R v Caroll Henderson, R v Peter Henderson Application for Costs
[2013] NSWDC 2
•18 January 2013
District Court
New South Wales
Medium Neutral Citation: R v Caroll Henderson, R v Peter Henderson Application for Costs [2013] NSWDC 2 Hearing dates: 14 November 2012, 18 January 2013 Decision date: 18 January 2013 Before: Judge Haesler SC Decision: Refused
Catchwords: Costs in Criminal Cases Legislation Cited: Costs in Criminal Cases Act 1967
2nd Reading Speech of the Costs in Criminal Cases Bill 1967
Confiscation of Proceeds of Crime Act 1989
Crimes Act 1900
Criminal Procedure Act 1986
Evidence Act 1995
Legal Aid Commission Act 1979Cases Cited: Allerton v DPP (1991) 24 NSWLR 550; (1991) 53 A Crim R 33
Gerakiteys v The Queen (1984) 153 CLR 317,
R v Mok (1987) 27 A Crim R 437
Mordaunt V DPP 1 Anor [2007] NSWCA 121; (2007) 171 A CRIM R 510
Pavey (1997) 98 A Crim R 396
R v Saffron (1988) 17 NSWLR 395,
Treasurer NSW v Ianella & Anor [1999] NSWCA 15Category: Costs Parties: Regina (Crown)
Caroll Anne Henderson (Applicant)
Peter James Henderson (ApplicantRepresentation: Mr Sunil de Silva (Crown)
Mr Allan Conwell (for Caroll Henderson)
Mr Frank Coyne (for Peter Henderson)
Mr Darren Robinson (DPP)Ms K Anderson (for Caroll Henderson)
Mr D Humphries (for Peter Henderson)
Nyman Gibson Stewart
Criminal Defence Lawyers
Level 3, 17 Brisbane Street
DARLINGHURST NSW 2010
Matthew Hammond Solicitors
689A The Horsley Drive
Smithfield NSW 2164
File Number(s): 2008/77194 2008/177894
Judgment
Introduction:
Between May and September 2012 I presided over the jury trial of three accused on conspiracy to defraud, offer and receive corrupt commissions and money laundering counts. Peter Henderson was acquitted by a jury of 12 of all of the counts in the Indictment against him. During the Crown case two counts had been subject to a direction by the Director of Public Prosecutions that there be no further proceedings.
Caroll Henderson was acquitted of most of the counts against her. The jury could not agree on 2 counts. During the Crown case one count had been subject to a direction by the Director of Public Prosecutions that there be no further proceedings. After trial the counts on which the jury could not agree were also subject to a direction by the Director of Public Prosecutions that there be no further proceedings.
A third accused, David Michael Wills, was convicted of most counts alleged against him.
Peter Henderson and Caroll Henderson have applied for a certificate pursuant to the Costs in Criminal Cases Act 1967 so they can seek their costs of the trial. The Crown opposes the application. It is appropriate that I, as the trial judge, deal with the applications, which given their similarity can be dealt with together.
The Act
Section 3. Costs in Criminal Cases Act 1967 (the Act) reads relevantly:
"The Judge in any proceedings relating to any offence punishable upon indictment, may where, after the commencement of a trial in the proceedings, a defendant is acquitted in relation to the offence concerned, or a direction is given by the Director of Public Prosecutions that no further proceedings be taken, grant to that defendant a certificate under this Act specifying that, in the opinion of the Judge:
(a) if the prosecution had, before the proceedings were instituted, been in possession of evidence of all the relevant facts, it would not have been reasonable to institute the proceedings, and
(b) that any act or omission of the defendant that contributed, or might have contributed, to the institution or continuation of the proceedings was reasonable in the circumstances.
For the purpose of determining whether or not to grant a certificate under section "all the relevant facts" is a reference to:
(a) the relevant facts established in the proceedings, and
(b) any relevant facts that the defendant has, on the application for the certificate, established to the satisfaction of the Judge and
(c) any relevant facts that the prosecutor, has established to the satisfaction of Judge that:
(i) relate to evidence that was in the possession of the prosecutor at the time that the decision to institute proceedings was made, and
(ii) were not adduced in the proceedings."
Here no leave was sought to adduce additional evidence.
A person to whom a certificate has been granted under this Act may apply to the Director-General of the Attorney General's Department for payment from the Consolidated Fund of costs incurred in the proceedings.
The Director-General may, if of the opinion that, in the circumstances of the case, the making of a payment to the applicant is justified, determine the amount of costs that should be paid to the applicant.
In Allerton v Director of Public Prosecutions (1991) 24 NSWLR 550, reference was made to the 2nd Reading Speech of the Costs in Criminal Cases Bill 1967. At 560-561 the Court set out this portion of the second reading speech,
"The bill represents a middle course between the two extremes I have cited. It departs from the old English conception that costs in criminal trials should only be awarded in exceptional cases. On the other hand it establishes criteria which, when applied judicially permit courts to make orders in appropriate cases without any innuendo arising from the making, or the refusal to make such orders that would be critical either of the prosecutor or the accused" (Emphasis added by the Court).
