems to have taken the view that the mental reservation of the accused prevented any criminal agreement on his part from coming into existence.  His Lordship, after expressing his agreement with the view of the majority of the Supreme Court of Canada went on to say[91]:

   "For the purposes of the law of contract, the words or conduct by which a man manifests his assent are binding on him and the law does not allow him to say that his mind did not go with his conduct.  The criminal law, however, is concerned with punishing wrongdoing; the essential element in any crime, other than in the limited class of absolute offences, is a guilty mind.  Evidence that the accused person acted and spoke as if he was making and had made an agreement may provide cogent evidence of a guilty mind; but it is only evidence and can be rebutted by other evidence.

   It follows, in my judgment, that in the crime of conspiracy there must be the element of a guilty mind."

   His Lordship's agreement with the majority of the Supreme Court in O'Brien and his reference to the law of contract suggest that he saw the lack of intention to carry out the agreement as preventing any criminal agreement arising, notwithstanding his reference to "a guilty mind".

   [90] (1965) 50 Cr App R 1.

   [91] (1965) 50 Cr App R 1 at 3-4.

2. In R v Gemmell[92], the Court of Appeal of New Zealand held that a trial judge had wrongly directed the jury that the accused was guilty of conspiracy to commit an armed robbery if he agreed to the robbery of a post office even if he did not know that the other conspirators intended to use a gun.  McMullin J, delivering the judgment of the Court, said[93]:

   "It is of the essence of a conspiratorial agreement that there must be not only an intention to agree but also a common design to commit some offence, that is, to put the design into effect.  The need for the existence of these two elements, the mens rea and actus reus, as they are sometimes called, may be more difficult to distinguish in conspiracy than in other crimes."

   After referring to the judgment of Taschereau J in O'Brien and noting the decision in Thomson, McMullin J said[94]:

   "To return to the traditional nomenclature of the criminal law, the mens rea is the intention of the conspirator to achieve the common design and his mind must go with the apparent manifestation of his consent.  The actus reus of the offence of conspiracy is the agreement which has a common design.  The actus reus does not exist in mere formulation of an intention in the minds of two or more persons to commit a crime; there must be an agreement into which that intention is translated."

   [92]    (1985) 1 CRNZ 496.

   [93]    (1985) 1 CRNZ 496 at 500.

   [94]    (1985) 1 CRNZ 496 at 500.

3. The reference to mens rea in this passage shows how difficult it is to separate the elements of actus reus and mens rea in conspiracy.  Although the language used is unclear, his Honour appears to be saying that no criminal agreement or actus reus can exist unless, separately considered, both parties intend to do an unlawful act in prosecution of a common design and both parties make an agreement together to carry out that common design.

4. In principle, it seems correct to conclude that there is no criminal conspiracy between two people unless, at the time of making the alleged agreement, both parties intend to carry it out.  This is because "the long established rule that conspiracy requires at least two guilty parties means that as against any particular accused the actus reus will include the existence of the requisite 'intent' on the part of at least one other person who has manifested agreement"[95].  If one person has not in fact conspired to do an unlawful act, it is impossible to hold that the only other party to the alleged conspiracy has nevertheless conspired to do that act.  As Deane J pointed out in Gerakiteys v The Queen[96]:  "[t]here must be at least two parties to a conspiracy."  The required intention cannot differ as between the alleged conspirators - if an intention to do an unlawful act is not required of one party, the law cannot require it of the other party.  And as Professor Sir John Smith points out[97] a "conspiracy which no one intends to carry out is an absurdity, if not an impossibility."  In an illuminating article[98], Dean Harno persuasively argued that Willes J's statement in Mulcahy[99] that a "conspiracy consists not merely in the intention of two or more, but in the agreement of two or more to do an unlawful act", should perhaps have emphasised that "conspiracy consists not merely in the agreement of two or more but in their intention."

   [95]    Orchard, "The Mental Element Of Conspiracy", (1985) 2 Canterbury Law Review 353 at 357.

   [96] (1984) 153 CLR 317 at 334.

   [97]    Smith and Hogan, Criminal Law, 8th ed (1996) at 282.

   [98]    "Intent in Criminal Conspiracy", 89 University of Pennsylvania Law Review 624 at 629-630 (1941).

   [99] (1868) LR 3 HL 306 at 317.

5. Nothing in R v Darby[100] is inconsistent with the proposition that a person cannot be guilty of criminal conspiracy if the only other party to the alleged conspiracy never intended to carry out the agreement.  In Darby, this Court held that one person could be convicted of criminal conspiracy even though the other alleged party to the conspiracy had been or was acquitted of the charge "unless in all the circumstances of the case his conviction is inconsistent with the acquittal of the other person."[101]  This conclusion is plainly correct because, among other reasons, evidence which is admissible against one accused - for example, a confession - may not be admissible against the other accused.  Where, however, one of the two parties never intended to carry out the alleged agreement to do an unlawful act, the conviction of the other is necessarily inconsistent with the conclusion that the other party is not a conspirator.

   [100] (1982) 148 CLR 668.

   [101] (1982) 148 CLR 668 at 678.

