R v Alex & Ors (Trial Ruling No 4)

[2024] NSWSC 1129

Supreme Court

New South Wales

Medium Neutral Citation:

R v Alex & Ors (Trial Ruling No 4) [2024] NSWSC 1129

Hearing dates:

28 May 2024

Date of orders:

28 May 2024 and 31 May 2024

Decision date:

05 June 2024

Jurisdiction:

Common Law - Criminal

Before:

Fagan J

Decision:

1. The Crown case on count 1 is to be limited to a conspiracy to cause non-remittance of PAYG withholding amounts in connection with the business of GHRC and CPC and will not be left to the jury as including a conspiratorial objective relating to PAYG withheld from employees of Superform (Queensland) Pty Ltd.

2. There are to be directed verdicts of not guilty in respect of Arthur Alex on counts 1 and 2.

Catchwords:

CRIMINAL PROCEDURE — Trial — conspiracy to defraud Commonwealth of PAYG tax — latent duplicity — Crown evidence only consistent with two conspiracies — Crown directed to close its case on only one of the conspiracies — where no evidence available to find one accused guilty of the conspiracy charge so confined — verdict by direction for that accused

Legislation Cited:

Criminal Appeal Act (1912) NSW

Criminal Code (Cth)

Evidence Act 1995 (NSW)

Taxation Administration Act 1953 (Cth)

Cases Cited:

Ahern v The Queen (1998) 165 CLR 87

Doney v The Queen (1990) 171 CLR 207; [1990] HCA 51

Gerakiteys v The Queen [1984] HCA 8; (1984) 153 CLR 317

R v Griffiths [1966] 1 QB 589

R v Ongley (1940) 57 WN (NSW) 116

R v. Greenfield [1973] 1 WLR 1151; [1973] 3 All ER 1050

Saffron v The Queen(No1) (1988) 17 NSWLR 395

R v West [1948] 1 KB 709

Texts Cited:

Gillies, The Law of Criminal Conspiracy (1981)

Category:

Procedural rulings

Parties:

Rex
George Alex
Lindsay Kirschberg
Gordon McAndrew
Pasquale Loccisano
Mark Bryers
Arthur Alex

Representation:

Counsel
C O’Donnell SC with H Mann B Anniwell and R O’Donnell - Crown
J Agius SC with E Beljic - Accused George Alex
M Breeze with Ms Edwards - Accused Kirschberg
D Price - Accused McAndrew
M Pickin - Accused Loccisano
L Brasch - Accused Bryers
M Burke - Accused Arthur Alex

Solicitors
Solicitor for the Commonwealth DPP
Matouk Joyner Lawyers - Accused George Alex
Birchgrove Legal - Accused Kirschberg
McGirr & Associates - Accused McAndrew
Kingston Fox - Accused Loccisano
Nyman Gibson Miralis - Accused Bryers
Matouk Joyner Lawyers - Accused Arthur Alex

File Number(s):

2020/216740; 2020/213439; 2020/210570; 2020/212593; 2020/210541; 2020/210516

JUDGMENT

1. The six accused in this trial are: George ALEX, Lindsay KIRSCHBERG, Gordon McANDREW, Pasquale LOCCISANO, Mark BRYERS, Arthur ALEX.

2. The indictment contains two counts against all six accused, that they:

1   between about 1 July 2018 and about 21 July 2020 at Sydney in the State of New South Wales, the Gold Coast in the State of Queensland and elsewhere, did conspire with each other, with Kevin John McHugh, William Samuel Pahl and Lucas James Connell, and with divers others with the intention of dishonestly causing a loss to a third person, namely the Commonwealth

and

2   between about 1 July 2018 and about 21 July 2020 at Sydney in the State of New South Wales, the Gold Coast in the State of Queensland and elsewhere, did conspire with each other, with Kevin John McHugh and William Samuel Pahl and divers others to deal with money of a value of $1,000,000 or more believing it to be proceeds of crime.

There is a third count against Arthur ALEX only, that he:

3   between about 23 October 2018 and about 5 March 2020 at Sydney in the State of New South Wales and elsewhere, did deal with money and other property that were proceeds of crime and he was reckless as to the fact that the money and other property were proceeds of crime and at the time of dealing the value of the money and other property was $1,000,000 or more.

3. The conspiracy alleged in count 1 concerns non-remittance of PAYG amounts that were withheld in connection with two businesses conducted in Queensland: one was a labour hire enterprise carried on by GHR Consolidated Pty Ltd (GHRC) and Civil Personnel Consolidated Pty Ltd (CPC), the other was a formworking business carried on by Superform (Queensland) Pty Ltd. These reasons are concerned with a defence submission that there is latent duplicity in count 1. It is submitted that the evidence adduced by the Crown, if accepted by the jury, could not satisfy them of a single conspiracy with respect to non-remittance of PAYG in connection with both businesses. It is said that the evidence at its highest could only be probative of two separate conspiracies, one in relation to each business. Counsel for the accused submit that, in closing its case to the jury on count 1, the Crown should be confined to allegations and evidence about the GHRC/CPC business. It is further submitted that there should be a verdict of not guilty by direction in respect of Arthur Alex on both counts 1 and 2 because the evidence against him on those charges only concerns Superform.

The burden of the evidence in the Crown case

4. The trial commenced on 12 February 2024 and the Crown closed its case on 23 May 2024 (Day 63, T 3223). The evidence adduced by the Crown is capable of satisfying the jury of the following facts:

1. During the charge period GHRC and CPC carried on a labour hire business in Queensland, supplying labour to the construction industry. Substantially the same business had been carried on prior to the charge period by Kevin McHugh, through entities named Global HR Pty Ltd, Civil Personnel Services (Aust) Pty Ltd and Prime Services (Queensland) Pty Ltd, amongst others.

