R v Alex & Ors (Trial Ruling No 7)

[2024] NSWSC 1137

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	R v Alex & Ors (Trial Ruling No 7) [2024] NSWSC 1137
Hearing dates:	23 and 24 July 2024
Date of orders:	23 and 24 July 2024
Decision date:	24 October 2024
Jurisdiction:	Common Law - Criminal
Before:	Fagan J
Decision:	Application for redirection refused.
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 Belijic - 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
Publication restriction:	Nil

JUDGMENT

1. These are my reasons for having refused an application made on 23 July 2024, at the conclusion of the summing up in this trial, for a re-direction concerning two groups of invoices that were included in the Crown’s evidence (Ex 1/TB-295 and TB-302). The invoices were relevant to two Payroll Services Agreements that were relied upon by the accused but which the Crown submitted were shams, not intended to be performed according to their terms and not in fact observed or implemented. The first Agreement was made between GHR Consolidated Pty Ltd (GHRC) and Prime Services (Queensland) Pty Ltd (Prime) (Ex GA-14). The second was made between Civil Personnel Consolidated Pty Ltd (CPC) and Prime (Ex GA-13). It was not in contest that both Agreements were made on 16 August 2018. The passage in respect of which redirection was sought appears at pp 110-111 of the transcript of Day 3 of the summing up.

2. Ms Dorling, an accountant who throughout the charge period worked on contract to GHRC/CPC in their office, gave evidence that in June 2019 she prepared the invoices in question at the direction of Mr Kirschberg. He was at that time a director of both GHRC and CPC. Ms Dorling duly prepared the invoices and distributed them to Mr Kirschberg and Mr McAndrew, amongst others, under cover of an email dated 24 June 2019 (Ex 5, Tab 11, p 38, row 1146). Each invoice was in the name of Prime, addressed to GHRC or CPC, containing a one line claim for “Labour Hire Charges & Management Fee” in a global sum. The documents in Ex 1/TB-295 and TB-302 included schedules that Mr Kirschberg had provided to Ms Dorling in which he set out the amounts to be shown on the invoices together with the calculations by which he had derived the amounts. Although prepared in June 2019 the invoices specified that the “Labour Hire Charges & Management Fee” were due for services provided between 27 January 2019 and 28 April 2019. Each invoice specified a “Due Date” for payment that fell within that range.

3. In support of the application for re-direction it was submitted that at T 110-111 of the summing up my reference to the content of the invoices and to Mr Kirschberg’s calculation sheets amounted to an argument in support of the Crown’s contention that the Agreements were shams and that it went beyond the arguments in support of that contention that the Crown itself had articulated in final address. I reject that characterisation. This was a reference to evidence, not an argument, and it was necessary for the purpose of correcting erroneous assertions of fact made in closing address by counsel for Mr McAndrew concerning invoicing and payment under the Agreements.

4. Mr McAndrew’s counsel submitted the following to the jury (Day 87):

At T 4369.11:

GHRC/CPC are paying to the entities they are directed to pay and in accordance with the invoices that they receive, which includes enough funding to cover tax and other entitlements and a bit more on top. They're paying enough money to Prime so Prime can cover its tax and all its statutory obligations.

At T 4385.3:

GHRC paid the invoices that they received according to the rates that were listed at the back of the payroll services agreements and that was a gross figure and that included enough to pay tax. That included enough to pay tax. It included enough to pay other statutory obligations.

5. There were two distinct misrepresentations in those passages, one as to invoicing in accordance with the Agreements and one concerning payment in accordance with the invoices (and, hence, in accordance with the Agreements). The first misrepresentation was that Prime rendered invoices “according to the rates that were listed at the back of the payroll services agreements”. There was not tendered a single Prime invoice in which payment for Prime’s purported supply of workers to GHRC/CPC was claimed at the rates set out in either of the Agreements. Nor did any witness give secondary evidence that any invoices were prepared or rendered on that basis.

