R v Agius; R v Castagna

[2017] NSWSC 549

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	R v Agius; R v Castagna [2017] NSWSC 549
Hearing dates:	23 March 2017
Date of orders:	24 March 2017
Decision date:	24 March 2017
Jurisdiction:	Common Law - Criminal
Before:	Garling J
Decision:	Application for separate trial dismissed
Catchwords:	PRACTICE AND PROCEDURE – application for separate trial – no prejudice established to justify separate trial – joint trial in the interests of justice
Legislation Cited:	Criminal Code Crimes Act 1914 (Cth) Criminal Procedure Act 1986
Cases Cited:	R v Agius; R v Zerafa [2012] NSWSC 978 R v Baladjam & Ors (No.57) [2008] NSWSC 1471 R v Hiroki [2014] NSWSC 365 R v Middis (Supreme Court, 27 March 1991, unreported) R v Rogerson; R v McNamara (No.3) [2015] NSWSC 965
Texts Cited:	Not Applicable
Category:	Procedural and other rulings
Parties:	The Queen Robert Francis Agius (Applicant on the Motion) Anthony Dante Castagna
Representation:	Counsel: P McGuire SC (Crown) P Lowe (Agius) P Strickland SC (Castagna)   Solicitors: Director of Public Prosecutions (Crown) David H Cohen & Co Solicitors (Agius) Hazan Hollander Solicitors & Intellectual Property (Castagna)
File Number(s):	2016/136935;2016/137095
Publication restriction:	Not to be published until after finalisation of the trial. Trial finalised - non-publication order revoked on 24.8.2020.

Judgment

1. On 3 February 2017, Robert Francis Agius (“the applicant”) sought, by a Notice of Motion filed that day, orders that he be tried separately from his co‑accused, Anthony Dante Castagna, on the charges contained in an Indictment dated 19 September 2016.

2. Argument was heard on 23 March 2017. On 24 March 2017, I ordered that the Notice of Motion be dismissed. I indicated that reasons would be provided in due course.

3. These are my reasons for dismissing the Motion.

The Indictment

4. The Indictment charges the applicant and Mr Castagna jointly with three offences, which are:

1. Between 8 April 1998 and 23 May 2001, at Sydney in the State of New South Wales and elsewhere did conspire with each other to defraud the Commonwealth:

Contrary to s 29D and 86(1) of the Crimes Act 1914 (Cth);

2. Between 24 May 2001 and 30 July 2009, at Sydney in the State of New South Wales and elsewhere, did conspire with each other with the intention of dishonestly causing a loss to a third person, namely the Commonwealth:

Contrary to s 135.4(3) of the Criminal Code; and

3. Between about 2 February 2004 and 15 April 2008, at Sydney in the State of New South Wales and elsewhere, did conspire with each other to deal with property of a value of $1 million or more believing it to be the proceeds of crime:

Contrary to ss 11.5(1) and 400.3(1) of the Criminal Code.

5. In addition, Mr Castagna is charged with 10 substantive offences relating to the lodging of his personal income tax return for the financial years ended 30 June 1999 through to and including 30 June 2008. The first of these offences, relating to the financial year 1999, is charged contrary to s 29D of the Crimes Act, and the balance of the offences for the remaining years charge an offence contrary to s 134.2(1) of the Criminal Code.

6. The Commonwealth DPP (“CDPP”) has informed the Court that it is intended that all the charges be heard together, and that she wishes to proceed with the entire indictment.

7. Mr Castagna also filed a Motion with respect to separating the counts on the Indictment however he did not proceed with that Motion.

Relevant Legislation

8. Section 21 of the Criminal Procedure Act 1986 provides that the Court may order a separate trial of any count or counts of an indictment if it is of the opinion:

1. that an accused person may be prejudiced or embarrassed in his or her defence by reason of being charged with more than one offence in the same indictment; or

2. that for any other reason it is desirable to direct that an accused person be tried separately for any one or more offences charged in an indictment.