2. The identity of any person, entity or entities that, at any time during the charge period, could be said to have been the employer of labour hire workers in the GHRC/CPC business, according to the legal criteria of an employer-employee relationship, is uncertain on the evidence. GHRC and CPC were the employers, at times during the charge period, of office staff and site managers who were based at the business premises occupied by the two companies. Those employees administered the labour hire activity.

3. Mr Kirschberg was a director of GHRC from 28 August 2018 until 1 July 2019. He was a director of CPC from before the commencement of the charge period until 1 July 2019.

4. Mr McAndrew was a director of GHRC from before the commencement of the charge period until 11 December 2018 and again from 29 April 2019 until after the end of the charge period. He was a director of CPC throughout the charge period.

5. From the commencement of the charge period until 31 December 2019 GHRC carried on the labour hire business as trustee of the GHRC Unit Trust. Thereafter it did so in its own right as a corporation.

6. During the charge period George Alex asserted rights of control over the GHRC/CPC labour hire business and directed the transfer of funds from the business and from bank accounts of entities associated with the business to the bank accounts of other companies, through which he derived financial benefit to himself and conferred financial benefit on his family members, friends and associates.

7. Mr Loccisano controlled companies into whose bank accounts funds were transferred from the GHRC/CPC labour hire business and from bank accounts of entities associated with the business. He conveyed instructions from George Alex to Mr Kirschberg, Mr McAndrew and others regarding the conduct of the business and the transfer of funds.

8. From about April 2019 Mr Bryers acted as a consultant to George Alex and Messrs Kirschberg, McAndrew and Loccisano, advising them on the corporate structure of the business and on tax.

9. The net pays of labour hire workers of the business were paid out of a bank account in the name of GHRC Unit Trust for seven weeks in September to November 2018. For the rest of the charge period the net pays were disbursed from bank accounts in the names of the following companies:

Prime Services (Queensland) Pty Ltd up to 22 January 2019

ACN_481 Pty Ltd and/or ACN_543 Pty Ltd from 30 January 2019 to 1 May 2019

GHRC Queensland Services Pty Ltd and CPC Queensland Services Pty Ltd for three weeks in May 2019

Australian Priority Invoicing Pty Ltd from 30 May 2019 to 28 February 2020

Australian Office Administration Pty Ltd from 28 February 2020 until 22 April 2020

North West Hire Services Pty Ltd for three weeks in May 2020

Queensland Inland Management Pty Ltd from 20 May 2020 until 15 July 2020

10. The accused, not including Arthur Alex, were able to operate or to direct others to operate the bank accounts of the above entities and they caused the net pays of the GHRC/CPC labour hire workers to be disbursed from those accounts. None of the PAYG withholding tax that was required to be withheld from the pays of those labour hire workers was remitted to the ATO, as it should have been in compliance with Schedule 1, ss 12-35 and 16-70 of the Taxation Administration Act 1953 (Cth). The estimated unremitted PAYG in respect of labour hire workers, after allowance for other ATO credits, is $9,362,735.63.

11. The net pays of administrative and management staff of GHRC and CPC were paid out of bank accounts in the names of the following companies:

Prime Services (Queensland) Pty Ltd for five weeks in August-October 2018 and from 14 November 2018 to 27 March 2019

GHRC as trustee of the GHRC Unit Trust for six weeks in September-October 2018 and from 5 February 2019 to 1 May 2019

ACN_481 Pty Ltd for one week in April 2019

CPC Queensland Services Pty Ltd for four weeks in May 2019

GHRC Administration Pty Ltd from 15 May 2019 to 7 August 2019

Australian Priority Invoicing Pty Ltd from 30 May 2019 to 28 February 2020

Australian Office Administration Pty Ltd from 5 March 2020 until 30 June 2020

North West Hire Pty Ltd for three weeks in May 2020

As to some administrative staff, GHRC and/or CPC from 15 January 2020 until 14 July 2020

12. Through their ability to operate or to direct others to operate the bank accounts of the above entities, the accused, not including Arthur Alex, caused the net pays of the GHRC/CPC administrative staff to be disbursed from those accounts. None of the PAYG withholding tax that was required to be withheld from the pays of those staff members was remitted to the ATO, contrary to ss 12-35 and 16-70. The estimated unremitted PAYG in respect of staff, after allowance for ATO credits, is $721,073.

13. The companies that paid net wages, as referred to in (9) and (11) were designated by the Crown as Group B Entities.

14. Funds that were available to the GHRC/CPC business and that could have been applied to the remittance of PAYG were instead transferred from bank accounts of GHRC, the GHRC Unit Trust, CPC and the 13 Group B Entities directly or indirectly to bank accounts in the names of 20 other companies that were under the control of one or more of the accused. Six of those companies operated flow-through bank accounts, four of them in Australia (Group C Australian Entities, in the Crown’s terminology) and two in Singapore (Group C Singapore Entities). The remaining 14 Australian companies (designated Group D) ultimately received the funds that passed through the Group C Entities. The Crown case is that the Group D Entities thus received funds that might have been applied in remitting to the Commissioner the PAYG of the GHRC/CPC labour hire business.

15. In March 2020 George Alex and Mr Loccisano agreed with Mr Paul Davies and Mr Ayonava Mukerji, the directors of Superform (Queensland) Pty Ltd (Superform), that they would provide payroll services to that company. Superform employed about 250 carpenters and labourers in a business of erecting formwork for concreting pursuant to its subcontracts with builders on sites in Queensland. The payroll services agreed to be provided involved that Superform would transfer each week to Western Hire Trading Pty Ltd (WHT) sufficient funds to cover the net pays, superannuation and other entitlements that were due to Superform’s employees and also to cover PAYG, GST, Queensland state payroll tax and WorkCover premiums. Superform would supply to WHT data from timesheets, upon which individual pays were to be calculated. WHT would transfer the net pays to the workers and disburse all other amounts to their proper recipients.

