R v Boulos

[2008] NSWDC 187

CITATION:	R v Boulos [2008] NSWDC 187
HEARING DATE(S):	17 - 20 March 2008
JUDGMENT DATE:	20 March 2008
JURISDICTION:	Criminal
JUDGMENT OF:	Murrell SC DCJ
DECISION:	Application for stay of proceedings is refused
CATCHWORDS:	Application For A Permanent Stay Of Proceedings - Defrauding the Commonwealth - Abus of process - Delay
CASES CITED:	Barton v The Queen (1980) 147 CLR 75 Jago v District Court of NSW (1989) 168 CLR 23 The Queen v Davis (1995) 57 FCR 512 Barron v Attorney - General for NSW (1987) 10 NSWLR 215 Williams v Spautz (1991 - 92) 174 CLR 509 R v Carver [1999] NSWCCA 135 R v McCarthy (CCA, 12 August, 1994, unreported) R v Tolmie (CCA,7 December 1994, unreported) R v Littler [2001] NSWCCA 173
PARTIES:	Regina Madgi BOULOS
FILE NUMBER(S):	2007/00013514
COUNSEL:	Mr I Bourke Mr I McClintock SC Mr I McLachlan

Application For A Permanent Stay Of Proceedings

Background

1 The applicant seeks to permanently stay his trial on 10 counts of defrauding the Commonwealth, alleging that any trial would be an abuse of process because the delay in prosecution and the associated loss of evidence means that he cannot obtain a fair trial.

2 The applicant contends that a combination of factors means that he cannot obtain a fair trial. In summary, those factors are that there has been an unjustifiable delay in prosecuting the charges and:
(1) the delay has resulted in the legitimate destruction or unavoidable loss of important documents;
(2) important witnesses (in particular, a Mr Andrews) are no longer available; and
(3) the passage of time has affected the memory of all witnesses.

3 Computer World Solutions (CWS) and Trio International (Trio) were computer trading companies that were part of a group of companies under the applicant's effective control. Mr Andrews was the internal accountant and financial controller for the Boulos group of companies. He had shares in CWS and Trio. Brendons Advanced Technology Pty Ltd (BAT) was one of the applicant's private investment companies. Mr Norman was BAT's accountant. IDB Satellite (IDB) was an unrelated company that had discussed joining the Boulos group. Mr Andrews had access to IDB documents.

4 Between January 1993 and February1994, BAT lodged with the Australian Taxation Office (ATO) ten sales tax refund applications, seeking a total of $1,140,789. Each refund application was supported by an invoice from CWS, asserting that BAT had purchased computers from CWS for a tax-inclusive price, and a purchase order from either Trio or IDB, alleging that BAT had onsold the computers for a tax-exclusive price (as Trio and IDB were not required to pay sales tax). The applications sought a refund of sales tax paid by BAT to CWS. ATO refund cheques were deposited into an account held by Ubigold Pty Ltd (Ubigold) or Boulos Investments Pty Ltd (Boulos Investments). The Crown alleges that the transactions that were the basis for the applications did not occur.

5 Andrews faces charges on eight of the ten offences the subject of the Boulos indictment. In relation to the eight matters, Andrews' handwriting appears on relevant documents. Andrews faces nine additional charges, relating to allegedly false claims by CWS for sales tax refunds. Norman is serving a prison sentence for unrelated tax offences between 1993 and 2001.

The Crown Case

6 The applicant concedes that Andrews falsified documents supporting the refund applications, but says that the subject computer transfers may have been "real", albeit "paper" transactions, ie computers may have existed and may have been transferred between companies, albeit by documents that contained false features such as forged signatures.

7 The applicant contends that, if the applications were fraudulent, he is not guilty of the fraud. It is common ground that Andrews probably both created the documents for submission to the ATO and submitted the documents. There is no direct evidence that the applicant was involved in or knew of any fraud. The Crown case against the applicant is circumstantial. The applicant contends that there is an obvious rational explanation consistent with his innocence, i.e. that Andrews acted alone, without the applicant's knowledge or involvement.

8 In its case, the Crown advances the following circumstances.

(1) In 1993/94, BAT did not have a bank account and did not lodge tax returns. The evidence suggests that it it did not trade to any significant extent.
(2) The applicant had a controlling role in BAT, CWS and Trio. The applicant and his wife were the sole directors of BAT, Ubigold and Boulos Investments.
(3) The applicant was closely involved in the buying and selling of computers by CWS and Trio. During weekly sales meetings, computer stock holdings were discussed.
(4) At the time that Zenith allegedly supplied computers to CWS, Zenith was winding up it's Australian operations.
(5) The relevant transactions concerned very substantial numbers of computers and very substantial sums of money .
(6) Each refund cheque was accompanied by a notice stating that the cheque was a sales tax refund. In addition, the ATO sent five other letters to BAT referring to a claim for sales tax refund.
(7) The ten refund cheques were sent to BAT's registered office, a private residence occupied by members of the applicant's extended family.
(8) Each refund cheque was substantial.
(9) Ubigold and Boulos Investments were property holding companies whose main income was rent.
(10) The refund cheque deposit slips contain handwriting that "looks like" that of the applicant. All cheques were deposited on days when the applicant was in Australia. One deposit was "delayed" until a date when the applicant had returned from overseas.
(11) At the time that each cheque was deposited, there was a low balance in the receiving account.
(12) Within a few days of deposit, funds were withdrawn. The authorised bank account signatories for Ubigold and Boulos Investments were the applicant and his wife. Some of the funds were applied to expenses such as credit card accounts, and the expenditure appears to be of a personal nature.
(13) BAT made only 10 claims for sales tax refunds, and each was false.
(14) One month after the AFP asked the applicant to attend for an interview, the applicant left Australia on a one-way ticket. The Crown will seek to rely upon flight as evidencing consciousness of guilt. The applicant will object to admission of the evidence.