Justice McColl helpfully distilled the relevant authorities in Mordaunt v DPP [2007] NSWCA 121, at [36]. From that summary I draw the following propositions, which seem pertinent to this application. I have not included citations, which are set out fully in Her Honour's comprehensive judgement:
(a) The institution of proceedings refers to the time of arrest or charge.
(b) The onus of proof is on the applicant.
(c) There is no exhaustive test of what constitutes unreasonableness.
(d) The reasonableness of a decision to institute proceedings is not based upon;
(i) Any reasonable prospect of conviction test generally used by prosecution agencies throughout Australia.
(ii) The test applied by magistrates when deciding to commit for trial.
(iii) The test of reasonable suspicion, which might justify an arrest.
(iv) The test which determines whether the prosecution is malicious.
(v) Whether there is evidence to establish a prima facie case.
(e) The fact that a court concluded the evidence was insufficient to warrant a conviction is not necessarily indicative of unreasonableness.
(f) A judgment of acquittal in favour of an accused does not mean that it was not reasonable to have prosecuted.
(g) There must be an objective analysis of the whole of the relevant evidence including;
(i) The extent to which there is any contradiction of expert evidence concerning central facts necessary to establish guilt, or
(ii) Any inherent weakness in the prosecution case.
(h) Matters of judgment concerning credibility, demeanour and the like are likely to fall on the other side of the line of unreasonableness, being matters quintessentially within the realm of the ultimate fact finder, whether it be Judge or Jury.
(i) If, in the end, the question for the jury depended upon word against word this is not sufficient to establish the issue of unreasonableness in favour of an applicant; as in a majority of such cases, it would be quite reasonable for the prosecution to allow those matters to be decided by the jury.
(j) It is different where the word upon which the Crown case depended had been demonstrated to be one, which was very substantially lacking in credit.
(k) Before a certificate is granted, the judge must have formed an opinion specifying the matters in s 3(1)(a) and (b), and must also exercise the residual discretion, contemplated by s 2.
Background
Caroll Henderson and Peter Henderson were arraigned on 15 May 2012 before a jury and me. There was a co-accused David Michael Wills. The charges alleged; common law conspiracy to cheat and defraud; offering a benefit corruptly: s 249B(1) Crimes Act 1900; s 73(2) Confiscation of Proceeds of Crime Act 1989; and conspiring with others to engage in money laundering transactions - a common law conspiracy whose closest equivalent statutory offence is s 73(2) Confiscation of Proceeds of Crimes Act 1989.
The critical elements the Crown had to prove beyond reasonable doubt on each count are set out below:
Both Caroll Anne Henderson and Peter James Henderson:
Counts 1, 2, 9, 11, 12,13,15,16, 18, 23, 25, 26, 28, 29, 31, 32 & 34.
Count 1 (overall conspiracy allegation)
Between 1 February 1996 and 30 May 1999 he or she:
1. Agreed with another or others;
2. To commit an unlawful act; here, to cheat and defraud Woolworths Ltd in respect of the supply an installation of computer hardware and software in relations to Woolworths' business.
3. With the intention that that agreement would be carried out.
Count 2 (Disposal of unlawfully obtained funds conspiracy allegation)
Between 1 February 1996 and 30 May 1999 he or she:
1. Agreed with another or others;
2. To commit an unlawful act: here, to engage in money laundering transactions;
3. With the intention that that agreement would be carried out.
Count 9 (18 February 1997 give corrupt benefit of $10,000 to Wills allegation)
On 18 February 1997 he or she:
1. Corruptly gave David Michael Wills;
2. An agent of Woolworths Ltd;
3. With his consent;
4. A benefit; here money ($10,000):
5. As a reward for having shown favour to Az-Ben Electronics Ltd in relation to the business of Woolworths Ltd.
Count 11 (18 February 1997) offer corrupt benefit of a15% share in Scanning Retail Technology (UK) to Wills allegation)
On 18 February 1997 he or she:
1. Corruptly offered David Michael Wills;
2. An agent of Woolworths Ltd;
3. With his consent;
4. A benefit; here a15% share in Scanning Retail Technology (UK)):
5. As a reward for having shown favour to Scanning Retail Technology
(UK) in relation to the business of Woolworths Ltd.