6. The decisions in O'Brien and Thomson are consistent with the view that the reason why the law punishes conspiracies is not so much because parties have made an agreement or have evil minds but because they both intend to achieve some further act that is detrimental to the welfare of society.  It is the likelihood that their common intention will be translated into socially undesirable action that prompts the State to intervene.  If one of the two parties has no intention of committing the socially harmful act, it lessens the chance that the act will occur.  It merely lessens the chance, however, rather than eliminates it altogether.  In many cases the encouragement flowing from the agreement may cause the other party to carry out that act.  In my view, Dean Harno was right when he said[102]:

   "Conspiracy is an inchoate crime for which the essential act is slight.  It involves an intent to commit a further act.  It is the commission of that act which the state desires to prevent, and it is with the intent to commit that act that the state is concerned.  The essence of the crime thus lies in the intent."

   [102] "Intent in Criminal Conspiracy", 89 University of Pennsylvania Law Review 624 at 646 (1941).

1. The decision of this Court in Gerakiteys[103] also emphasises that the conspirators must have a common intention to achieve the same unlawful object.  The Court held that the accused could not be guilty of conspiring with nine other persons to defraud a number of insurance companies because the evidence did not establish that the accused and the other persons all had a common purpose of defrauding those companies.  Rather, the evidence established no more than that the accused and one other person had a common purpose of defrauding a particular company.

   [103] (1984) 153 CLR 317.

2. It would seem to follow from Gerakiteys that a person must intend to achieve the carrying out of the unlawful act and that it is not sufficient proof of a criminal conspiracy that he or she realised that the probable consequences of his or her conduct might result in the performance of the unlawful act.  Indeed, the editor of Howard's Criminal Law[104] declares that the effect of Gerakiteys is that "reckless assistance or encouragement does not amount to a conspiratorial agreement."  Similarly, Dean Harno contended that[105] "[c]riminal conspiracy involves a specific intent to commit a particular act"; and Professor Sir John Smith says[106] that "[r]ecklessness as to circumstances of the actus reus is not a sufficient mens rea on a charge of conspiracy to commit a crime even where it is a sufficient mens rea for the crime itself".  More importantly, Wilson, Deane and Dawson JJ took the same view in an obiter comment in Giorgianni v The Queen[107].  Their Honours said[108]:

   "For the purposes of many offences it may be true to say that if an act is done with foresight of its probable consequences, there is sufficient intent in law even if such intent may more properly be described as a form of recklessness.  There are, however, offences in which it is not possible to speak of recklessness as constituting a sufficient intent.  Attempt is one and conspiracy is another." (emphasis added)

   [104] 5th ed (1990) at 370-371.

   [105] "Intent in Criminal Conspiracy", 89 University of Pennsylvania Law Review 624 at 635 (1941).

   [106] Smith and Hogan, Criminal Law, 8th ed (1996) at 287.

   [107] (1985) 156 CLR 473.

   [108] (1985) 156 CLR 473 at 506.

3. One difficult area of intention in cases of conspiracy to injure or defraud arises where relevant harm is suffered only by a person whose person or interests were not the object of the agreement.  In principle, it is clear that the court cannot attribute a constructive intention to the defendants.  Consequently, in Attorney‑General's Reference (No 1 of 1982)[109] the English Court of Appeal held that the defendants could not be indicted in England where they had agreed to defraud persons in Lebanon by selling bottles of whisky on which they had fraudulently placed the labels of an English company (the "X company").  For jurisdictional reasons[110], they could not be indicted for conspiracy to defraud the purchasers, and, since harm to the X company was not the object of their agreement, the Court of Appeal held that had not conspired to defraud that company.  Delivering the judgment of the Court, Lord Lane CJ said[111]:

   "It may well be that if the plan had been carried out, some damage could have resulted to the X company.  But that would have been a side effect or incidental consequence of the conspiracy, and not its object.  There may be many conspiracies aimed at particular victims which in their execution result in loss or damage to third parties.  It would be contrary to principle, as well as being impracticable for the courts to attribute to defendants constructive intentions to defraud third parties based on what the defendants should have foreseen as probable or possible consequences.  In each case to determine the object of the conspiracy, the court must see what the defendants actually agreed to do."

   [109] [1983] QB 751.

   [110] By the English common law, a conspiracy to commit a crime abroad is not indictable in England unless the crime is one for which an indictment would lie in England:  Board of Trade v Owen [1957] AC 602.

   [111] [1983] QB 751 at 757.

4. But this statement, although correct so far as it goes, overlooks the fact that a jury could find that the X company must inevitably have suffered loss or been prejudiced[112] by the conspiracy and that the defendants knew it.  It is no misuse of language in that context to say that the defendants intended to cause damage to the X company.  At all events, a jury could find from those facts that the defendants intended to cause harm to the X company.  No doubt when a person intends to do something, ordinarily he or she acts in order to bring about the occurrence of that thing.  But a person may intend to do something even though it is the last thing that he or she wishes to bring about[113].  Intention in this context is broader than a person's inclination to act to achieve a result that he or she believes is desirable.  If a person does something that is virtually certain to result in another event occurring and knows that that event is certain or virtually certain to occur, for legal purposes at least he or she intends it to occur[114].  In R v Moloney[115] and R v Hancock and Shankland[116], however, the House of Lords held that foresight of a consequence, even foresight that the consequence was virtually certain, was merely evidence of intention.  But if this is so, a jury would be bound to acquit a person accused of murder if the jurors believed that the accused had not committed the fatal act in order to bring about the death of the deceased even though the accused knew that death was the certain result of his or her actions.

   [112] The potential loss of sales or injury to reputation as the result of the defendants passing off a different and presumably cheaper product.

   [113] In R v Moloney [1985] AC 905 at 926, Lord Bridge of Harwich gave an example of the distinction:

   "A man who, at London Airport, boards a plane which he knows to be bound for Manchester, clearly intends to travel to Manchester, even though Manchester is the last place he wants to be and his motive for boarding the plane is simply to escape pursuit."