6. To the contrary, the only relevant invoices tendered in evidence were those in Ex 1/TB-295 and TB-302, which were not drawn up “according to the rates that were listed at the back of the payroll services agreements” but were in each case one line claims for a single global figure. The schedules by which Mr Kirschberg derived the global figures that he instructed Ms Dorling to put on the invoices did not, on the face of them, apply the rates specified in the Agreements distributively according to the number of hours worked by personnel in each of the various categories. The schedules uniformly applied the hourly rates for the lowest skilled and lowest paid category of worker specified in the table at the back of each Agreement. In the first of Mr Kirschberg’s schedules, relating to GHRC for 27 January 2019, he set out in numbers the rates that that his calculations utilised, being those for the lowest category. Consistent use of the lowest rates throughout the schedules could be confirmed by simple arithmetic.

7. Counsel’s second evidentiary misrepresentation was that GHRC “paid the invoices that they received”. Undisputed bank records showed that GHRC and CPC made weekly transfers to Prime’s bank account. Ms Dorling testified, without challenge, that those payments preceded the preparation of invoices. To the extent that there were any invoices they were self generated by Ms Dorling on behalf of GHRC/CPC long after weekly and other periodic bank transfers had been made, in amounts and on dates that did not correspond with any of the subsequent invoices. Further, the transfers into Prime’s bank account were not of amounts calculated “according to the rates that were listed at the back of the payroll services agreements”. They were weekly transfers of amounts representing the total of net pay due to the workers for the relevant week. GHRC/CPC also made monthly or other periodic transfers representing the total superannuation and other entitlements due to the workers. Payslips and other documents tendered by the Crown and by Mr George Alex showed that the payments from GHRC/CPC to Prime’s bank account of workers’ net wages and superannuation and other entitlements were, in total combination, very much less than the amounts that would be payable from GHRC/CPC to Prime if the hourly rates specified in the schedules to the Agreements were applied.

8. Prior to completion of the closing address on behalf of Mr McAndrew, in the absence of the jury, I pointed out to counsel that his submission as quoted above misrepresented unchallenged evidence and was insupportable (commencing at T 4400.49). I made the following observations (Day 88):

At T 4402.13:

As you stated to the jury, my problem with this, Mr Price, is I don't want to just come back in my summing-up and just contradict you and say, "That's wrong and not in accordance with the evidence", without giving you an opportunity to see what it is. […] What you've put here, it refers to Prime, but it seems to be in completely general terms, that "GHRC CPC, are paying to the entities they are directed to pay in accordance with the invoices they receive, which includes enough funding to cover tax and other entitlements and a bit more on top". On the evidence, that is not correct in respect to the period in which Prime's account was used between 7 August [2018] and 22 January [2019], and it's demonstrably, on the charts, not correct in respect of the next period in which the ACN companies were paid.

At T 4402.40:

[You have] also said "directed to pay in accordance with invoices they receive". Well, as far as I can see in the evidence, GHRC and CPC did not receive invoices on the letterheads of Prime for any period before January 2019. Ms Dorling said she generated those at the direction of Mr Kirschberg and she identified the communications from him in which she was requested to generate them, and the earliest of them is for January 19 and then they continue on right through to June 2019.

[…] I mean, there are invoices in respect of periods when Prime didn't have a bank account. But in any event, those invoices were generated later and unless I've missed something, I haven't seen in the evidence any invoices generated by Ms Dorling or otherwise, in other words self‑generated or otherwise, for any time earlier than January 2019. Throughout the considerable part of the latter half of 2018, GHRC and CPC were paying across to Prime amounts that were sufficient to cover net wages and no more. What the jury make of all this is a matter for them and it's well open to you to argue whatever you see fit about it, but you can't misstate the evidence.

9. Counsel said he would take the above observations on notice. He concluded his address the next day without having withdrawn the misstatements. They required explicit correction in summing up, with reference to the evidence that unequivocally contradicted what counsel had told the jury. In the context of his address, counsel’s assertions would have been understood by the jury as supporting the affirmative case advanced on behalf of Mr McAndrew and also, particularly, Mr Kirschberg, that the Agreements were observed and performed on the part of GHRC/CPC and that the accused expected that Prime would perform its side of the contracts by remitting PAYG.