Count 12 (18 February 1997 money laundering allegation)
On 18 February 1997 he or she:
1. Engaged in a transaction involving money, the transfer of money $10,000 from the account of Finnigan Computers Ltd to Cross Border Holdings Ltd;
2. At that time she knew the money was the proceeds of a serious offence.
Count 13 (21 February 1997 give corrupt benefit of 10,000 to Wills allegation)
On 21 February 1997 he or she:
1. Corruptly gave David Michael Wills;
2. An agent of Woolworths Ltd;
3. With his consent;
4. A benefit; here $10,000;
5. As a reward for having shown favour to Az-Ben Electronics Ltd in relation to the business of Woolworths Ltd.
Count 15 (21 February 1997 money laundering allegation)
On 21 February 1997 he or she:
1. Engaged in a transaction involving money, the transfer of money $10,000 from the account of Finnigan Computers Ltd to Cross Border Holdings Ltd;
2. At that time she knew the money was the proceeds of a serious offence.
Count 16 (26 February 1997 give corrupt benefit of $176,210 to Wills allegation)
On 26 February 1997 he or she:
1. Corruptly gave David Michael Wills;
2. An agent of Woolworths Ltd;
3. With his consent;
4. A benefit; here $176,210;
5. As a reward for having shown favour to Az-Ben Electronics Ltd in relation to the business of Woolworths Ltd.
Count 18 (26 February 1997 money laundering allegation)
On 26 February 1997 he or she:
1. Engaged in a transaction involving money, the transfer of money $176,210 from the account of Finnigan Computers Ltd to Cross Border Holdings Ltd;
2. At that time she knew the money was the proceeds of a serious offence.
Count 23 (10 June1997 give corrupt benefit of $141,346.77 to Wills allegation)
On 10 June 1997 he or she:
1. Corruptly gave David Michael Wills;
2. An agent of Woolworths Ltd;
3. With his consent;
4. A benefit; here $141,346.77;
5. As a reward for having shown favour to Az-Ben Electronics Ltd in relation to the business of Woolworths Ltd.
Count 25 (10 June 1997 money laundering allegation)
On 10 June 1997 he or she:
1. Engaged in a transaction involving money, the transfer of money $141,346.77 from the account of Finnigan Computers Ltd to Cross Border Holdings Ltd;
2. At that time she knew the money was the proceeds of a serious offence.
Count 26 (1 July 1997 give corrupt benefit of $19,204 to Wills allegation)
On 1 July 1997 he or she:
1. Corruptly gave David Michael Wills;
2. An agent of Woolworths Ltd;
3. With his consent;
4. A benefit; here $19,204;
5. As a reward for having shown favour to Az-Ben Electronics Ltd in relation to the business of Woolworths Ltd.
Count 28 (1 July 1997 money laundering allegation)
On 1 July 1997 he or she:
1. Engaged in a transaction involving money, the transfer of money $19,204 from the account of Finnigan Computers Ltd to Cross Border Holdings Ltd;
2. At that time she knew the money was the proceeds of a serious offence.
Count 29 (7 October 1997 give corrupt benefit of $24,000 to Wills allegation)
On 7 October 1997 he or she:
1. Corruptly gave David Michael Wills;
2. An agent of Woolworths Ltd;
3. With his consent;
4. A benefit; here $24,000;
5. As a reward for having shown favour to Az-Ben Electronics Ltd in relation to the business of Woolworths Ltd.
Count 31 (7 October 1997 money laundering allegation)
On 7 October 1997 he or she:
1. Engaged in a transaction involving money, the transfer of money $24,000 from the account of Finnigan Computers Ltd to Cross Border Holdings Ltd;
2. At that time she knew the money was the proceeds of a serious offence.
Count 32 (29 August 1997 give corrupt benefit of $557,151 to Wills allegation)
On 29 August 1997 he or she:
1. Corruptly gave David Michael Wills;
2. An agent of Woolworths Ltd;
3. With his consent;
4. A benefit; here $557,551;
5. As a reward for having shown favour to Az-Ben Electronics Ltd in relation to the business of Woolworths Ltd.
Count 34 (29 August 1997 money laundering allegation)
On 29 August 1997 he or she:
1. Engaged in a transaction involving money, the transfer of money $557,151 from the account of Finnigan Computers Ltd to Cross Border Holdings Ltd;
2. At that time she knew the money was the proceeds of a serious offence.
Caroll Henderson, alone:
Count 21 (13 May 1997 give corrupt benefit of $31,000 to Wills allegation)
On 13 May 1997 she:
1. Corruptly gave David Michael Wills;
2. An agent of Woolworths Ltd;
3. With his consent;
4. A benefit; here $31,000;
5. As a reward for having shown favour to Smart Retail Terminals Ltd in relation to the business of Woolworths Ltd.
Peter Henderson, alone:
Count 38 - False and misleading Statement allegation
Between16 February 1998 and 23 March 1998 he:
1. with intent to obtain a benefit for Advance Retail Technology Ltd
2. made a statement that Robert Daly was a person involved with Advance Retail Technology Ltd,
3. which was false and misleading in a material particular
4. and was made with reckless regard to whether it was false and misleading.