9. This section provides one source of power for the Court to make the order sought.

10. Section 29 of the Criminal Procedure Act also provides:

“29 When more than one offence may be heard at the same time

(2)    A court may hear and determine together proceedings related to offences alleged to have been committed by 2 or more accused persons in any of the following circumstances:

(a) the accused persons and the prosecutor consent,

(b) the offences arise out of the same set of circumstances,

(c) the offences form or are part of a series of offences of the same or a similar character.

(3)    Proceedings related to 2 or more offences or 2 or more accused persons may not be heard together if the court is of the opinion that the matters ought to be heard and determined separately in the interests of justice.”

11. Accordingly, the Court is entitled to order a separate trial, as sought by the applicant, if it is of the opinion that the order would be in the interests of justice, or else if there is any other reason which makes it desirable to direct that Mr Agius be tried separately.

12. There is no substantive difference between the provisions. It seems to me that the relevant test is whether it is in the interests of justice that the charges against Mr Agius be separated from those against Mr Castagna, and that the CDPP is required to proceed against them in separate trials.

13. In R v Middis (Supreme Court, 27 March 1991, unreported) Hunt J said:

“Briefly, the relevant principles are that:

1.    where the evidence against an applicant for a separate trial is significantly weaker than and different to that admissible against another or other accused to be jointly tried with him, and

2.   where the evidence against those other accused contains material highly prejudicial to the applicant, although not admissible against him, and

3.   where there is a real risk that the weaker Crown case against the applicant will be made immeasurably stronger by the reason of the prejudicial material,

the separate trial will usually be ordered in relation to the charges against the applicant. The applicant must show that positive injustice would be caused to him in a joint trial.”

14. More recently, Bellew J called attention to the relevant principles in R v Rogerson; R v McNamara (No.3) [2015] NSWSC 965 at [60] ff. His Honour identified the following propositions, with which I express my respectful agreement:

“1.   As a general proposition crimes which are alleged to have been committed jointly should be prosecuted in a joint trial. An exception to that general rule arises where there is a real risk of positive injustice to an accused;

2.   The mere existence of “cut-throat” defences, or inconsistent defences, does not of itself support an order for a separate trial. Depending upon the circumstances of the case, such defences may in fact strengthen the case for a joint trial;

3.   It is contrary to the interests of justice that there should be inconsistent verdicts. This consideration is of particular importance where each accused is likely to cast blame on the other;

4.   The risk of inconsistent verdicts is particularly significant where each accused seeks to blame the other;

5.   It is in the interests of justice that the whole picture is presented to the members of the jury so that the jury in a joint trial has the means of obtaining ‘a conspectus of the respective roles of each of [the accused]’: Ali v R (2005) 214 ALR 1 at [58] (Heydon and Callinan JJ);

6.   Questions of costs and inconvenience are not irrelevant in determining whether separate trials should be ordered; and

7.   It must be recognised that some prejudice to one or other accused is inevitable in any joint trial. It is a factor to be taken into account in striking the necessary balance. It is necessary to keep in mind that the common law proceeds on the assumption that the jury will obey any direction which is given by a trial Judge.”

15. I have also previously discussed the relevant principles in R v Hiroki [2014] NSWSC 365. Those principles remain applicable.

16. It is convenient to proceed by next setting out the essence of the Crown case.

Crown Case Statement

17. The Crown case statement provided is a relatively lengthy document. It is unnecessary to set it out in full for the purpose of this judgment. It is sufficient to set out what is described in that statement as the “Executive Summary”. It is in the following form:

“1.   These matters are the result of a joint taskforce investigation between the Australian Federal Police (AFP) and the Australian Taxation Office (ATO) into offshore tax evasion and money laundering schemes, known as Project Wickenby.

2.   Between 1999 and 2008 Mr Castagna was a venture capitalist contracted to Macquarie Bank (MBL). The contract for Mr Castagna’s services was entered into via an offshore company named Billbury Limited (Billbury), of which Mr Agius was a Director. The contracts were signed by MBL, Mr Castagna as Billbury’s representative, and Mr Agius as Director of Billbury. Mr Castagna and Mr Agius are cousins.