16. The nominal director of WHT was Marino Sotiropoulos but Mr Loccisano controlled the company’s affairs and its bank account. Each week from 18 March 2020 until 15 July 2020 Mr Loccisano caused the gross weekly amount received by WHT from Superform, which was in the order of $600,000, to be transferred to a bank account of North West Hire Services Pty Ltd (NWHS). The nominal director of NWHS was again Mr Sotiropoulos but its affairs were also under the control and direction of Mr Loccisano.

17. With Mr Loccisano’s authority Arthur Alex operated the bank account of NWHS and caused it to disburse the net weekly pays of the employees of Superform, from 18 March 2020 until 15 July 2020. No remittances of PAYG were made to the ATO in respect of those distributions of net pay. The amount not remitted over the period of four months was $3,048,275.

5. In the senior Crown prosecutor’s opening, over approximately five days, he explained at length the evidence that would be adduced to prove the above facts. The great majority of the opening was concerned with evidence relating to unremitted PAYG in respect of net wages paid in connection with the GHRC/CPC business. Relatively little time was spent outlining the evidence to be called in relation to the Superform aspect of the Crown’s case on count 1.

6. That is understandable in view of the very much greater complexity of the evidence concerning PAYG defaults in the GHRC/CPC business, compared to the evidence of defaults with respect to PAYG withheld from Superform’s employees. As alleged by the Crown and in due course demonstrated by the evidence, there were, sequentially, 15 different wage paying entities in relation to GHRC/CPC: see (8) and (10) above. In contrast, only one entity, NWHS, disbursed net pays to Superform’s people. The GHRC/CPC defaults were alleged to have continued over two years whereas those of Superform occurred over four months.

7. Consistently with the emphasis given and time spent during the opening, the evidence of only one of the Crown’s 17 witnesses was concerned specifically with Superform. The witness was the company’s director Mr Davies. Included amongst the Crown’s witnesses were those who proved Australian Securities and Investments Commission data for all relevant companies, estimates of unremitted PAYG, analysis and tracing of funds flows and so on. The evidence of such witnesses was overwhelmingly concerned with entities and transactions involved in the alleged GHRC/CPC defaults. So much of their evidence as concerned Superform was confined and relatively simple.

8. The evidence tendered in the Crown case has been dominated by the replaying of intercepted phone calls and discussions recorded through covert listing devices. Approximately 105 hours of sitting time has been taken up with replaying to the jury conversations relating to the business of GHRC/CPC. There were only approximately six hours of conversations concerning Superform, contained in Exhibits 22 and 31.

The Crown’s opening address

9. In his opening the senior Crown prosecutor designated GHRC, GHRC Unit Trust and CPC as Group A Entities, signifying that they issued invoices to construction company clients for the provision of hired labour. The Group A Entities thereby derived the revenue from which the wages of the workers and administrative staff could be funded. Prosecuting counsel characterised Superform as an additional Group A entity, on the basis that it issued invoices to construction companies for the performance of work under its formworking subcontracts. The Crown characterised WHT and NWHS as Group B Entities, on the basis that funds for the payment of Superform employees’ wages were passed through WHT to NWHS and the latter disbursed the net pays. The Group A and Group B designations were part of the Crown’s opening of count 1 to the jury as a conspiracy that had an overarching objective of not remitting PAYG in respect of workers in the construction industry, generally.

10. In opening, the prosecutor identified eight discrete time intervals into which he divided the two years over which the successive Group B Entities listed in [4](8) above, disbursed from their bank accounts the net wages of labour hire workers. Phase 1 was the period from 7 August 2018 to 21 January 2019 during which Prime Services (Queensland) Pty Ltd (and, for three weeks, GHRC Unit Trust) disbursed the pays. Phase 2 was the period from 30 January 2019 to 1 May 2019 during which ACN_481 Pty Ltd and/or ACN_543 Pty Ltd GHRC disbursed the pays – and so on. The Crown designated the period in which NWHS paid the net wages of Superform’s employees as Phase 6b, overlapping with Phases 6a, 7 and 8, from 5 March 2020 to 15 July 2020, during which Australian Office Administration Pty Ltd, NWHS (for three weeks) and Queensland Inland Management Pty Ltd paid the net wages of labour hire workers in the GHRC/CPC business.

11. The Crown opened on a separate chronology of eight phases into which it divided the two year charge period according to the sequence in which successive Group B entities, as listed in [4] (10) above, paid the net wages of GHRC/CPC’s administrative and management staff.

12. With respect to non-payment of Superform PAYG employees as part of the object of the conspiracy to cause loss alleged in count 1, the Crown prosecutor included the following in his opening:

At T 128:

You will hear evidence from a gentleman named Mr Davies. He was a director of that company … called Superform (QLD) Pty Ltd. … [It] had a large payroll to administer because it had a number of workers … [Mr Davies] and others involved with the company, or at least one other, decided to hand over to people connected with George Alex, some of the accused, in effect to hand over the payroll administration of that entity Superform to them and it's part of the Crown case that this was within the overall ambit of the tax fraud conspiracy as it unfolded in this sense, that Superform paid money to the alleged conspirators in effect, or entities connected with them, for the wages, the total gross wages for those employees. And these funds you can see flowed through a company called Western Hire Trading which is a company that it is alleged was controlled, in effect, by one or more of the alleged co-conspirators. And then that money sufficient to cover the net wages went to North West Hire Services and then that money went to pay Superform's employees their net wages.

[Emphasis added].

At T 196:

You can see the qualitative difference that I believe I referred to earlier was between phase 6b, the Superform phase, and all the other phases because firstly, this did not involve the payroll processing of office workers, labour hire workers of the Group A business run by GHRC and CPC.