10. The closing address on behalf of Mr Kirschberg followed that of counsel for Mr McAndrew (Days 89-91), in circumstances where it was clear that the misstatements referred to above had not been withdrawn or qualified and that it could be expected that they would be corrected by the trial judge in summing up. Mr Kirschberg’s counsel was on notice to anticipate that the jury would be reminded of the actual evidence concerning Ex 1 TB-295 and TB-302 – evidence that those invoices did not reflect the rates in the schedules to the Agreements, that the transfers from GHRC/CPC to Prime long predated the self-generated invoices and that the transfers of funds were not in amounts that reflected the scheduled rates but were much smaller sums comprised of net pay, superannuation and other entitlements.

11. On Day 3 of the summing up at T 86-87 I quoted to the jury the above extract from the address of Mr McAndrew’s counsel, taken from T 4369. I directed the jury that counsel’s submission was not in accordance with the evidence. I identified some of the undisputed evidence to the contrary, including that the weekly payments from GHRC/CPC to Prime were not enough to cover tax and statutory obligations and that the transfers were not made in accordance with invoices, which on Ms Dorling’s evidence were prepared later. At T 110-111, in the passage with respect to which redirection was sought, I reminded the jury of the content of the only invoices in evidence, in Ex 1 TB-295 and TB-302, and I pointed out the rates used by Mr Kirschberg in the schedules by which he had instructed amounts for which the invoices were to be made out, in all cases the lowest rates in the schedules. I directed the jury as follows at T 111:

[It] is something that you may find appropriate to take into account in working out whether the agreement was really being implemented. Effectively, these schedules are working out for all the hours at the one rate. They are schedules that are prepared well after the time when the work has been done. The invoices are then prepared by Ms Dorling in June 2019, some three months after the Prime account ceased to be used. All of those are things to take into account in working out whether this really appeared to be part of actual implementation following the agreement or not.

12. The Crown had referred to only one aspect of non-observance of the Payroll Services Agreements in support of its submission that they were shams. In closing address senior counsel for the Crown submitted the following (at T 3919-3921, Day 78):

Despite the group A entities [GHRC, GHRC Unit Trust and CPC] apparently contracting with seemingly independent group B entities, that is, third parties [including Prime] purportedly to provide payroll services under these agreements, it was people within GHRC's own office who actually processed the payroll. Robyn Turkington, Amy Dorling, and the other - I think this was a term Amy Dorling and Ms Turkington used - "the other office girls", meaning other women who worked within the office as administration staff.

They actually provided the payroll service by doing the clerical work to make it happen. That's really plain as day, the Crown submits. It wasn't these other entities, Prime or [ACN_481]. That just highlights the fiction behind this whole arrangement, we submit. That it was a façade or a cover with group B entities that were both replaceable and disposable and just corporate facades, if you will, to provide this façade of independence between group B, the company which bears the obligation to legally remit PAYG, and group A within the office of which the payroll was actually being processed. … [The] group B entities [including Prime] were simply used to transfer the net wages through bank accounts in their names.

[…]

[It is] clear from that particular evidence [Recording 369, 8 July 2019 Bryers / Kirschberg] that the payroll services agreement was understood by Mr Kirschberg to be part of a sham because it was GHRC and CPC's office staff led by Ms Turkington and Ms Dorling, Ms Turkington in particular, that in fact ran the payroll.

13. Those submissions were to the same effect as the Crown’s opening at T 101, where the prosecutor expressed himself in language almost identical to the first paragraph quoted above when explaining the basis upon which the Crown would contend that the Payroll Services Agreements with Prime were shams. Between the opening and the closing the Crown had adduced evidence of non-observance of the Agreements by GHRC/CPC and Prime in respects additional to the fact that GHRC/CPC had carried out payroll computation and distribution, or “payroll processing”, which Prime had contracted to perform. In closing the Crown did not refer to those further aspects of non-observance as a basis for concluding that the accused intended the Agreements should not have their apparent, or any, legal consequences and that none of the individuals who executed the agreements as directors of the respective companies intended them to be binding or to be observed or performed.