When the trial was nearing the close of the Crown case the Director of Public Prosecutions notified the court that no further proceeding were to continue in relation to counts 11 and 38.
So far as Mrs Henderson was concerned the jury returned verdicts of not guilty in relation to counts 1, 9, 12, 13, 15, 16, 18, 23, 25, 26, 28, 29, 31, 32, 34. The jury could not agree on counts 2, and 21. Subsequently the Director of Public Prosecutions has notified the court that there would be no further proceedings on those remaining counts.
The jury returned verdicts of not guilty in relation to all the remaining counts faced by Peter Henderson
So far as both Caroll and Peter Henderson are concerned they were acquitted or had no further proceedings in relation to each of the charges on which they were indicted. Each has asked that certificates pursuant to section 3 Costs in Criminal Cases Act 1967 be granted. The Crown opposes the applications.
The relevant facts are those established in the proceedings by the evidence and the exhibits at trial supplemented as it was at trial (with appropriate cautions) by the charts MFI 8. I also take into account the jury verdicts.
Both Mr Coyne, Counsel for Peter Henderson, and Mr Conwell, Counsel for Caroll Henderson, annexed to their submissions extracts from the trial transcript. Some additional 'facts' were provided in the submissions that added nothing of relevance to the trial material. An example in the submission MFI 1 (Peter Henderson) page10 went to the source of funds for the defence. Legal Aid paid for the defence but the Henderson's each contributed $50,000. While in Pavey (1997) 98 A Crim R 396 at 401, the court did comment on the "strange spectacle" of two government agencies Legal Aid and the Director of Public Prosecutions asking the courts to resolve a dispute between them about costs, I cannot see how the source of defence funding can operate as a relevant consideration when the matters in s 3 are considered. In any event s 42 Legal Aid Commission Act 1979 applies and I must consider the applicants and make an order as to costs in respect of a legally assisted person as if they were not a legally assisted person.
Also included with the submissions were committal transcripts (Peter Henderson MFI 1 Tab 4 - evidence of Weissman at committal 8/12/10), clearly material known to the Crown. Some of which was raised during cross-examination of Mr Weissman at trial.
No leave to adduce evidence that was not adduced in the proceedings or to examine any witness was sought by the Crown Prosecutor or DPP. Mr Crown provided comprehensive written submissions in response to those of the applicants. The parties took an opportunity to make brief oral submissions at Campbelltown District Court on the afternoon of 14 November 2012. Further written submissions in reply to those of the Crown were received on behalf of both Caroll and Peter Henderson.
Issues to be determined.
In essence I must determine the matter on the evidence called at trial. Neither Caroll nor Peter Henderson gave evidence at trial however their co-accused, David Michael Wills, did give evidence in his defence. Mr Wills was convicted of the conspiracy to launder money count and most of the substantive counts alleged against him including count 22 which corresponded to count 21 against Mrs Henderson, a count on which the jury failed to agree.
The critical question in dispute is, if the prosecution had, before the proceedings were instituted, been in possession of evidence of all the relevant facts, it would not have been reasonable to institute the proceedings.
It is not suggested or submitted that any act or omission of the defendant contributed, or might have contributed, to the institution or continuation of the proceedings so I do not need to deal with any issues raised by s 3(1)(b) of the Act.
To deal with the critical question, I need to:
(a) Find what were the relevant facts.
(b) Assume the prosecution was in possession of them prior to instituting the proceedings.
(c) Ask the hypothetical question: if the prosecutor had evidence of all the relevant facts before the proceedings were instituted would it have been reasonable to institute them? Allerton at 560.
Mr Coyne and Mr Conwell submit that when I apply the tests taken from the authorities summarised above to the relevant facts I will issue the certificates.
As I understand their submissions neither Mr Coyne nor Mr Conwell seek their costs in relation to only the counts which were the subject to a direction during the Crown case by the Director of Public Prosecutions that there be no further proceedings. In the overall scheme of things a certificate for these costs alone could neither be quantified nor would it be of much consequence. Nor does Mr Conwell pursue on his own the matters which led to the Director deciding not to proceed on the counts concerning Caroll Henderson about which the jury could not agree. In his submissions in reply, Mr Conwell did however raise as a possibility a proportional order.
Mr de Silva, Crown Prosecutor, for the Director, submits that the applicants have not met the onus placed on them.
The case for Peter Henderson
Mr Coyne for Peter Henderson made the following points by reference to the transcript of the trial and committal:
(1) The prosecution evidence against the applicant was always weak.
(2) The prosecution case included surveillance material, which exculpated Mr and Mrs Henderson.
(3) The Fraud Squad failed to properly and independently investigate the allegations against Mr and Mrs Henderson.