Rather, it involved processing payroll of the employees of the company called Superform (Qld) Pty Ltd, and you can see how that was processed in a flow of funds that emanated from that company down to and through Western Hire Trading and then through a company called North West Hire Services. North West Hire … was the company that was used ultimately to pay the net wages plus entitlements and superannuation to the Superform employees …

It's through his involvement in this particular phase that the Crown alleges the evidence will show that Mr Arthur Alex joined the conspiracy from a date just before 18 March 2020. …

Superform was a genuine business, it needed to pay its employees. In the period in question, it did so through North West Hire using the payroll services that were offered by that entity, and I've explained to you that this agreement came about in February 2020 ... Superform's directors were a man named Mukerji. He was sometimes referred to as Shupi for short. Another of Superform's directors was Paul Davies.

13. The alleged objective of the conspiracy to cause loss to the Commonwealth was formulated to the jury towards the end of the Crown opening in the following terms:

At T 258.2-.12

The Crown alleges that each of the six accused entered into an agreement ‑ this is in respect of count 1 ‑ not to remit PAYG withholding tax obtained to pay wages of labour hire workers and also of office workers, but in the main labour hire workers, through causing wage paying entities, which again in the main were the Group B entities as I've described, but from time to time Group A entities, PAYG payable to the Commissioner of Taxation and causing that not to occur with the intention of dishonestly thereby causing a loss to the Commissioner of Taxation through the non‑remittance or non‑repayment of that PAYG withholding tax.

[Emphasis added].

Particularisation of a conspiracy by what is agreed to be done

14. Relevant parts of s 135.4(3) of the Criminal Code (Cth), pursuant to which count 1 is charged, are as follows:

135.4 Conspiracy to defraud

(3) A person commits an offence if:

(a) the person conspires with another person with the intention of dishonestly causing a loss to a third person; and

(b) the third person is a Commonwealth entity.

Penalty: Imprisonment for 10 years.

(4) In a prosecution for an offence against subsection (3), it is not necessary to prove that the defendant knew that the third person was a Commonwealth entity.

…

General provisions

(9) For a person to be guilty of an offence against this section:

(a) the person must have entered into an agreement with one or more other persons; and

(b) the person and at least one other party to the agreement must have intended to do the thing pursuant to the agreement; and

(c) the person or at least one other party to the agreement must have committed an overt act pursuant to the agreement.

[Emphasis added].

15. The words emphasised in sub-s (9)(b) are unusually informal for the stipulation of a matter that must be proved to make out a statutory offence. “The thing” that is referred to in sub-s (9)(b) is not explained or defined as such in any earlier part of the section. However, sub-s (9)(b) makes it clear that an essential matter in the proof of a charge under s 135.4(3) is that the accused must be shown to have agreed with at least one other person to perform some act or acts, to do some thing or things, with the intention of dishonestly causing loss to the Commonwealth.

16. It is trite law that a charge of conspiracy can only be laid in respect of a single instance, not in respect of multiple conspiracies, consistently with the generally applicable constraints upon criminal pleading. In R v Ongley (1940) 57 WN (NSW) 116 Jordan CJ said this at p 117:

A count in conspiracy must comply with the general rule of charging one offence only. … Where a count in conspiracy charges, as it should do, only one conspiracy to effect some one or more improper purposes, the only issue before the jury under that count is whether all or any of the accused are guilty of the conspiracy alleged.

That statement was cited with approval by Deane J in Gerakiteys v The Queen [1984] HCA 8; (1984) 153 CLR 317 at p 334.

Defence counsel’s submissions

17. In the present case Mr Agius SC submits on behalf of George Alex that, taking into account the whole of the evidence in the Crown case, what it has sought to prove under count 1 is inherently and inescapably two conspiracies: first, a conspiracy to cause PAYG in respect of workers and administration staff of the GHRC/CPC business not to be remitted to the ATO, with the intention of dishonestly causing loss to the Commonwealth and, secondly, a conspiracy to cause PAYG withheld from the wages of Superform’s employees not to be remitted, again with the intention of dishonestly causing loss to the Commonwealth. Mr Agius SC submits that the jury should be directed that the Crown case under count 1 can only be assessed by them on the basis of its allegations and evidence concerning PAYG in connection with the GHRC/CPC wage earners.

18. Counsel for each of the other accused join in the submissions made on behalf of George Alex. Counsel for Mr Kirschberg also submits that there is no evidence from which the jury could conclude that his client was party to an agreement in relation to the PAYG of Superform’s employees and that “the co-conspirators rule should not apply to the evidence against” Mr Kirschberg “in relation to the Superform phase of the alleged conspiracy being phase 6b”. Counsel referred to s 87 of the Evidence Act 1995 (NSW) and to Ahern v The Queen (1998) 165 CLR 87 at 94-95 as sources of law relating to the co-conspirators rule. In the view that I take of the principal submission made on behalf of George Alex it becomes unnecessary to determine this supplementary argument advanced for Mr Kirschberg.

19. Counsel for Arthur Alex made additional submissions arising from the fact that the Crown opened its case against him on count 1 to the effect that he only joined the conspiracy alleged thereunder from 6 March 2020, when dealings with Superform commenced. Those submissions are directed to Arthur Alex’s claim for a directed verdict, if the Crown is required to confine count 1 to a conspiracy with the intention of causing loss to the Commonwealth by non-remittance of PAYG withheld from GHRC/CPC personnel.

What conspiratorial objective is the evidence capable of proving?

20. Resolution of the accused’s challenge to count 1 depends upon whether the Crown’s evidence, taken at its highest, is capable of supporting a jury finding that up to March 2020 the first five accused, excluding Arthur Alex, had formed a conspiracy with the general and overarching object of causing non-remittance to the ATO of PAYG that might be deducted from the wages of construction industry workers of any business and in any situation where the conspirators were able to exercise control over the amounts withheld. On a fair reading of the passages of the opening quoted at [12] and [13] above, the Crown has advanced under count 1 a conspiracy with a general objective of that nature.