Chronology

1.2.91 BAT bank account closed.
25.1.93 - 11.2.94 Period of alleged offences.
Jan 1994 Jull, an ATO compliance officer, commenced inquiries.
10.5.94 - 28.6.94 Jull spoke to Andrews and the applicant. He asked for access to records, but failed to obtain it.
15.7.94 Matter referred to the ATO investigations section.
Late 1994 Norman says that a fire at his premises destroyed documents, including documents belonging to BAT and CWS. Although Norman was a Crown witness, the Crown questions whether there was a fire.
20.10.94 - July 96 Some witness statements obtained.
Aug/Sept 96 ATO referred the matter to the AFP.
1999 BAT, CWS and Trio were deregistered by this time.
1998/99 Lapsing of the requirement under s127(1) of the Sales Tax 1992 to retain sales tax records for five years. Most records relating to the internal company transactions of BAT, CWS and Trio were lost or destroyed by 2000, prior to the applicant learning that there was a continuing investigation.
6.4.00 AFP executed search warrants at the homes of the applicant and Andrews and at the Boulos business premises. No relevant documents were located.
2000/01 Further witness statements were obtained.
11.2.01 Andrews left Australia.
29.10.01 The AFP wrote to the applicant's lawyers setting out the general allegations and requesting an interview. The applicant declined.
30.11.01 The applicant left Australia . The AFP obtained a warrant for his arrest (supporting documentation was faulty).
21.1.02 The applicant's wife said that he would return at the end of January.
29.5.02 The AFP obtained a warrant for the applicant's arrest.
13.8.03 The applicant's solicitors contacted the CDPP and were told that the matter was still active.
29.6.04 The applicant's solicitors contacted the CDPP and advised that the applicant wanted to return to Australia. There were discussions regarding his return.
20.12.05 The applicant returned. He was arrested at the airport and charged. Bail was granted.
17.1.05 The brief of evidence was served.
Aug 05 - Aug 07 Committal proceedings.
31.8.07 The applicant was committed for trial on 10 counts of being "knowingly concerned" in frauds.
15.10.07 Amended indictment served, containing 10 counts of defrauding the Commonwealth.
18.1.08 Trial fixed for four weeks, commencing on 16.6.08. Stay application fixed for 17.3.08.

9 For the purpose of the applicant's argument on delay, there are three periods.
(1) 1994 - 2001 The Crown concedes that there was unjustifiable delay during part of this period.
(2) 30.11.01 - 20.12.04 Delay attributable to the applicant's absence from the jurisdiction.
(3) 20.12.04 to date No relevant delay.

The Power To Grant A Stay of Proceedings

10 The Court has an inherent jurisdiction to permanently stay proceedings that are an abuse of process: Barton v The Queen (1980) 147 CLR 75. The onus is on the applicant to satisfy the Court that any trial would involve an abuse of process: Barron v Attorney - General for NSW (1987) 10 NSWLR 215. The onus is "a heavy one" and the power to stay will be exercised "only in the most exceptional circumstances": Williams v Spautz (1991 - 92) 174 CLR 509 at 529.

11 The power to grant a permanent stay is discretionary: Basha (1989) A Crim R 337, per Hunt J at 339.

12 The exercise of the discretion involves balancing the interests of the community and those of the applicant. There is a strong public interest in ensuring that persons accused of serious offences face trial: R v Carver [1999] NSWCCA 135 at para [33]. However, the public interest in holding a trial does not extend to holding an unfair trial: Jago per Mason CJ at 30.

13 An abuse of process occurs when a trial is incapable of serving its purpose, ie is incapable of finally determining whether the accused has engaged in the alleged criminal conduct: Jago v District Court of NSW (1989) 168 CLR 23 per Brennan J at 47. A stay will be justified where any trial "will necessarily be an unfair one or ... the continuation of the proceedings would be so unfairly oppressive that it would constitute an abuse of process": Jago per Deane J at 60 (my emphasis).

14 Before a stay may be granted, there must be "a fundamental defect which goes to the root of the trial", such that the trial judge will be unable to address the unfairness: Barton per Wilson J. at 111, R v Littler [2001] NSWCCA 173 at para [5]. There must be no available means, such as jury directions, of bringing about a fair trial: Williams at 519.