(4) The Crown opened on inferences to be drawn from an assertion that the systems provided by Mr and Mrs Henderson's company, SRT, to Woolworths were of poor quality or included over-supply or overcharging. That assertion was not made out in the trial.
(5) Mr Henderson was inculpated almost solely because of the use of his Finnigan Computers Limited account (FCL) in only some of the financial transfers to David Will's Cross Border Holdings (CBH) account.
(6) At issue was Mr Henderson's knowledge and involvement in those transactions.
(7) The Crown relied, in the brief served on the defence, the committal hearing and the trial on the evidence of Mr Weissman, Mr Kearns and Mr Hanby as to Mr and Mrs Henderson's knowledge and involvement. Whilst it should have been obvious from the brief served, it became apparent at the committal and beyond doubt at the trial that all these witnesses, Mr Weissman and Mr Kearns in particular, were intimately involved in the creation of company structures and financial transfers to CBH, both through FCL and by other means, which did not involve Mr Henderson.
(8) It was raised at committal and confirmed at trial that Mr Weissman not Mr Henderson, prepared, and in fact forged, the FCL invoices initiating and central to some of the charged transactions.
(9) It was confirmed at trial that Mr Weissman, Mr Kearns and Mr Hanby prepared the Business Control Technology (BCT) invoices used to initiate some of the charged transactions.
(10) Mr Weissman gave evidence of his involvement in other companies and other transfers to CBH, which did not involve Mr Henderson.
(11) Mr Kearns gave evidence at trial that Mr Henderson did not pay attention to detail and was not the type to require, or look at, bank statements.
(12) Mr Kearns gave evidence that he effected all of the charged transactions through FCL.
(13) Mr Kearns gave evidence that he did so on instruction from Caroll Henderson (although he was unable to provide any supporting documentation).
(14) Mr Wills gave evidence that the monies received by CBH came from Mr Weissman and had nothing to do with Mr Henderson.
(15) Mr Weissman, Mr Kearns and Mr Hanby each gave evidence, which could be characterised as unreliable: so unreliable, so substantially lacking in credit that no prosecution could reasonably have been based on their testimony.
(16) Mr Weissman, the only prosecution witness to directly inculpate Mr Henderson, gave his evidence under immunity from prosecution.
(17) The Crown's opening did not accurately reflect what the evidence established: The British Virgin Islands (BVI) companies could not be shown to have been established to support the conspiracy; APOS was a good product and nothing done by Peter Henderson was other than what was good business practice; It was not established that protocols were breached or inside information as passed on; and, Peter Henderson was not a party to the Woolworths / Az-Ben contract.
(18) There was an available alternative explanation well known to the Crown, which could not be disproved: the Henderson's intention to join with Wills and Weissman in the international marketing of APOS 2000 and other products. A venture which may have involved Wills breaching a duty to Woolworths but which did not involve criminal action by Peter or Caroll Henderson.
(19) The matters raised in this application were raised in Mr and Mrs Henderson's defence during both opening and closing address.
It was submitted that if, at the time the proceedings were commenced, the hypothetical prosecutor had been in possession of all of these facts, including the evidence as ultimately given of Mr Weissman, Mr Kearns and Mr Hanby, it would not have been reasonable to institute proceedings. And, that the requirements for a certificate under s 3 of the Act having been established, justice required that a certificate be granted.
The case for Caroll Henderson
Mr Conwell adopted what Mr Coyne had said and submitted the following additional factors take this matter outside the ordinary and meant that the test in s 3(1) had been satisfied.
(1) Despite hours of telephone intercepts and listening device recordings of private conversations between Mr and Mrs Henderson and others led by the prosecution the only interpretation of those conversations was that Mr and Mrs Henderson's was inconsistent with guilt. It was implausible they were invented.
(2) The Crown's heavy reliance on Benzi Weissman was misplaced. Weissman admitted being untruthful to police when interviewed by them and being untruthful at committal proceedings in December 2010, particularly in relation to an initial assertion Mr Henderson was responsible for directing funds into Finnigan Computers Limited (FCL) by way of false invoices, spelt "Finnegan"
(3) It was unreasonable for the prosecution to have relied upon Weissman in their case against the Hendersons. Weissman was criminally concerned in Will's frauds and made an induced statement while outside the jurisdiction of the New South Wales courts. The same points apply to the evidence of Victor Hanby and Michael Kearns, who said that they moved funds at the direction of the Henderson's.
(4) Mrs Henderson's retention of the huge volume of documents, despite knowing a police investigation was underway, was inconsistent with her guilt.
(5) David Wills' evidence at trial was highly corroborative of the innocence of Mrs Henderson as he said he received the money only from Weissman.
(6) The long delay occasioned by the police investigation meant witnesses' memories were unreliable and unable to be supported by documents.
(7) Regard should also have been had to the good character and lack of criminal convictions of Mrs Henderson and her husband.