3.   During the charge period MBL transferred at least $6,386,381 to an overseas account in the name of Billbury Limited under the consultancy agreement for Mr Castagna’s services. Of this amount, Mr Castagna received approximately $849,310.21 into his personal bank account in Australia transferred from Billbury. This amount was declared to the ATO as income in his Income Tax Returns (ITRS) for the relevant financial years.

4.   The remainder and majority of the fees paid by MBL for Mr Castagna’s services were held offshore in Vanuatu and New Zealand in accounts controlled by Mr Agius and not declared as income by Mr Castagna to the ATO.

5.   Between the 1999 and 2008 financial years Mr Castagna failed to declare approximately $5.7 million in income received from MBL. Mr Castagna, with the assistance of Mr Agius, had a large portion of those funds returned to Australia for his personal use under the guise of loans (which were not taxable). The failure to declare all of his income caused a loss to the taxation revenue of approximately $2.7 million.

6.   The conspiracy alleged in relation to counts 1 and 2 is, in essence, an agreement between Mr Castagna and Mr Agius, between about 8 April 1998 and about 30 July 2009, to defraud the Commonwealth of income tax or to dishonestly cause a loss to the Commonwealth by concealing the true income of Mr Castagna from the revenue. One fraud conspiracy is alleged, although it is represented by two counts in order to reflect two different statutory regimes under which the charges are brought.

7.   The fraud the subject of the conspiracy alleged in counts 1 and 2 is charged in the alternative under counts 3 to 12.

8.   The conspiracy alleged in relation to count 13 is in essence, an agreement between Mr Castagna and Mr Agius, between about 2 February 2004 and 15 April 2008, to deal with the proceeds of the conspiracy alleged in sequences 1 and 2, by returning the proceeds (or most of the proceeds) to Australia under the guise of loans, which were not taxable. Once returned to Australia the proceedings were used by Mr Castagna to develop a number of investments properties in the Newcastle region.”

18. In oral submissions, the CDPP made it clear that its case on each of the counts of conspiracy was that the jury would have to convict both the applicant and Mr Castagna, or neither of them. The CDPP accepted that in many conspiracy cases, it was possible for a jury to return a verdict of guilty in respect of one conspirator, and not guilty in respect of another. But it made it plain that in the facts and circumstances of this case, such differential verdicts would not be sought by the prosecution and if returned, would be perverse.

The Applicant’s Case

19. As ultimately formulated in the course of oral submissions, the applicant’s case identified the following matters as the basis upon which the Court would be persuaded that a separate trial should be ordered.

20. The first matter identified was the prejudicial consequence to Mr Agius if a voluntary disclosure statement, sent by Mr Castagna to the Australian Taxation Office on 18 November 2008, was admitted into evidence even if it was not tendered against Mr Agius.

21. The second matter relied upon was the potential prejudice to Mr Agius if the Court was to permit evidence either being led by the prosecution or being adduced by Mr Castagna which in any way might touch upon Mr Agius’ two earlier convictions of conspiracy with Mr Owen Trevor Daniel and others for offences against the same sections of the Crimes Act and Criminal Code as the first two counts in this proceeding. The full facts, matters and circumstances of those convictions can be found at R v Agius; R v Zerafa [2012] NSWSC 978.

22. In respect of those two offences, Simpson J sentenced Mr Agius to a total term of imprisonment of 8 years and 11 months, with a non-parole period of 6 years and 8 months, expiring on 30 March 2019.

23. It is agreed between the parties that the facts, matters and circumstances underlying Mr Agius’ earlier convictions are not at all relevant to these proceedings.

24. The third matter relied upon was the risk of a “cut throat” defence in the sense that Mr Castagna’s defence would portray Mr Agius as a tax avoidance/fraud mastermind who conceived of the scheme, told Mr Castagna that it was lawful, and that Mr Castagna was an innocent man caught up in such a scheme.