21. Consistently with that position, in the course of submissions made after the close of the Crown case as to the terms in which the jury should be directed on the elements of the offence, the Crown proposed that they be instructed to determine whether the Crown has proved beyond reasonable doubt that the six accused agreed upon an objective as follows:

to not pay to the ATO the PAYGW that should have been paid in relation to the wages paid to workers and office staff employed in the construction industry by the companies controlled by the accused and their co-conspirators.

22. A conspiracy with such a wide reaching objective is to be distinguished from a conspiracy to cause loss by the more particular and limited means of not remitting PAYG deducted from wages paid in connection with the single, specific business of GHRC/CPC, in whose management the first five accused were involved.

23. If the evidence would sustain the formation of a conspiracy with the more general object described above, then the jury could find that the accused’s concerted acts of not remitting Superform PAYG from March 2020 onwards were in furtherance of the one original conspiracy, with the joinder of Arthur Alex as an additional party. If on the other hand the Crown’s evidence at its highest would only support a finding that, up to March 2020, the first five accused conspired to cause loss to the Commonwealth by the particular means of not remitting PAYG withheld from GHRC/CPC workers, then the evidence of agreement between any two or more of the accused, including Arthur Alex, thereafter to cause non-remittance of Superform PAYG could only be characterised as a second conspiracy, to carry out acts additional to those done in relation to GHRC/CPC’s payroll, with the intention of causing non-remittance of PAYG that was due from this second, discreet source.

24. I can identify no evidence, either direct or circumstantial, upon which the jury could support a finding that the first five accused conspired, up to March 2020, to carry out an objective as broad as that of causing PAYG not to be remitted from the payroll of any company over whose wage-paying function they might secure control. The evidence adduced by the Crown to prove what the first five accused agreed upon up to March 2020 is entirely circumstantial. From that evidence the jury could conclude that between the second half of 2018 and the early months of 2020, and continuing thereafter, the first five accused were well aware of the size of the workforce utilised in GHRC/CPC’s business and they each knew the approximate weekly total of gross wages and PAYG withholding. Evidence has been adduced of weekly “yellow sheet” reports prepared and circulated by office staff, showing this information.

25. The evidence would be capable of satisfying the jury that the structure under which the total weekly wage bill was paid to one or other of the Group B Entities did not reflect any bona fide commercial arrangement and was a device intended to distance GHRC and CPC from the payment of wages, so that non-remittance of PAYG could take place without the principal entities or their directors incurring liability. The jury could find from the Crown’s evidence that Messrs McAndrew and Bryers went to considerable lengths in their dealings with WorkCover to deny that either GHRC or CPC employed the labour hire workers and to obscure the identity of their employer. The evidence would support a conclusion that the first five accused knew that approximately $100,000 per week was being drawn from the business for private purposes, as well as other funds from time to time, and that this was insupportable except on the basis that PAYG was not remitted.

26. Such circumstantial evidence of actions and knowledge in connection with only one business, that of GHRC/CPC, necessarily can only support an inference that a conspiracy that was on foot up to March 2020 was directed to the PAYG withholding that arose in that business. The circumstantial evidence is almost entirely comprised of overt acts. The fact that those overt acts are confined to the GHRC/CPC business dictates the characterisation of the object of the conspiracy that may be inferred. That would not be so if there were additional direct or circumstantial evidence from which the jury might find that the first five conspirators agreed they should pursue multiple opportunities to take control of payrolls, including those of businesses they were not conducting themselves, so that the non-remittance of PAYG with respect GHRC/CPC could be seen as merely their first foray into inflicting loss upon the Commonwealth in this manner. There is no such additional direct or circumstantial evidence.

The Crown’s evidence under count 1 is of two conspiracies

27. The conspiracy that could be found upon the basis of what the first five accused did in relation to GHRC/CPC up to March 2020 is a conspiracy with an object limited to that particular business. Insofar as the Crown has adduced evidence that three of the accused conspired with Arthur Alex from March 2020 onwards to cause non-remittance of PAYG withheld from Superform's payroll, that proof is directed to a distinct second conspiracy, which the Crown cannot be permitted to pursue under count 1.

28. I have referred to three, only, of the accused having joined with Arthur Alex in relation to Superform because I am satisfied that there is no evidence upon which the jury could find that either Lindsay Kirschberg or Gordon McAndrew joined in agreeing with any of the other accused to cause loss to the Commonwealth in respect of Superform PAYG. In view of the conclusion expressed in the preceding paragraph, I do not find it necessary to recite the evidence that the Crown argued should be regarded as prima facie evidence that Messrs Kirschberg and McAndrew agreed to the alleged objective with respect to Superform PAYG. I found no substance in the Crown’s submissions on the material identified. In my assessment, the evidence only has a capacity to prove that, so far as such an objective with respect to Superform PAYG was agreed upon, it was a plan by George Alex and Mr Loccisano, to which they recruited Arthur Alex and for which they sought a measure of assistance from Mr Bryers. They had no need of either Mr Kirschberg or Mr McAndrew.

29. As a result of the misconduct of a former director of Superform the company had been left in March 2020 with no access to accounting software and in need of a new bank account. Mr Kirschberg gave some limited advice to Mr Davies regarding software and Mr McAndrew offered assistance to set up a bank account. Their actions in those respects were not material to the non-remittance of PAYG that occurred over the next four months. Nothing was asked of Mr Kirschberg or Mr McAndrew, by George Alex, Mr Loccisano or Arthur Alex, to assist in causing Superform’s PAYG not to be remitted. Neither Mr Kirschberg nor Mr McAndrew acted on his own initiative to do anything in that regard. This was in contrast to their respective positions concerning the PAYG withheld from personnel of GHRC/CPC, where Messrs Kirschberg and McAndrew had roles to play by reason of their close involvement in the management of the labour hire business. The jury may conclude that their cooperation with respect to a conspiracy concerning PAYG withheld from GHRC/CPC’s workforce was necessary and was forthcoming. There was no role for either Mr Kirschberg or Mr McAndrew in relation to the Superform payroll, according to the evidence adduced by the Crown.