The case for the Crown
In response, the Crown submit that:
(1) Neither applicant has discharged their onus on either the 'facts issue and the reasonableness issue' identified in Mordaunt v DPP.
(2) There was no deficiency in the investigation or the opening address by the Crown.
(3) A not guilty verdict or failure of the jury to agree is not of itself an indicator of unreasonableness.
(4) The jury here had to make judgement concerning credibility, demeanour of critical witnesses quintessentially within their realm. The Crown was entitled to rely on R v Manley [2000] NSWCCA 196; (2000) 49 NSWLR 203. It is not unreasonableness to leave such findings to a jury.
(5) It was appropriate for the Director to use accomplice's evidence. Section s165 (1)(d) Evidence Act 1995 is designed for this very eventuality.
(6) The Crown case against the Henderson's was based on a there being a joint criminal enterprise between them; where Caroll attended to the business aspect of the Smart Retail Terminals (SRT) work and Peter the technical aspect. There was evidence of such an enterprise and that it was in part criminal. As such the Crown could on s 87(1)(c) Evidence Act 1995.
(7) There was a strong circumstantial case, particularly in relation to the APOS 2000 contracts and the subsequent dealings between the alleged conspirators. In particular, the Crown could rely on the significant returns to the Henderson's via Finnigan Computers Limited for a relatively modest investment; the company structures put in place in the BVI, the role of SRT in the APOS projects; and, the meetings in Jersey and the UK in connection with work related to the APOS 2000 project.
(8) These arrangements were supported by documents found at the Henderson's home (exhibit 65) and those tendered through Kearns (Exhibit 52).
(9) The Crown relied on what Hanby, Kearns and Weissman said but they did not seek to excuse their faults. They were put forward as persons who acted to further the offences, especially the two principle conspiracies. These acts did include preparation of false documents. The documents found with the Henderson's (Ex 65), indicate both the Henderson's and Mr Wills were aware of this. Those relating to the entity known as ITIO indicate this clearly. The Crown case was the Henderson's needed false documents to cover the large sums they received from Weissman. Sums which came from both NCR and Woolworths. It was not reasonable to presume that both Peter and Caroll Henderson were aware Weissman needed to construct documents to hide these illicit transactions (which were to the benefit of the Henderson's) from his accountant in the UK and his Israeli partnership.
(10) The financial records (exhibits tendered through the expert forensic accountant Mr Fogarty - exhibits 46-50) showed not only substantial sums flowing to FCL but via FCL to CBH, beneficially owned by Wills.
(11) Documentary evidence of corrupt payments in the banking records, letters and faxes from Kearns to 'Peter and Caroll' were found at the Henderson's home or on their computer (Ex 65 and 66). They supplemented and corroborated evidence from Michael and Gail Kearns that the payments out of the FCL account were under the direction of Caroll Henderson. And were reported to both Caroll and Peter Henderson.
(12) Significant among the documents were:
(a) A letter [26/03/97] from Kearns - re the message from Wills about who to invoice re $31,000 for petrol and $48,000AD for Self Scanning. (Ex 65 pp 7 and 124)
(b) A letter [28/04/97] from Caroll Henderson to Kearns "Could you please invoice us for the sum of $31,000 for professional services." And suggesting how the sum should be invoiced. Caroll wanted the money transferred to CBH 'immediately'. (Ex 65 p 8)
(c) A fax 21/02/98 from Kearns "Caroll and Peter- Re NCR deal. I attach Benzi's correspondence from which you will see DW has agreed". (Ex 65 p 276)
(13) This material also supported an inference that Peter and Caroll Henderson were concerned in 'laundering' the proceeds of the corrupt benefits. For example: Victor Hanby gave evidence of his recruitment by Caroll Henderson and his concerns that 'routing' payments through FCL would raise questions about 'money laundering' and the concerns reflected in a diary maintained by Caroll, 'Vic in jeapody' [sic]. (Exhibit 65 p 67)
(14) The recorded telephone conversation between Caroll Henderson and Wills on 09/02/08 at 11:42 [pg14] was a lie told in consciousness of guilt as it contained information that both parties knew was untrue and was intended to mislead the investigators:
Wills "Yeah, look I don't know what ah, how they've drawn all these conclusions other than that um, you know, the, the commercial business we were going to set-up once I left Woolworths was the guts of it and that ah, then in somehow the monies that ah, we had been using to fund that and the product and living expenses et cetera were taken down to be as a result, indirect result of commissions from Woolworths. Which, as you know, is bullshit." (Exhibit 72)
(15) That this false position was repeated by Peter Henderson on 12/03/08 - 21:38 pg 35-38, to the effect that Wills was planning to leave Woolworths and then act as a marketing director for Weissman in selling APOS2000 and that Wills "was definitely was going to bloody um, make a big chunk of money in, in any sales going on of APOS2000 once it got bedded down in Woolworths and it, and it was flog-able." (Exhibit 72)
(16) The telephone intercepts were not entirely exculpatory, for example:
In a telephone conversation 13/03/08 (8:24 pg 20-12) Peter Henderson says: "Ah, it was received from Finnigan. That went through my account, straight from Benzi, which said ... your mother has got the bank account, IRS, straight from Benzi into our account. Some of it stayed with us, which was our legitimate money." (Exhibit 72)
(17) The material and the listening device recording and transcripts clearly indicated that despite the Henderson's being conscious of the risk the conversations were likely to be recorded they nevertheless lapsed and for example discussed the March meeting in Jersey where they became 'suspicious' that " Wills was getting money at that point in time" but they still continued with the association in the project where Az-Ben was providing money to an agent of Woolworths Ltd, out of the proceeds of payments by Woolworths Ltd.