   [114] Giorgianni v The Queen (1985) 156 CLR 473 at 506 and cf The Macquarie Dictionary, 2nd ed (1991) at 915:  "intent ... 3. Law. the state of a person's mind which directs his actions towards a specific object."

   [115] [1985] AC 905.

   [116] [1986] AC 455.

5. For present purposes, it is sufficient to say that, although it is wrong to impute a constructive intention to defendants charged with conspiracy, they may have intended to injure or defraud a person even though that person or his or her interests were not the object of the conspiracy.  This seems to have been accepted by the House of Lords in R v Cooke[117] where, surprisingly, no reference was made to Attorney-General's Reference (No 1 of 1982)[118].  In Cooke, the House held that employees of the British Rail Board could properly be convicted at common law of conspiring to defraud the Board "by making sales of food and drink not the property of the ... Board to customers of the ... Board and by failing to account to the ... Board for the proceeds of sale thereof."[119]  The accused, who were crew members of a train with a refreshment service, had brought their own tea and coffee powder and cheese and beefburgers onto the train and sold them to passengers.

   [117] [1986] AC 909.

   [118] [1983] QB 751 at 757.

   [119] [1986] AC 909 at 921 per Lord Mackay of Clashfern quoting from the particulars of the offence charged.

   Conspiracy to defraud

6. Conspiracy to defraud is a particular application of the statement of Willes J in Mulcahy[120] that a conspiracy consists of "the agreement of two or more to do an unlawful act, or to do a lawful act by unlawful means."  The criminal law of conspiracy began to expand "during the reign of Edward III ... accelerated in the time of Elizabeth and James I, and had made its most important progress by the end of the reign of George III."[121]  Indeed, it was not until around the time of George III (1760-1820) that conspiracy to defraud became recognised as an independent head of criminal conspiracy.  Cheating the public had long been recognised as an indictable offence but, until R v Wheatley[122], the fact that more than one person was involved in the cheating seems to have been merely a matter of aggravation[123], not liability.  In Wheatley, Mansfield LCJ said[124] that "[a]ll indictable cheats are where the public in general may be injured; as by using false weights, measures, or tokens; - or where there is a conspiracy."  The view that a conspiracy to cheat was indictable was accepted by Kenyon LCJ in R v Lara[125].  The final step in the development of this branch of the law was taken in R v Gill and Henry[126] where the Court of Kings Bench upheld an indictment for conspiracy to cheat and defraud although the means of the cheating were not specified.  Abbott CJ said[127]:

   "It is objected that the particular means and devices are not stated.  It is, however, possible to conceive that persons might meet together, and might determine and resolve that they would, by some trick and device, cheat and defraud another, without having at that time fixed and settled what the particular means and devices should be.  Such a meeting and resolution would nevertheless constitute an offence."

   Henceforth, a mere agreement to cheat and defraud without any overt acts implementing the conspiracy was sufficient.

   [120] (1868) LR 3 HL 306 at 317.

   [121] Bryan, The Development of the English Law of Conspiracy, (1909) at 53.

   [122] (1760) 1 W Bl 273 [96 ER 151].

   [123] Thus, in Thody's Case (1674) 1 Vent 234 [86 ER 157] where the charge was a conspiracy to cheat by using false dice, Wylde J said that "the conspiracy is laid only by way of aggravation." In R v Parry, Snelling et al (1704) 2 L Ray 865 [92 ER 78] although several persons were charged with "having cheated JS" the indictment was upheld "because it is a cheat". The element of combination seems to have played no part in maintaining the indictment.

   [124] (1760) 1 W Bl 273 at 275 [96 ER 151 at 152].

   [125] (1795) 6 TR 565 [101 ER 706].

   [126] (1818) 2 B & Ad 204 [106 ER 341].

   [127] (1818) 2 B & Ad 204 at 205 [106 ER 341 at 342].

7. Throughout the 18th and 19th centuries, most reported cases upholding an indictment for a conspiracy to cheat and defraud involved deception by means of false pretences[128].  Nevertheless, the cases showed that any combination to cause financial prejudice by dishonesty would suffice to found an indictment or information.  Thus, in R v Hilbers[129] the Court of Kings Bench refused to set aside a criminal information charging the defendants with conspiracy to raise the price of oil by making fictitious sales.  In R v Hall[130], the Court held that an indictment would lie for the defrauding of creditors by disposing of goods after an act of bankruptcy.  And in R v Absolon and Clark[131] the Court held that an indictment would lie for conspiracy to cheat and defraud a railway company where the defendants had purchased "not transferable" tickets for the purpose of selling them.  Moreover, in Levi v Levi[132], a civil action for slander for imputing a felony, Gurney B directed the jury that if, pursuant to an agreement, a group of people go to an auction with the shared intention that only one of them would bid for any particular article, and that they would later sell the articles that they had bought and divide the profits, they could be tried for a conspiracy to defraud the owners of the goods.