15 Delay and associated general prejudice will not usually create an abuse of process. In relation to criminal proceedings, delay is not infrequently associated with the death of witnesses, memory loss, or the loss of documents. Where an absent witness's likely evidence is not known, any disadvantage arising from the witness's absence is speculative, and abuse of process cannot be established: R v Tolmie (CCA,7 December 1994, unreported, at 5). Even where it is established that the missing evidence would be capable of creating a reasonable doubt, a fair trial can usually be achieved through the use of appropriate directions: R v McCarthy (CCA, 12 August, 1994, unreported, at 12).

16 In The Queen v Davis (1995) 57 FCR 512, the trial of a doctor on old sexual indecency charges was stayed because of special prejudice arising from the destruction of contemporaneous medical notes concerning the alleged patient/victims.

17 In Davis, at 519, the Court noted that, on a stay application, it was relevant to consider the strength of the prosecution case. However, on stay applications, it is not usual to rely on weakness in the prosecution case, and it is not a matter upon which the applicant relies in this application.

18 In short, in the exercise of its discretion, the Court must determine whether the applicant has established that any trial will necessarily be unfair. The notion of fairness (or unfairness) "defies analytical definition" and is largely a matter of "essentially intuitive judgement": Jago, per Deane J at 57.

Should A Stay Be Granted?

19 Very soon after the alleged offences, the ATO commenced inquiries. However, for most of the ensuing six years from mid 1994 to April 2000 (when search warrants were executed), there was an unjustifiable delay by prosecuting authorities. I infer that, for most of the period to April 2000, the investigation was, in fact, dormant. During this period, company documents may have been lost in a fire. To the extent that they had been operating, companies ceased to trade. The period prescribed by statute for the retention of sales tax documents expired, allowing the legitimate destruction of such documents. Between mid 1994 and 2000, the applicant was not told that he was still under investigation, and there is no evidence that he was aware that an investigation was continuing.

20 The applicant's contentions that, if he was within the jurisdiction, Andrews may have testified that the subject computer transfers were "real" and that, but for their destruction, company documents may have evidenced "real" transactions, are mere speculation. As Andrews is known to have falsified documents associated with the "transactions", it is more likely that any reliable evidence would tend to confirm fraud. Any disadvantage to the applicant can be addressed in a trial.

21 The applicant's principal argument is that the unjustifiable delay and associated events have deprived him of documents and witness recall that may have undermined the Crown's argument that the only available rational inference is that the applicant knew of, and was a party to, the frauds.

22 The Crown argues that, in contrast to the position in a case such as Davis, the applicant is unable to identify a particular critical document that would very likely elucidate the situation. However, such an inability is far less significant in a circumstantial evidence case, where the Crown does not rely upon one witness's evidence about one critical incident, but on a collection of circumstances, each of which, in isolation, is of no great significance.

23 The Crown case is inherently problematic. The only direct involvement that the Crown may be able to establish is that the applicant received and banked substantial cheques that were described as sales tax refunds. Alone, that evidence is incapable of establishing that the offender was a party to the frauds that yielded the refunds. The Crown's attempt to rely on flight as evidencing consciousness of guilt will, at least, attract a judicial direction requiring that such evidence be approached with caution. Otherwise, the circumstances upon which the Crown relies are of a very general nature. The Crown will ask a jury to infer that, by virtue of his role in the companies, the receipt of monies, and associated direct or indirect enrichment, the applicant "must have known" of, and been a party to, the fraud.

24 I accept the applicant's submission that, in all likelihood, he has suffered significant forensic disadvantage because of the unjustifiable delay in prosecution of almost six years For example, it may be that there were documents showing that, at the time when the refunds were received, the applicant received and banked similar sums, so that receipt of the refunds would not have caused him to question their legitimacy. It may be that the applicant was not personally enriched, but the funds went towards what were really business expenses. It may be that, had witnesses been questioned earlier, they would have recalled details of particular sales meetings or particular conduct by Andrews that would have supported the applicant's case. It is possible that there were documents showing that, at the relevant time, BAT did trade to a significant extent. Indeed, it is possible that, but for the unjustifiable delay, documentary or verbal evidence would be available to, at least, put a gloss on each of the circumstances upon which the Crown relies.

25 Apart from likely disadvantage to the applicant, it can be seen as "unfair" that the prosecuting authorities determined to prosecute alleged sales tax frauds at a stage when, because of the passage of time, it was permissible to destroy relevant documentation. It may be seen as "unfair" that, following the unjustifiable delay, the offender will stand trial fifteen years after the alleged offences, particularly because, in relation to the central issue, the Crown will rely upon circumstantial evidence.

26 However, our criminal justice system ensures that, in all but the most exceptional circumstances, an accused will be tried by his or her peers. I expect that the trial judge will explain issues of forensic disadvantage to the jury and that the applicant will receive a fair trial. Although, at a general level, it may be said that the process has been "unfair" to the applicant, I am far from satisfied that any trial will necessarily be unfair in the sense required to establish an abuse of process.

27 The application is refused and the trial date of 16 June 2008 is confirmed.