14. Part of the further proof of departure from the Agreements, to which the Crown has not referred in support of its sham argument, was the very body of unchallenged evidence that contradicted the erroneous submission of Mr McAndrew’s counsel. That was the evidence that GHRC/CPC had never paid Prime for the provision of workers at the all-inclusive rates per hour prescribed in the fee schedules and instead had made weekly and other periodic transfers to Prime of significantly lower amounts, comprising workers’ net pay, superannuation and other entitlements only, with no component from which PAYG remittances by Prime could have been funded.

15. Mr McAndrew’s counsel advanced a submission about mutual performance of the Agreements that constituted an egregious misstatement of unchallenged evidence. It was inherent in the correction of his submission that the jury would be reminded of evidence tending to prove precisely the opposite, namely, that the Agreements were mutually disregarded. The circumstance that the reference of the jury to this evidence came in summing up, whereas the Crown had not relied upon it in support of its contention about the Agreements being shams, did not involve any unfairness. It was a product of Mr McAndrew’s counsel having run an affirmative argument without foundation.

16. When counsel for Mr Kirschberg sought a redirection concerning my reminder to the jury of the evidence about the invoices in Ex 1 TB-295 and T-302, he submitted the following (in writing, 23 July 2024, MFI 106 – marked on Day 7 of the summing up at T 394.3):

[The] analysis provided to the jury in this part of the Summing Up included arguments not put by the Crown, in either the very long opening or closing, nor was it ever contended by the Crown that any differences between the actual rates of pay and the rates provided for in the [Payroll Services Agreements] could be a basis for impugning [the Agreements]. Additionally, it was never contended by the Crown that preparation of the invoices in June 2019 three (3) months after Prime’s accounts ceased to be used, could be taken into account in considering the legitimacy of [the Agreements].

Ms Dorling [and] Ms Turkington were never asked about any apparent differences or delays.

As a result of this, no submission was made by [Mr Kirschberg] on these issues in his final address.

[Emphasis added].

In those submissions the words “impugning” and “legitimacy” are references to the issue raised by the Crown of whether the Agreements were intended by the parties to have their apparent, or any, legal effect.

17. The written submissions on behalf of Mr Kirschberg sought that the proposed redirection should include a statement that the material features and circumstances of the invoices in Ex 1 TB-295 and T-302 “were not issues raised by the Crown in either their opening or closing arguments”. Counsel further stated:

Mr Kirschberg is at a significant advantage because he did not address you on these matters, because the Crown did not address you on these matters. There may be a number of explanations for the matters [raised with respect to the invoices in Ex 1 TB-295 and T-302].

18. Because I had warned Mr McAndrew’s counsel that he had misstated the evidence, Mr Kirschberg’s counsel was well aware when he subsequently delivered his final address that the misstatement was amenable to correction in summing up. He elected not to address the jury on the correct, undisputed facts concerning invoicing by Prime and payments by GHRC/CPC. If there were “a number of explanations for the matters raised” concerning the invoices in Ex 1 TB-295 and T-302, it was open to counsel to have submitted those explanations to the jury. He chose not to do so. There would have been no justification for me telling the jury that Mr Kirschberg had been left at a “significant disadvantage” with respect to addressing the jury on “a number” of unspecified “explanations for the matters raised”.

19. Notwithstanding the lack of merit in the broad, non-specific redirection formulated in the application, if there had been identified to the Court an arguable explanation for Mr Kirschberg’s instruction to Ms Dorling in June 2019 to prepare retrospective Prime invoices in the form and in the amounts that can be seen in Ex 1 TB-295 and TB-302, then I would have considered redirecting the jury that they should give consideration to that possible explanation. It might also have been appropriate to inform the jury that the possible explanation was available to Mr Kirschberg’s counsel and that he had omitted to articulate it in his address because the invoices had not been a focus of the Crown’s arguments.

18. With that in mind I invited counsel on two separate occasions to inform me what arguments he would have made with respect to the invoices, that he had not anticipated he would need to make by reason of the sequence in which matters were raised in other addresses and in the summing up. On Day 7 of the summing up, in the absence of jury, I recapitulated at T 394-395 the respects in which the submission of Mr McAndrew’s counsel had misrepresented the evidence. The following discussion then took place, from T 395.13:

HIS HONOUR: [… The] Crown put the matter that this agreement was just not being observed by anybody and not intended to be, and when a submission was made on behalf of Mr McAndrew in that sense, "Here’s an agreement and we got invoices in accordance with it and we just paid what was on the invoices and then it’s all over to the other party," that just cannot stand without correction.