30. The limit of what the Crown’s evidence is capable of proving, if the jury accept it at its highest, is that George Alex, Mr Loccisano and Mr Bryers conspired with each other and Messrs Kirschberg and McAndrew to cause non-remittance of PAYG withheld from GHRC/CPC’s workforce and that George Alex, Mr Loccisano and Mr Bryers separately and subsequently conspired with Arthur Alex to do the same with respect to PAYG withheld from Superform’s employees.

Illustrations from the authorities

31. The prosecution appears to have assumed that, upon proof of an agreement between the first five accused to defraud the revenue with respect to PAYG in connection with GHRC/CPC, the jury could regard the objective as generalised to one of not remitting PAYG withheld in other businesses. Two illustrations given by the English Court of Criminal Appeal in R v Griffiths [1966] 1 QB 589 show that generalisation of a conspiratorial objective does not readily follow and that the evidence in such cases will commonly not be capable of proving a single conspiracy for the perpetration of multiple activities unified as one object but, rather, will at the highest prove multiple conspiracies differentiated by the particulars of the several acts agreed to be undertaken. Paull J, giving the judgment of the Court in R v Griffiths, said this at p 599:

I employ an accountant to make out my tax return. He and his clerk are both present when I am about to sign the return. I notice an item in my expenses of £100 and say: “I don't remember incurring this expense.” The clerk says: “Well, actually I put it in. You didn't incur it, but I didn't think you would object to a few pounds being saved.” The accountant indicates his agreement to this attitude. After some hesitation I agree to let it stand. On those bare facts I cannot be charged with 50 others in a conspiracy to defraud the Exchequer of £100,000 on the basis that this accountant and his clerk have persuaded 500 other clients to make false returns, some being false in one way, some in another, or even all in the same way. I have not knowingly attached myself to a general agreement to defraud.

Similarly, the Post Office clerk who agrees to alter a date stamp in a case where a bookmaker has been swindled must know that the alteration is to be used for a fraudulent purpose. He therefore joins a scheme to defraud that bookmaker, of whom he may not have heard, but he cannot be indicted, merely because he has agreed to alter that stamp, on a charge of a conspiracy to alter date stamps and cheat bookmakers all over the country.

We venture to say that far too often this principle is forgotten and accused persons are joined in a charge of conspiracy without any real evidence from which a jury may infer that their minds went beyond committing with one or more other persons the one or more specific acts alleged against them in the substantive counts, or went beyond a conspiracy to do a particular act or acts.

32. Saffron v The Queen(No 1) (1988) 17 NSWLR 395 provides a counterexample. The Crown adduced evidence of an agreement to defraud the revenue by under-recording the income of a business, maintaining false books and lodging false income tax returns. The evidence was capable of satisfying the jury that there existed a single conspiracy with an agreed object of implementing the scheme of falsification in the business and in four more businesses of a similar character that the two conspirators, Saffron and Anderson, subsequently carried on over 12 years. At p 421B Hope JA summarised three of the questions of law that had been reserved for the opinion of the Court, in the following terms:

… whether there was sufficient evidence that the initial conspiracy was capable of extending and did extend to the later businesses, whether the evidence was at least as consistent with multiple conspiracies as with one conspiracy and whether it was open to the jury to find that the conspiracy charged grew out of the assumption of the management of the [original business] by Anderson and was later extended to the other businesses.

33. At p 423F Hope JA referred to R v West [1948] 1 KB 709 wherein the Court of Criminal Appeal held that a count for a single conspiracy, charging that the accused had conspired to infringe certain regulations over a specified period, was bad for duplicity. Doubting the decision, Hope JA agreed with the following observation in Gillies, The Law of Criminal Conspiracy (1981) at p 190(n):

What would give this conduct unity (and thus create the consensus for a unified agreement) would be, inter alia, the fact that the activity carried out was of an essentially uniform nature over the six years.

34. Hope JA (with whose conclusions, so far as relevant for present purposes, Clarke JA and Hunt AJA agreed) identified at p 426B the findings open to the jury that would enable them to conclude that there was a single conspiracy to defraud the revenue in respect of each of the businesses that Saffron and Anderson came to operate. His Honour summarised the facts as follows:

Saffron and Anderson remained co-conspirators throughout the period of the conspiracy. Likewise the object of the conspiracy remained the same from inception to conclusion, namely, to defraud the Commonwealth of tax by understating for tax purposes income derived by or from enterprises in the conduct of which both were concerned or interested and by using the same means, the bookkeeping system. The implementation of the conspiracy in relation to the [earliest business] continued throughout the whole of the period. The object of the conspiracy was also implemented by applying the scheme to the other businesses as Saffron and Anderson became interested in them.

35. His Honour made similar points at p 426F:

However in the present case there were throughout not only the same object and the same parties; there were the same scheme, the same general class of business and income, the same bookkeeper or bookkeepers implementing the conspiracy at the same office, and a substantial inter-mixing of the tax evasion activities in respect of all the businesses […] coupled with an absence of further discussions to bring the new businesses within the scheme, all of which justified an inference that Anderson and Saffron assumed, and it was the fact, that the scheme originating in the context of the [earliest business] was not limited to that business but was to be applied without further agreement to other businesses as they acquired interests in them.