25. Fourthly, Mr Agius argued that the Crown case against him was not a strong one. He pointed to the fact that both he and Mr Castagna had been discharged by the committing Magistrate on the basis that the Crown could not establish a case against either of them. He submitted that the strength of the Crown case was a relevant consideration because the effect of any possible prejudice to him would be magnified by the weakness of the Crown case.

26. Mr Agius next pointed to the fact that a considerable amount of the evidence to be adduced at the joint trial would relate to the dealings between Mr Castagna and his own retained accountants. Mr Agius drew attention to the fact that it was not suggested that he had any direct role to play in those encounters, nor that he knew at any time of the detail of them and, finally, that the encounters occurred, generally speaking, well after his involvement with Mr Castagna.

27. Finally, Mr Agius submitted that the time and cost of two trials, as opposed to a single trial, would not be unduly excessive and would not be of such a kind as would tell against ordering a separate trial.

Crown Submissions

28. The Crown opposed the application for a separate trial made by Mr Agius.

29. The Crown submitted that the prima facie rule which ought be applied is that those who are alleged to have committed a crime jointly should be prosecuted in a joint trial.

30. The Crown accepted that the voluntary disclosure statement was admissible as evidence only against Mr Castagna and not against Mr Agius. The Crown submitted that in general there was nothing in that document which raised any particular prejudice against Mr Agius. The Crown conceded that paragraphs 60 to 64 (inclusive) might fall into the category of being unduly prejudicial to Mr Agius. The Crown submitted that it would review whether or not it proposed to tender those paragraphs and, if those paragraphs were either not tendered or, alternatively, after objection, not admitted, they could be redacted from the document without any undue difficulty.

31. In addition the Crown submitted that directions from the Court of the kind dealing with evidence admissible against one conspirator and not the other, would be adequate to deal with any possible prejudice arising out of the voluntary disclosure statement.

32. The second issue raised by Mr Agius dealt with evidence being led by the Crown or cross-examined by Mr Castagna, which touched upon his earlier conviction and the facts, matters and circumstances involved in that conviction.

33. The Crown’s submissions proceeded upon the basis, which I think is a sensible one, that it was most unlikely that Mr Agius would be raising his own good character in response to the Crown’s case against him. The Crown accepted that unless this occurred, there would be no basis for it to tender that material. Obviously, if Mr Agius did raise his good character, then evidence of his conduct which led to these convictions may be relevant to that issue and could be adduced.

34. The Crown submitted that such an issue is not uncommonly raised in joint trials and it is ordinarily addressed at the time such a question is raised by an argument as to whether the evidence is admissible and, if it is, then it would be appropriate for the Court to give the jury directions as to how properly to deal with it.

35. The Crown accepted that there would be some potential prejudice to Mr Agius if such an issue was to be raised, but submitted that it was not certain to be raised and, if it was, that it could be dealt with in the ordinary process of the conduct of the trial.

36. With respect to the third point raised by Mr Agius, namely the risk that Mr Castagna’s defence may paint him as a principal in a very broad tax fraud scheme into which Mr Castagna was drawn without adequate knowledge, the Crown made a similar submission.

37. In short, the Crown submitted that in a closed conspiracy case such as this one, it would be surprising if such an issue was in fact raised by Mr Castagna but, if it was, that was necessarily a part of any trial on a conspiracy charge and raised a matter which was entirely appropriate for a jury to determine. The Crown submitted that any possibility of prejudice could properly be dealt with by directions or else objections to admissibility.

38. In respect of these last two points, the Crown submitted that whilst at least at this stage there may be prejudice, that potential was insufficient to discharge the tests articulated in the authorities to which attention has been drawn.

39. The Crown submitted that the Court would not be persuaded that the case for the prosecution was a weak one. It also submitted that even if it was, it was an irrelevant matter for the Court to take into consideration.

40. The Crown submitted that evidence involving Mr Castagna’s dealings with his accountants about the submission of his tax returns was inadmissible as evidence of conduct in furtherance of the conspiracy. If it was not admissible against Mr Agius but against Mr Castagna, then the Crown submitted that it would be adequate for the Court to give the appropriate directions to the jury.