(18) As to the self scanning aspect of the conspiracy: an expenditure authority for $AUD2.1m was issued to fund a self scanning pilot for 16 stores in Hobart; Ian Glew (Woolworths National Manager - store level systems maintenance) was told that Peter Henderson of SRT had been selected as the provider of the equipment and that Peter was aware of this fact even before Glew had processed the requirement; a substantial amount of money was spent on this project when the viability of the service was yet unconfirmed; in dealing with SRT Wills did not tender or keep full records of contractual arrangements; and, a document located during the search of the Henderson's premises that opened the inference that Wills was paid $31,000 in respect of this deal (exhibit 65).
(19) As even if a smaller number of counts had been preferred, the same evidence would have been called, a proportionate order is not appropriate.
The relevant facts
The facts relevant to my assessment of the hypothetical reasonableness of the decision to institute proceedings fall into two categories:
(1) Evidence that the prosecution had in its possession when proceedings were instituted.
(2) Evidence that subsequently became available.
No s 31(1)(b) issues were raised and I note there is no evidence of any acts or omissions of a defendant that contributed (or might have contributed) to the institution of proceedings.
The trial took many weeks and covered nearly 4000 pages of transcript with many thousand pages of evidence contained in over 90 exhibits.
In brief, it appears to me that so far as the Henderson's were concerned the Crown had available to it both before and during trial, material to indicate:
(a) Wills generally bent the rules and Woolworth's procedures to his and Woolworth's advantage.
(b) Wills bent the rules in his dealing with SRT on behalf of Woolworths again to the advantage of Woolworths and SRT.
(c) Caroll and Peter Henderson acted together as partners in all their business dealings, including SRT and the companies that they were beneficial owners of Marco Polo (MP) and FCL.
(d) Wills bent the rules and Woolworths procedures when dealing with Weissman over the APOS and Y2K projects.
(e) The Hendersons' were Weissman's agents in Australia and had an arrangement, undocumented, that they would be paid unspecified commissions.
(f) Peter Henderson was given advance information by Wills, which he passed on to Weissman.
(g) Woolworths paid Weissman companies many millions of dollars without proper accounting by Weissman to Woolworths.
(h) The Henderson's received significant payments from Woolworths for their work on Self Scanners and other projects much of which was ordered in advance and never used.
(i) The Henderson's received significant payments from Weissman companies as a share of money's paid by Woolworths out of all proportion to work done.
(j) Some of this money was sent on to Wills, some kept by Henderson entities.
(k) Weissman used forged documents to facilitate the transfers to FCL.
(l) Hanby used manufactured invoices to cover the source of the money paid to Finnegan.
(m) Kearns had authority to transfer monies on behalf of the Henderson's and Wills. Each was aware of this.
(n) Kearns could not show every transfer was done with authority, but some were evidenced by documents held by him or found at the home or computer of the Henderson's.
(o) Wills, Weissman, Kearns and the Henderson's had met in Jersey and London to discuss business dealings.
(p) The source of the funds for those dealings was ultimately Woolworths or National Cash Registers (NCR) who received money for APOS related hardware from Woolworths.
(q) The NCR transactions were not part of the charged conspiracies or other counts however the timing of Weissman's dealings with NCR, the attempts to hide the beneficial owners of APOS 2000 and subsequent payments to Wills and FCL and the timing of those payments were relevant. In mid 1998 Weissman agreed with NCR that they would have the rights to market APOS 2000 overseas. FCL and Wills via CBH subsequently received a substantial sum from that NCR payout. Yet the proposed business arrangements between the Hendersons and Wills were to market APOS 2000 overseas after mid 1998!
(r) Considerable efforts were made to hide the source of the funds and the various business dealings.
(s) The Hendersons employed Wills' girlfriend at considerable expense to them.
In addition however there was available material that would indicate a prosecution may not have been reasonable:
A. APOS was not a bad product and Woolworths terminated the project prematurely.
B. Wills may have broken the rules but as he got results. He was tolerated as a senior manager. He was expected to take risks.