   [128] R v Hevey, Beatty and M'Carty (1782) 1 Leach 232 [168 ER 218]; R v Brisac and Scott (1803) 4 East 164 [102 ER 792]; R v Roberts (1808) 1 Camp 399 [170 ER 999]; R v Pywell (1816) 1 Stark 402 [171 ER 510]; R v Gilland Henry (1818) 2 B & Ad 204 [106 ER 341]; R v Whitehead (1824) 1 C & P 67 [171 ER 1105]; R v Cooke (1826) 5 B & C 538 [108 ER 201]; R v Serjeant (1826) 1 R & M 352 [171 ER 1046]; R v Hamilton (1836) 7 C & P 448 [173 ER 199]; R v Steel (1841) 2 Moo 246 [169 ER 98]; R v Kenrick (1843) 5 QB 49 [114 ER 1166]; R v Gompertz (1846) 9 QB 824 [115 ER 1491]; R v Read (1852) 6 Cox 77(b); R v Whitehouse (1852) 6 Cox CC 38; R v Yates (1853) 6 Cox CC 441; R v Carlisle and Brown (1854) Dears CC 337 [169 ER 750]; R v Bullock and Clark (1856) Dears CC 653 [169 ER 883]; R v Esdaile (1858) 1 F & F 213 [175 ER 696]; R v Timothy (1858) 1 F & F 39 [175 ER 616]; R v Barry (1865) 4 F & F 389 [176 ER 615]; Latham v The Queen (1864) 9 Cox CC 516.

   [129] (1818) 2 Chit (KB) 163.

   [130] (1858) 1 F & F 33 [175 ER 613].

   [131] (1859) 1 F& F 498 [175 ER 825].

   [132] (1833) 6 C & P 239 [172 ER 1224].

8. These cases show that deception was not an essential element of a conspiracy to defraud.  It was sufficient if the defendants agreed to use dishonest means to achieve their object.  However, a conspiracy to defraud involves more than an agreement to use dishonest means to achieve some object.  As Lord Radcliffe pointed out in Welham v Director of Public Prosecutions[133]:

   "[D]efrauding involves doing something to someone.  Although in the nature of things it is almost invariably associated with the obtaining of an advantage for the person who commits the fraud, it is the effect upon the person who is the object of the fraud that ultimately determines its meaning."

   His Lordship went on to say[134]:

   "[P]opular speech does not give, and I do not think ever has given, any sure guide as to the limits of what is meant by 'to defraud.'  It may mean to cheat someone.  It may mean to practise a fraud upon someone.  It may mean to deprive someone by deceit of something which is regarded as belonging to him or, though not belonging to him, as due to him or his right.  It passes easily into metaphor, as does so much of the English natural speech.  Murray's New English Dictionary instances such usages as defrauding a man of his due praise or his hopes.  Rudyard Kipling in the First World War wrote of our 'angry and defrauded young.'  There is nothing in any of this that suggests that to defraud is in ordinary speech confined to the idea of depriving a man by deceit of some economic advantage or inflicting upon him some economic loss.

   Has the law ever so confined it?  In my opinion there is no warrant for saying that it has.  What it has looked for in considering the effect of cheating upon another person and so in defining the criminal intent is the prejudice of that person:  what Blackstone[135] called 'to the prejudice of another man's right.'"

   [133] [1961] AC 103 at 123.

   [134] [1961] AC 103 at 124.

   [135] Commentaries, 18th ed, vol 4 at 247.

9. Although most cases of conspiracy to defraud involve an agreement to use dishonest means which has the effect of inflicting economic loss on a third party, the infliction of such loss is not an essential element of the offence.  It is sufficient that the conspirators intended to obtain some advantage for themselves by putting another person's property at risk[136] or depriving another person of a lawful opportunity to obtain or protect property[137].  It is also well established that a conspiracy to defraud may be established if the defendants agree to deceive a person into acting or refraining from acting contrary to his or her public duty[138].

   [136] R v Sinclair [1968] 1 WLR 1246; [1968] 3 All ER 241; (1968) 52 Cr App R 618; R v Allsop (1976) 64 Cr App R 29; Wai Yu-Tsang v The Queen [1992] 1 AC 269.

   [137] R v Kastratovic (1985) 42 SASR 59 at 65.

   [138] Board of Trade v Owen [1957] AC 602; R v Terry [1984] AC 374; Withers [1975] AC 842 and cf R v Bassey (1931) 22 Cr App R 160.

10. Thus, in most cases, a conspiracy to defraud arises when two or more persons agree to use dishonest means with the intention of obtaining, making use of or prejudicing another person's economic right or interest or inducing another person to act or refrain from acting to his or her economic detriment.  Exceptionally, a conspiracy to defraud will also arise when two or more persons agree to use dishonest means to induce a third person to act or refrain from acting in contravention of the third person's public duty.  In some cases, it may be sufficient that the object of the agreement to use dishonest means concerns a non-economic right or interest of a person such as private reputation or personal status.  But in the vast majority of cases, conspiracies to defraud concern rights or interests having an economic value.

    The mental element in conspiracy to defraud

11. In so far as it is meaningful to speak of mens rea in the crime of conspiracy to defraud, mens rea means the intention to prejudice the interests of a third
    person by the use of means that are dishonest.  Since the decision of the House of Lords in R v Scott[139], however, the notion has grown up[140] that dishonesty is a separate element of the crime of conspiracy to defraud and that the prosecution must prove that the accused persons knew that they were acting dishonestly.  In Scott, the issue before the House of Lords was whether the offence of conspiracy to defraud could be made out in the absence of proof of deception.  Their Lordships held that it could.  They upheld a conviction for the offence where the appellant had agreed with employees of cinemas to pay them in return for lending him films which he could copy and sell for commercial distribution.  In the course of his speech Viscount Dilhorne said[141]:

    "If, as I think ...'fraudulently' means 'dishonestly,' then 'to defraud' ordinarily means ... to deprive a person dishonestly of something which is his or something to which he is or would or might but for the perpetration of the fraud be entitled."