41. In summary, the Crown submitted that the matters raised by Mr Agius did not reach the requisite threshold for the ordering of a separate trial, particularly in circumstances where a number of the witnesses to be called to give evidence had retired from professional practice and were elderly. Moreover, the Crown submitted that if the trials were separated, almost all of the witnesses would need to give their evidence on a second occasion with consequences for costs and the efficient discharge of the administration of justice.

Resolution

42. I determined that I was not satisfied that Mr Agius had established any prejudice sufficient to warrant an order for a separate trial and that it was in the interests of justice that the trials of Mr Agius and Mr Castagna should proceed jointly.

43. In any conspiracy case, it is a matter for the prosecution in its submissions and for the presiding Judge, by the giving of clear directions on principles of law, to ensure that the jury is aware that a clear distinction is to be made between the existence of a conspiracy, the participation of each of the alleged conspirators in it and the evidence which is properly to be taken into account on these matters, including separately against each accused.

44. Evidence of the acts or declarations of one alleged conspirator made outside the presence of the other may be led in particular circumstances: see R v Baladjam (No.57) [2008] NSWSC 1471 at [53]. This is because of the co‑conspirators rule which provides that when two or more persons are bound together in the pursuit of an unlawful object, anything said, done or written by one in furtherance of the common purpose is admissible in evidence against the other. Admissibility derives from the combination which implies an authority in each to speak or act on behalf of the other.

42. It is not unusual that in a joint trial evidence against one accused will not be admissible against the other accused. Of itself, and without more, it is ordinarily to be expected that directions from a trial Judge will make clear the correct approach for a jury to take.

43. The voluntary disclosure statement is not being tendered against Mr Agius. Accordingly, if any material which is prejudicial to Mr Agius remains in the document, it can properly be dealt with by a direction by the presiding Judge to the jury. The mere fact of differential evidence is not of itself sufficient to result in a separate trial being justified.

44. Here, the contents of the voluntary disclosure statement, but for paragraphs 60 to 64, do not create such prejudice as could only be alleviated by a separate trial. Although this is an interlocutory proceeding, and admissibility of evidence must necessarily await the full context of a trial, it seems to me to be highly doubtful that the contents of paragraphs 60 to 64 are admissible as part of a tender of the voluntary disclosure statement.

45. I do not accept that prejudice against Mr Agius of a kind necessary to warrant a separate trial will arise by reason of the tender by the Crown in the case against Mr Castagna of the voluntary disclosure statement.

46. The second and third points deal with issues which may arise from the conduct of the proceedings by Mr Castagna which, if they do arise, I accept may be prejudicial to Mr Agius. At this stage of the proceedings, it is highly unlikely that evidence about or touching upon Mr Agius’ conduct covered by his first trial, and his convictions for those offences, would be admissible if tendered by the Crown, or else adduced by Mr Castagna. Further, given that the Crown’s case will be that it can only obtain a verdict of guilty for both of the accused (or neither of them), then the likelihood of a “cut throat” defence being raised seems to be very slight.

47. In those circumstances, I am unpersuaded that there will be sufficient prejudice likely to arise, or which may possibly arise, which would justify an order for a separate trial.

48. Finally, I am unpersuaded that the strength or weakness of the Crown case is at all relevant to this determination. In the circumstances here, I cannot see how it would impact on the extent of prejudice which is demonstrated, or else which is predicted.

49. As well, I take into account that if an order for separate trials were to be made, most, if not all, of the witnesses would be required to give evidence at both trials. One group of witnesses, namely, those professionals providing Mr Castagna with advice about and submitting his personal income tax returns, may fall into a different category. But in order to make a clear finding about that, it would be necessary for the Court to be satisfied that none of their evidence touching upon the conduct of Mr Castagna would be admissible against Mr Agius under the co-conspirators rule. It is inappropriate for this Court to make such a determination at this stage without the benefit of the full evidentiary picture being available.

50. It is for these reasons that I determine that the application for separate trial should be dismissed.

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Amendments

24 August 2020 - Trial finalised - non-publication order revoked on 24.8.2020.

Decision last updated: 24 August 2020