BREEZE: That may well be right but, in our submission, it [ie, the correction in summing up] ought not to have been done in the manner that it was done, which was to point out to the jury matters in the evidence that were not pointed out to them by the Crown and the prejudice is we never had the opportunity, as we’ve put in writing, to meet that criticism because there was no criticism on that particular issue.

HIS HONOUR: Is there formulated here an argument that you would have put and would have wanted to put in your direction?

[Counsel identified the proposed redirection, in his written submission].

HIS HONOUR: […] I’m looking at p 2 of the four page document dated 23 July 2024 [part of MFI 106]. About a third of the way down it has a heading "Directions Sought". […] Underneath that are a number of subheadings. The fourth one from the bottom says, "Mr Kirschberg is at a significant disadvantage." "There may be a number of explanations."

BREEZE: Correct.

HIS HONOUR: What do you want me to put to them as the explanations that you say would have been made in your address?

HIS HONOUR: Are they here?

21. There followed at T 396 an exchange in which Mr Kirschberg’s counsel submitted that the jury should be told the rates per worker per hour specified in the schedules to the Agreements “were the rates that GHRC/CPC could charge out, and were not necessarily the rates [at] which the workers were to be paid”. It would have been incorrect to tell the jury that the rates specified in the schedules to the Agreements were “the rates that GHRC/CPC could charge out”; that is, charge to its construction company clients. After some discussion counsel acknowledged that the scheduled rates were those to be paid by GHRC/CPC to Prime, not “rates that GHRC/CPC could charge out”: T 397.3. Counsel provided no further response to my question, “What do you want me to put to them as the explanations that you say would have been made in your address?”

22. On Day 8 of the summing up at T 423.48, at the conclusion of further argument regarding the proposed redirection, the following took place:

HIS HONOUR: I do not accept that there has been any unfairness in my pointing out evidence that contradicted what Mr Price put to the jury. There is no unfairness in circumstances where I gave him full opportunity to fix it up himself. You had the opportunity to correct it. It was open to you to say, "Well, we don't endorse that, it's not" - especially after I had drawn it to everybody's attention - "We don't endorse that all payments were made in accordance with the invoice, we're not adopting that. The real position is this," and explain what it would be. If there is any such argument, tell me about it.

BREEZE: We've made our submissions, and we seek the direction as outlined in the written submissions.

23. That was the end of counsel’s submissions. The redirection as outlined to the Court in writing was not justified by anything counsel had put. No further or different redirection was propounded. In all the circumstances outlined in these reasons, there was no occasion to redirect the jury and Mr Kirschberg’s application in that behalf was dismissed.

24. Counsel for Mr George Alex made written submissions (dated 24 July 2024, also part of MFI 106), seeking a redirection to the following effect:

That your Honour withdraw your Honour’s remarks to the jury about:

(1)   a comparison between the charge out rates in the Schedule to the Prime Services Agreements [sic] and the rates in the schedules prepared by Mr Kirschberg and sent to Amy Dorling; and

(2)   about such an analysis by as articulated by your Honour could be used to conclude that the PSAs were a sham [sic].

25. The written submissions and further oral argument in support of this proposed withdrawal were to the effect that the summing up had “raised an argument which the Crown has not relied upon as a basis for a finding that the [Payroll Services Agreements] were a sham” and that the accused had been denied procedural fairness by the trial judge having identified a “disconnect” between the fee schedules to the Agreements and the rates on which Mr Kirschberg had calculated the amounts to be inserted in the retrospective, self generated invoices. It was submitted that the summing up had led to procedural unfairness “by offering the conclusion that the PSAs were sham”. I reject the submissions made on behalf of Mr George Alex for the reasons given above in relation to Mr Kirschberg’s application. The closing address for George Alex was delivered after the addresses on behalf of both Mr McAndrew and Mr Kirschberg.

Amendments

25 October 2024 - .

09 December 2024 - para 11 change word implement to "implementation"

para 14 change word "and" to "had"

Decision last updated: 09 December 2024