    [139] [1975] AC 819.

    [140] See, for example, Australia, Model Criminal Code Officers Committee of the Standing Committee of Attorneys-General, Model Criminal Code.  Ch 3:  Conspiracy to Defraud.  Report, May 1997 at 5, n 11.

    [141] [1975] AC 819 at 839.

12. Later in his speech, Viscount Dilhorne said[142]:

    "[I]t is clearly the law that an agreement by two or more by dishonesty to deprive a person of something which is his or to which he is or would be or might be entitled and an agreement by two or more by dishonesty to injure some proprietary right of his, suffices to constitute the offence of conspiracy to defraud."

    [142] [1975] AC 819 at 840.

13. These statements were descriptive and not intended to be definitive of the elements of the offence of conspiracy to defraud.  They provide no support for the view that dishonesty as such is an element of the offence.  Still less do they provide any support for the view that the offence is not proved unless an accused person knows that he was acting in a way that ordinary people would consider dishonest.  If that was so, it would follow that, if one of two alleged conspirators did not know that what he was doing was dishonest, both would have to be acquitted because there must be at least two conspirators.

14. Yet in Ghosh[143], the English Court of Appeal took Viscount Dilhorne's statements in Scott as meaning that proof of subjective dishonesty was essential to the proof of both theft under the Theft Act 1968 (UK) and the common law offence of conspiracy to defraud and that the tests were interchangeable[144].  The test of dishonesty formulated in Ghosh has been applied in Australia in numerous cases concerned with conspiracy to defraud[145].  The authors of Archbold[146] seem to have been voices in the wilderness in robustly maintaining the view that it is "superfluous" to direct a jury as to dishonesty.  In my opinion, however, the authors of Archbold are right.  A successful prosecution for conspiracy to defraud does not require proof that the accused knew that he or she was acting dishonestly either in a Ghosh sense or a wholly subjective sense.

    [143] [1982] QB 1053.

    [144] As a result, the Court said (at 1064):

    "In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest.  If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.

    If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest."

    [145] Einem v Edwards (1984) 12 A Crim R 463 at 470-471; R v Aston and Burnell (1987) 44 SASR 436 at 440; Cheatle v Director of Public Prosecutions unreported, Supreme Court of South Australia, 2 July 1992; R v Karounos (1994) 63 SASR 451 at 485; Weinel v Fedcheshen (1995) 65 SASR 156 at 172; Cornelius & Briggs (1988) 34 A Crim R 49 at 74; R v Clark & Bodlovich (1991) 6 WAR 137 at 150‑151; Bond (1992) 62 A Crim R 383 at 405-406; Carter v The Queen unreported, Supreme Court of Western Australia, 26 September 1997 at 158; R v Maher [1987] 1 Qd R 171 at 186; R v Laurie [1987] 2 Qd R 762 at 763; R v Allard [1988] 2 Qd R 269 at 270, 276; R v Harvey [1993] 2 Qd R 389 at 413, 437-439.

    [146] Archbold Criminal Pleading, Evidence and Practice, (1996), vol 2 at 17-102, but they seem to have retreated from this position in the 1997 edition (see 17-62 to 17‑64).

1. As the foregoing review of authority and analysis demonstrate, the resolution of the problem presented by this appeal is by no means easy.  No holding of this Court determines the matter.  Such authority as exists in the several jurisdictions of Australia and overseas, demonstrates a sharp division between those who are persuaded to the correctness and utility of the Ghosh approach to dishonesty and those who are not. The current state of diversity of Australian judicial opinion is obviously unsatisfactory. Particularly is this so in the case of the approach that is to be taken to dishonesty where it is an ingredient in a federal offence. That approach should not differ, depending upon the jurisdiction in which the trial is had. The quandary presented has not been resolved by the Parliament. On the contrary, the Act still leaves the question to be determined in accordance with the common law[235]. 

   [235] The Act, s 4.

2. Whilst it would be preferable for a legislative solution to be offered, and whilst work to that eventual end has been performed on the Model Criminal Code, it would be unrealistic to postpone the resolution of the question in this appeal in the hope that legislation will shortly ensue.  In expressing the best solution which the common law provides, it is not inappropriate to take into account the work that has been performed on the Model Criminal Code.  As I have said, the drafters favour the adoption of the "Feely/Ghosh test", not apparently regarding as important the differences between what was recommended in Feely and what was done in Ghosh.  However, there are important differences between the exercise by the Officers' Committee on a model criminal code and the function of this Court in declaring the common law in Australia.  Necessarily, the officers working on the Model Code have been obliged to pay close regard to the consensus of official opinion in the several Australian jurisdictions, that being a matter pertinent to the prospects of adoption of the legislative code which they will eventually recommend[236].  This Court, unless constrained by authority, is obliged to derive any new principle in a different way.  It must take into account past decisions on analogous matters and evaluate any applicable considerations of legal principle or legal policy[237].

   [236] Commonwealth, Model Criminal Code Officers Committee of the Standing Committee of Attorneys-General, Model Criminal Code.  Chapter 3:  Theft, Fraud, Bribery and Related Offences.  Final Report (1995) at 29.

   [237] Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 252.