36. On all those considerations the present case is different from Saffron v The Queen(No 1) and the outcome is, accordingly, different. The four accused whom the jury could find were concerned with Superform’s payroll were different from those concerned in GHRC/CPC, there being only three persons in common across the two activities. Processing of the Superform payroll was not carried out in the office of GHRC/CPC or by the bookkeeping personnel of that business. As between the two entities, the distribution of net pays and the withholding of PAYG that should have been remitted was in different hands as between GHRC/CPC and Superform, respectively. There was no intermixing of the activity of failing to remit PAYG of one business with the failure to remit it for the other.

37. The non-remittance in relation to GHRC/CPC concerned a business in the management of which the five conspirators were directly engaged whereas none of the four whom the jury might find agreed not to remit Superform PAYG had any involvement in the conduct of that business. They only handled its payroll. The evidence does not show that the non-remittance with respect to Superform commenced seamlessly and without the need for further discussion between the five who were concerned with GHRC/CPC’s PAYG up to March 2020. On the contrary, non-remittance Superform’s PAYG required a whole new discussion, between three of the original conspirators plus Arthur Alex, concerning the new activity of offering an external payroll processing service to a business not owned, managed or in any way controlled by them.

38. At p 424 Hope JA cited a passage from the judgment of Lawton LJ in R v. Greenfield [1973] 1 WLR 1151; [1973] 3 All ER 1050 (at pp 1156-7 and 1054-5, in the respective reports) which included the following:

A charge which is not bad for duplicity when the trial starts does not become bad in law because evidence is led which is consistent with one or more of the defendants being a member of a conspiracy other than the one charged. Such evidence may make it impossible for the prosecution to establish the existence of the conspiracy charged. [R v Griffiths] was such a case. At the end of the prosecution's case the evidence may be as consistent with the defendants, or some of them, having been members of a conspiracy which was not the one charged as with the one charged. In such a situation the trial judge should rule that there is no case to answer. But if at the end of the prosecution's case there is evidence on which, if uncontradicted, a reasonably minded jury could convict the defendants, or two or more of them, of the conspiracy charged despite evidence of the existence of another conspiracy, then the trial judge should let the case go to the jury.

39. Count 1 was not bad for duplicity at the commencement of this trial. The evidence that has been led is consistent with four of the accused having entered into a conspiracy relating to Superform, which I find to have involved a means and an objective different from the means and objective of the conspiracy not to remit PAYG arising in the GHRC/CPC business. However, three of those four accused (all but Arthur Alex) could be found by the jury to have been parties to the conspiracy between themselves and with Messrs Kirschberg and McAndrew concerning GHRC/CPC. The jury, acting reasonably, could convict those five of that conspiracy under count 1, disregarding the evidence of another conspiracy concerning Superform. The case against those five on count 1 will be left to the jury on the limited basis relating to GHRC/CPC.

40. In accordance with Doney v The Queen (1990) 171 CLR 207; [1990] HCA 51, I have reached the above conclusions after examining the evidence according to the criterion of whether there is no evidence upon which the jury could make relevant findings, as opposed to the test that would arise under s 6(1) of the Criminal Appeal Act (1912) NSW of whether a finding would be “unreasonable, or [could] not be supported, having regard to the evidence”.

Conclusion and orders regarding latent duplicity

41. For the above reasons I directed on 28 May 2024 (Day 66, at T 3457-8) that the Crown may only seek verdicts of guilty on count 1 on the basis that the alleged conspiracy was intended to cause loss to the Commonwealth in respect of PAYG not remitted out of amounts required to be withheld from the wages of personnel who worked in the business of GHRC/CPC. I indicated that in summing up I would direct the jury that the question they must answer in order to arrive at a verdict on count 1 is whether the accused whose case is under consideration agreed with one or more other persons:

to cause Pay As You Go Withholding (“PAYGW”) amounts withheld from wages, of persons employed in connection with a labour hire business carried on by GHR Consolidated Pty Ltd (“GHRC”) and Civil Personnel Consolidated Pty Ltd (“CPC”), not to be remitted to the Commissioner of Taxation.

42. I indicated that the jury would be directed to disregard such evidence as was adduced by the Crown to establish that the conspiracy extended to non-remittance of Superform’s PAYG. Consequential directions were made for the Crown to provide redacted copies of some exhibits, removing material that relates only to Superform. So far as the jury has access to exhibits electronically, by means of tablets that connect them to a server, that access will be managed to exclude evidence on the server that is only relevant to Superform.

Directed verdict of acquittal for Arthur Alex in respect of counts 1 and 2

43. During the pre-trial phase of this prosecution, at least from July 2023, and consistently throughout the trial the charge against Arthur Alex of reckless dealing in proceeds of crime (count 3) has been pleaded and particularised as having commenced on 23 October 2018 and concluded on 5 March 2020. The Crown has at all times alleged that Arthur Alex joined the conspiracies in counts 1 and 2 from about 6 March 2020, when he became engaged in distributing net pays to the employees of Superform through the account of NWHS: see [4] (16) above. The Crown has never claimed to have evidence that Arthur Alex had joined in the conspiracies in counts 1 and 2 at any time before he agreed to process Superform’s payroll.

44. The Crown opened its case against Arthur Alex on count 1 as follows:

Arthur Alex's alleged role in the tax fraud conspiracy, his, the Crown alleges, main practical involvement in the operation of that conspiracy was during the processing of the Superform pay runs which comprised phase 6b of the phasing under the conspiracy. From about 6 March 2020 he, it's alleged, processed Superform's payroll together with Mr Loccisano and it's from this time the Crown alleges he joined the tax fraud conspiracy. As you've heard his involvement with Superform involved him exchanging email correspondence with Mr Loccisano and being copied to Mr Loccisano's emails to that Superform employee I mentioned earlier, Susana Francisco, including under the email address [email protected].