3. Most serious crimes of dishonesty are still tried in Australia before a jury.  This feature of the mode of trial makes it specially important, as this Court has repeatedly recognised, to avoid wherever possible, over-subtle distinctions and differentiations and to adopt legal standards which are readily comprehensible, easily applied, capable of simple explanation to juries by judges and, in matters of fundamental principle which are unaffected by statutory disparities, as uniform as possible throughout the nation[238].  One special reason for adhering to the simple concept of acts and intentions is that this can be readily explained to, and understood by, a jury.  Excessive subtlety may not be understood.  Differentiation between the essential notion of dishonesty as an ingredient of criminal offences, whether express or implied, does not appear to be justified simply because, in some contexts, the word is used in an adverbial or adjectival form and in others as a noun.  Furthermore, differentiation, such as now arises in the State of Victoria, in the judicial explanation of dishonesty, where that concept is relevant to both federal and State offences, is a sure formula for mistakes in judicial directions, confusion on the part of the jury or both.  To resolve these differences, this Court should return to basic principle.

   [238] Zecevic v Director of Public Prosecutions (Vict) (1987) 162 CLR 645 at 665; R v Barlow (1997) 188 CLR 1 at 32.

   The fundamental principle of subjective intention

4. Save for a limited number of exceptional cases[239], the concern of the criminal law in Australia is ordinarily addressed in each offence not just to the conduct of an accused but also to his or her subjective intention or belief.  This is a fundamental feature of our criminal law.  Stephen J in R v O'Connor[240]observed:

   "For criminal liability to be incurred (cases of strict liability and culpable negligence always apart) civilised penal systems have, in modern times, insisted that the accused should be shown to possess a blameworthy state of mind.  As Stephen J pointed out in R v Tolson, 'The full definition of every crime contains expressly or by implication a proposition as to a state of mind.  Therefore, if the mental element of any conduct alleged to be a crime is proved to have been absent in any given case, the crime so defined is not committed ...'.  (The reference to proof of absence must now, of course, be read in the light of Woolmington v Director of Public Prosecutions.  The mental element that must be present is a state of mind such as Lord Simon described, in Majewski, as 'stigmatised as wrongful by the criminal law':  it is that state of mind which, when compounded with prohibited conduct, constitutes the particular offence.  As Dickson J said in Leary v The Queen, 'Society and the law have moved away from the primitive response of punishment for the actus reus alone'.  Thus in Bratty v Attorney-General (Northern Ireland) the Lord Chancellor, in describing 'the overriding principle, laid down by this House in Woolmington's Case' said, 'that it is for the prosecution to prove every element of the offence charged.  One of these elements is the accused's state of mind;  ... if, after considering evidence properly left to them by the judge, the jury are left in real doubt whether or not the accused acted in a state of automatism, it seems to me that on principle they should acquit because the necessary means rea - if indeed the actus reus - has not been proved beyond reasonable doubt'."

   [239] Such as crimes of negligence, eg manslaughter by criminal negligence, or offences of strict liability.

   [240] (1980) 146 CLR 64 at 96-97 (citations omitted). See also at 79-80 per Barwick CJ.

5. The foregoing basic principle requires juries (or where relevant another tribunal of fact) to determine the intention or belief of the accused at the time of the criminal act in order to judge whether the offence has been established[241].  Obviously, this requirement presents certain difficulties.  Absent a comprehensive and reliable confession, it is usually impossible for the prosecution actually to get into the mind of the accused and to demonstrate exactly what it finds was there at the time of the criminal act.  Necessarily, therefore, intention must ordinarily be inferred from all of the evidence admitted at the trial[242].  In practice this is not usually such a problem.  But the search is not for an intention which the law objectively imputes to the accused.  It is a search, by the process of inference from the evidence, to discover the intention which, subjectively, the accused actually had.  Thus in He Kaw Teh v The Queen[243], Gibbs CJ remarked that:

   "[I]f guilty knowledge is an element of an offence, an honest belief, even if unreasonably based, may negative the existence of the guilty knowledge, and thus lead to an acquittal."

   [241] The common law in Australia draws no distinction between crimes of "basic intent" and crimes of "specific intent":  R v O'Connor (1980) 146 CLR 64 at 81-85, 91-92, 111. Contrast the approach taken in England: R v Morgan [1976] AC 182 at 216‑217; R v Majewski [1977] AC 443 at 478-479; cf Director of Public Prosecutions v Beard [1920] AC 479 at 504. However, where intoxication is involved, the dichotomy has been introduced by legislation. See for example Criminal Code Act 1995 (Cth), Schedule, cl 8.2(1); Crimes Act 1900 (NSW), s 428B.

   [242] Woolmington v The Director of Public Prosecutions [1935] AC 462 at 481.

   [243] (1985) 157 CLR 523 at 534. See also at 592 per Dawson J. This Court has consistently upheld the general rule that "a person is not criminally responsible for an act which is done independently of the exercise of his will":  Hardgrave v The King (1906) 4 CLR 232 at 237 per Griffith CJ (emphasis added); cf Thomas v The King (1937) 59 CLR 279 at 309 per Dixon J; Ryan v The Queen (1967) 121 CLR 205 at 216 per Barwick CJ; R v O'Connor (1980) 146 CLR 64 at 80 per Barwick CJ, at 96-97 per Stephen J.

6. Dishonesty may be an element of an offence, either expressly (as in the Theft Act offences in Victoria) or inherently (as here, because the conspiracy alleged is of a particular character, viz one to defraud).  The absence of the ingredient of dishonesty, even if that absence is, objectively speaking, unreasonably based, will negative the existence of dishonesty and justify a verdict of acquittal.  Because the tribunal deciding such matters, whether jury or not, can be counted on to avoid the extremes of gullibility and naivety, that tribunal can safely be expected to apply what, for want of a better expression, amounts to "the current standards of ordinary decent people"[244].  But this is an expectation based upon the nature, composition and functions of the decision‑maker.  It is not based upon a legal requirement that the decision-maker, jury or otherwise, must apply to the facts an objective standard, invented as a fiction and resting on a presumption that it is possible to discover the "current standards of ordinary decent people" or the "ordinary standards of reasonable and honest people"[245] separately from the standards of the decision maker.

   [244] As Lawton LJ said in R v Feely [1973] QB 530 at 538.

   [245] R v Ghosh [1982] QB 1053 at 1064.

7. To the extent that an accused puts forward idiosyncratic, bizarre, eccentric or peculiar beliefs to support an assertion of a want of dishonesty, such considerations go, in my opinion, only to the plausibility of the accused's evidence[246].  If the tribunal of fact accepts the evidence and it sustains an absence of dishonesty at the relevant time, it will sustain an acquittal where dishonesty is an essential ingredient of the offence.  Fear of hordes of modern Robin Hoods, galloping into the court rooms of the nation, in company with anti-vivisectionists, environmentalists and other people affirming minority beliefs (so often raised as a spectre in these cases) should neither be exaggerated nor overstated.[247]

   [246] R v Lawrence [1997] 1 VR 459 at 467 per Callaway JA.

   [247] This was also the answer given by Barwick CJ in R v O'Connor (1980) 146 CLR 64 at 79 to the suggestion that juries would be too readily persuaded to an acquittal if evidence of the result of self-induced intoxication, particularly by drugs other than alcohol, were allowed; cf R v O'Connor [1980] VR 635 at 647 per Starke J.

8. The injection of an objective criterion as contemplated by the ruling in Ghosh cuts across one of the basic principles of our criminal law.  Without the specific authority of Parliament, the courts should not invent such an exception.  To do so is to countenance the punishment of an accused on the basis of a criminal intention derived from a fiction based on objective standards rather than on the foundation of the accused’s actual intention, subjectively held at the time of the criminal act charged.  Such a departure from principle could certainly be achieved by statute.  No doubt it would be applauded by some.  But it is out of harmony with one of the most fundamental concepts – perhaps the most fundamental idea - of the criminal law of this country.  If such a principle were to be adopted it would have to be done by a Parliament and not by a court declaring the common law in Australia.

9. The appellant urged this Court, in relation to the offence of which he stood charged, to return to the approach accepted by the Victorian Full Court in Salvo.  In that case, the judges in the majority addressed attention to two considerations in giving meaning to the word "dishonestly" where expressly appearing in the Theft Act provisions of the Victorian Crimes Act. The first was the need to focus the inquiry upon what "the accused himself in fact believed"[248].  The second was to address whether the accused believed that "he had a legal right in all the circumstances"[249].  In my opinion, in giving attention to what the accused in fact believed, the majority in Salvo correctly expressed the test for the ascertainment of the presence or absence of the ingredient of dishonesty.  And this is so whether that ingredient is expressly stated by statute or is inherent in the definition of the offence created by the common law.  However, the reference to the existence of a claim of right, whilst doubtless apt to the facts of that case did not (nor did it purport to)[250] exhaust the circumstances where dishonesty might be negatived.  The broader statement expressed by King CJ in Kastratovic[251] would, in my view, have application to a wider range of cases:

   "In all cases, the element of intent to defraud connotes the intention to produce a consequence which is in some sense detrimental to a lawful right, interest, opportunity or advantage of the person to be defrauded, and is an intention distinct from and additional to the intention to use the forbidden means."

   [248] R v Salvo [1980] VR 401 at 423 per Murphy J; cf at 426 per Fullagar J.

   [249] [1980] VR 401 at 420 per Murphy J, at 432 per Fullagar J.

   [250] [1980] VR 401 at 423 per Murphy J who confined his remarks to the position "in the present case".

   [251] (1985) 42 SASR 59 at 62-63.

10. Whilst the notion of defrauding will commonly address attention to the use of forbidden means, it is not confined to a consideration of the means.  In certain cases some, at least, of the means used may have been perfectly legal.  The stain of fraud may arise from the object which the perpetrator dishonestly set out to achieve.

11. I have no more temerity to attempt an exhaustive definition of the meaning of "defraud", or of dishonesty, than Viscount Dilhorne could evince in R v Scott[252].  Nor is it necessary to do so.  In the present case, the proper instructions to the jury would have involved a review of the essential ingredients of the charge of conspiracy to defraud.  It would have obliged the judge to inform the jury that one ingredient which the prosecution had to prove was that the appellant, in concert with the other persons named, had set about to deprive the Commissioner of Taxation dishonestly of the taxation owing to him by the client.  This direction would have been followed by a reminder of the evidence pertinent to the respective cases of the prosecution and the accused, much as the primary judge gave in this case.  But instead of telling the jury, as Ghosh and its Australian acolytes required, that they had to ascertain whether the appellant had acted dishonestly by reference to "the ordinary standards of reasonable and honest people", it would have been the judge’s duty to focus the minds of the jury on what the appellant himself in fact believed as to the means chosen to achieve the agreement found.  If he believed that he had a legal right to act as he did, if he believed that that he was not acting in breach of any legal obligations or if he had no dishonest intention to act in a way to impede the Commissioner of Taxation in the lawful collection of tax from the client, the means chosen to achieve the purposes of the agreement would lack the element of dishonesty necessary to establish its character as one of defrauding the Commissioner.  The search is for the accused’s intention as well as for his actions.  It was not just the intention to enter an agreement with the alleged co-conspirators but the intention to enter an agreement intended to be achieved by dishonest means which alone would warrant criminal punishment.  Conclusions on the foregoing questions unfavourable to the accused, reached to the requisite standard, would justify conviction of the appellant.