Arthur Alex also processed the payroll, that is the payment of wages through the company North West Hire's bank account. You may recall hearing calls between Arthur Alex and Mr McAndrew about this process. They will, of course, be played in evidence, and between Arthur Alex and Mr Loccisano about the banking codes in respect of those payments. The Crown alleges that Arthur Alex and Loccisano together controlled North West Hire even though Marino Sotiropoulos was recorded as the director of that company and was the signatory to both of its bank accounts.

Mr Arthur Alex's involvement in the tax fraud conspiracy, it's alleged, also involved him being [apprised] of and discussing various issues with George Alex such as the franchise model and the conspirators' response to the ATO inquiries in June 2020. For example, on 29 June 2020 Arthur Alex and George Alex discussed Mr McAndrew's initial response to the ATO and Arthur Alex forwarded the relevant email to Nectaria Alex for George to read. Later on 30 June 2020 Arthur Alex participated in meetings where the conspirators discussed how to respond to the ATO's inquiries, including by creating alleged false documents to support the distribution of proceeds to themselves and their associates.

As part of these inquiries the ATO requested a copy of "management services agreement" supporting an invoice issued by Alex Nicholson Wright to GHRC and an explanation of what consulting services Alex Nicholson Wright provided. On 30 June 2020 Arthur Alex and the accused Mr Bryers, it's alleged, set about creating the agreement and an explanation to provide to the ATO. Arthur Alex asked Bryers if they needed to "backdate the agreement" and Bryers replied, "I never use that word" but confirmed that Arthur Alex would "be able to locate the original copy". Later on 6 July 2020 Arthur Alex discussed the response further with Mr McAndrew and reminded him to ensure he submitted the signed agreement as there was "another one floating around that wasn't".

[Emphasis added].

45. My ruling that count 1 can only be left to the jury as a conspiracy not to remit PAYG withheld in connection with the business of GHRC/CPC has the consequence that that count cannot be proved against Arthur Alex in reliance upon his conduct with respect to Superform’s payroll from 6 March 2020. The Crown sought to persuade me that there is some evidence, dating from 30 June 2020, three weeks before the end of the charge period, upon which the jury could find that Arthur Alex joined the conspiracy with respect to non-remittance of PAYG in GHRC/CPC’s business. The evidence consisted of conversations between Arthur Alex and the first five accused concerning an ATO audit enquiry by email addressed to GHRC dated 29 June 2020.

46. The auditor’s enquiries concerned two principal subjects. The first was a series of large weekly payments from GHRC’s bank account in the period September to November 2018. The auditor suggested that the payments looked like payroll amounts and noted that no PAYG withholding had been reported or remitted. The second subject was a number of large value invoices from companies connected with Mr Loccisano. The auditor sought details of those invoices, clearly directed to a suspicion that GHRC’s payments in respect of them were not bona fide deductible expenses. At their highest, Arthur Alex’s contributions to the recorded discussions of those topics, both during a meeting on 30 June 2020 and in subsequent phone calls, would constitute some evidence that he was willing to assist in providing false information to the ATO to help conceal GHRC’s failure to remit PAYG nearly two years earlier and that he was also willing to help fabricate documents and explanations to create the appearance that the queried invoices represented deductible business expenses.

47. None of the evidence cited by the Crown rises to a level that would enable the jury to find that Arthur Alex agreed with any of the first five accused to cause future non-remittance of PAYG withheld in the GHRC/CPC business. Nor could the evidence cited support a jury finding that in these conversations of 30 June 2020 Arthur Alex admitted that he had been party to such a conspiracy with respect to GHRC/CPC at any time in the past. In one conversation Mr Bryers said that the only time the ATO had “picked up” was when GHRC had paid net wages directly out of one of its own bank accounts. He said that this proved “just how effective what we’re doing is working” and that it “shows you always distance yourself from paying wages”. To this, George Alex said “Mm” and Arthur Alex said “Yeah”. That minimal response from Arthur Alex is consistent with him merely acknowledging Mr Bryers’ boast about his own activities. In the absence of any overt act by Arthur Alex directed to the non-remittance of PAYG for GHRC/CPC, the response is equivocal and could not be understood by the jury as either agreement to cause non-remittance in the future or an admission that he had been involved in such conduct with respect to GHRC/CPC in the past.

48. It follows that Arthur Alex is entitled to a directed verdict of not guilty in respect of count 1. So far as proceeds of crime are concerned, there is a clear basis upon which the Crown terminated at 5 March 2020 its pleading that he was reckless about the source of funds that he handled after that time (count 3). The same clear basis underlies the Crown’s commencement from 6 March 2020 of its allegation (in count 2) that Arthur Alex conspired with others to deal with money that he believed were proceeds of crime. The basis is that up to 5 March 2020 the funds handled by Arthur Alex are alleged to have been proceeds of the other accused failing to remit PAYG from the GHRC/CPC business, whereas after 6 March 2020 the funds handled are alleged to have been proceeds of his own participation in count 1 constituted by processing the Superform payroll.

49. Once the Superform aspect of count 1 is removed, the Crown is left with no evidence that any money handled by Arthur Alex was believed by him to be proceeds of crime. In respect of the period after 6 March 2020, the only proceeds of crime that can be identified in this trial are funds flowing from non-remittance of GHRC/CPC’s PAYG – as to which the Crown has never alleged that Arthur Alex believed such money to be proceeds of crime, only that he was reckless about the matter. The Crown does not seek to change its case in that respect and it would not be permitted to do so now that the evidence is closed. Having regard to the way the charges are pleaded the Crown could not ask the jury to convict Arthur Alex on count 2 in relation to his dealing with the proceeds of count 1 (as committed by others) on any date after 6 March 2020.

50. For the above reasons on 4 June 2024 I directed the jury to find Arthur Alex not guilty of counts 1 and 2 on the indictment. The foreman returned the jury’s verdicts accordingly.

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Decision last updated: 05 September 2024