    [252] [1975] AC 819 at 839.

    The proviso is inapplicable

12. It follows from these conclusions that the charge given to the jury in the trial of the appellant in this case was erroneous.  It introduced misdirections as to the way in which they were to approach an ingredient of the offence of conspiracy to defraud, viz an agreement on the part of the appellant with others to cause loss to the Commissioner of Taxation by dishonest means[253].  The appellant was entitled to have the jury pass upon the evidence, correctly instructed on the important ingredients of that offence.  The objective considerations, as required by Ghosh and contained in the primary judge's instruction, may have affected the jury's approach to the consideration of the subjective beliefs, intentions and objectives of the appellant. 

    [253] R v Scott [1975] AC 819 at 841. See also at 839.

13. It is impossible to know how, properly instructed, the jury might have responded to the appellant's evidence.  Whilst it is true that his principal defence was that he did not enter into a conspiracy at all, he was entitled, if that defence were rejected, to have the jury consider the issue of the alleged dishonesty with the proper legal test in mind.  As the judge’s charge did not ensure that that happened, the appellant suffered a miscarriage of justice.  He lost a real chance of acquittal[254].  The case is therefore not one for the application of the proviso.  It is true that, on the facts, the prosecution case against the appellant was extremely strong.  Objective evidence would clearly have supported inferences of dishonesty which the prosecution invited the jury to draw.  But the accused was entitled to have the jury accurately instructed on such an important, even central, ingredient of the offence.  This did not occur.

    [254] cf Mraz v The Queen (1955) 93 CLR 493 at 514; R v Storey (1978) 140 CLR 364 at 376; Quartermaine v The Queen (1980) 143 CLR 595 at 600-601; Wilde v The Queen (1988) 164 CLR 365 at 372-373; Whittaker v The Queen (1993) 68 A Crim R 476 at 484; R v Jones (1995) 38 NSWLR 652 at 659.

14. The Crown argued that the introduction of objective considerations was not unknown in particular contexts of the criminal law.  Thus, on the issue of provocation the question is not resolved by reference only to the subjective beliefs of the accused.  Consideration is given to the response of an ordinary person or "an ordinary person in the position of the accused"[255].  It was argued that juries are accustomed to receiving and acting upon judicial instructions addressed to such considerations.  All of this is true.  However, the position in such cases is distinguishable on a number of grounds.  First, the introduction of an objective element in provocation can be traced to very old principles of the common law, elaborated, historically, before the universal importance of the subjective intention of the accused was accepted as a general rule.  As well, in Australia, the objective criterion is now commonly so stated in the applicable Crimes Act or Code.  Furthermore, in a case such as provocation, what is in issue is an amelioration of the charge of criminal conduct.  Here, the issue is the definition of one of the elements of the offence itself.  Now confronted by the problem, the Court is obliged to solve it by resort to fundamental principle.  Dishonesty of its essential nature connotes conscious wrongdoing.  It is not dishonesty by the standards of other persons but by the appreciation and understanding of the accused personally.

    [255] See for example Crimes Act 1900 (NSW), s 23(2)(b); cf Green v The Queen (1997) 72 ALJR 19; 148 ALR 659.

    Conclusion and orders

15. At one stage the appellant argued that this Court should substitute a verdict of acquittal on the first count for the verdict which the jury returned.  That submission was entirely misconceived.  This Court, which has neither seen nor heard the witnesses, could not properly reach any conclusion on the appellant's protestations that he had only acted in his capacity as the client's solicitor and had not been dishonest.  Such matters would have to be passed upon by a jury.  However, it should be a jury properly instructed as to what dishonesty means in this context, as an element of the offence charged.  This is what was missing from the first trial.  The jury were deprived of the instructions which the law required.  For all this Court knows, if the jury had been properly directed, they might have concluded that the appellant was naive, even stupid perhaps, but not dishonest and thus not a party to the conspiracy to defraud the Tax Commissioner.  It would follow that the appeal should be allowed, the conviction quashed and a new trial ordered. 

1. I have already indicated my disagreement with the conclusions of McHugh J (with whom Gummow J concurs).  From the foregoing it will be plain that I also cannot agree with the opinion of Toohey and Gaudron JJ that the question whether the means used to effect the conspiracy are to be characterised as dishonest is to be answered by the application of the standards of ordinary, decent people.  However, clearly, the opinions of Toohey and Gaudron JJ are much closer to my own, in that their Honours accept that the offence of conspiracy to defraud the Commonwealth, properly analysed, involves dishonesty at two levels and a jury must be so satisfied.  As this Court is evenly divided on the applicable legal test, as there is a clear majority for dismissing the appeal which my opinion cannot affect and as it is essential that the Court should provide clear instruction to those who have the responsibility of conducting criminal trials, whilst preferring my own opinions I withdraw them.  For the purposes of procuring a holding on the issues argued in this appeal, I concur in the opinions expressed by Toohey and Gaudron JJ on the point of difference between them and McHugh J and Gummow J.

2. The appeal should therefore be disposed of as Toohey and Gaudron JJ propose.