C. Woolworths may have been seeking a scapegoat for their considerable losses.
D. SRT provide a valued service to Woolworths and there were no significant complaints about their professionalism.
E. The documents used to justify transfers to Finnigan Computers, which founded counts 22, 24, 25, 27, 28, 30, 31 and 33, were forgeries that could only have been and were admitted to have been forged by Weissman. Documents were available to show the Henderson's were in transit to Australia at the time they were created. They were generated from the Ramada Hotel at Parramatta where Weissman was staying and they used an obviously forged and false business name and address.
F. Weissman was a liar, and a forger who would say anything.
G. The Hanby/BCT documents were obviously bogus.
H. Kearns could be relied on to protect himself and was otherwise was an unreliable witness
I. When his forgeries attempting to use FCL failed Weissman used a "switch" or front company to send money direct to CBH and Wills.
J. The defence would be anticipated to mount a sustained attack on the credibility of Weissman, Hanby and Kearns on the basis they were self-interested co-conspirators.
K. That the Henderson's were recorded clandestinely protesting they were innocent dupes and what they said may just have been true.
L. No charges were to be laid in relation to any fraud on NCR.
M. There were legitimate plans to market APOS 200 and other products overseas. Wills was part of those plans.
N. The initial Az-Ben / Woolworths agreement regarding the development of APOS may have been legitimate but only subsequently corrupted by payments from Weissman to Wills without knowledge or active participation by the Hendersons. This scenario accords with the verdicts at trial.
Consideration
When the matter first came before me on 15 May 2011 an indictment with 41 counts was presented. The transcript page 1 records:
"HIS HONOUR: 41 counts?
CROWN PROSECUTOR: 41 counts, your Honour, and my friends--
HIS HONOUR: Why is that? I know nothing about this trial.
CROWN PROSECUTOR: Yes, your Honour.
HIS HONOUR: It automatically puts the Crown at a disadvantage"
The Crown chose to charge as a count almost every transaction said to found the two principle conspiracies. They, as I anticipated, set themselves up to fail on at least some of the counts charged. Counts 22, 24, 25, 27, 28, 30, 31 and 33 were based on invoices which they should have known were forgeries and could not have originated directly from the Henderson's who were not in Australia at the time they were generated. To rely on Weissman to support these charges knowing who he was, what he had done, and what he said at committal put the prosecution at risk.
However, transfers from FCL to CBH, which founded counts 9, 12, 13, 15, 18 and 19, were supported by documents held both by Kearns (Ex 52) and the Henderson's (Ex 65).
In addition, while Hanby's documents were clearly bogus and he was a liar, the Henderson's were working with him and he with them. His company, BCT, did transfer $481,000 to FCL of the $520,000, which came from Az-Ben and of which BCT/Hanby retained the not insubstantial sum of $39,000. A solid reason for the Henderson's and he to fallout.
Similarly, while Weissman may have forged FCL invoices, his companies relying on invoices such as those from BCT, transferred $1,912,000 to FCL of which only $937,911 went to CBH and Wills. Money from FCL went to benefit the Henderson's or companies associated with them such as International Scanners and to pay their debt to I.D. Ware Italy (Ex 46).
The Crown could reasonably rely on FCL receipt of this money to ask the jury to infer that the lies and forgeries were not directed at the Henderson's and that they well knew FCL was being used as a conduit.
The documents in Ex 65 went to supporting the Crown contentions, that the Henderson's were not simply compliant in a joint venture to market APOS 2000 internationally but were well aware of the source of the funds, the reason why such funds in such large amounts were paid and the need to hide the transactions from discovery by Woolworths.
While it can be presumed the Crown knew of the difficulties calling co-offenders or co-conspirators would cause their case, and the difficulties with corroborating their assertions, it was not unreasonable to do so. Nor was it unreasonable to allow, for the possibility some of what they said would be accepted and some rejected by the jury.
Exhibit 65 in particular, and the transactions noted in Ex 46 relating to FCL and Marco Polo, did corroborate much of what Kearns said Mr and Mrs Henderson were aware of. And, the evidence did allow the Crown to rely on the co-conspirator's rule and section 87 Evidence Act 1995 in its case against Mr and Mrs Henderson.
The prosecution however could never have proved count 38, which was discontinued. While an inference could be drawn that Mr Henderson was the source of the name, "Robert Daly", there was simply not evidence he made the statement relied on to found the charge. This count however occupied very little court time.
Count 11 however, which was also discontinued, depended on the availability of a witness whose absence through illness and inability to participate in close circuit TV evidence the Crown could not reasonably predict.
As to the remaining counts, the defence skilfully ran their defence on the basis that the juries rejection of Weissman, Kearns and Hanby as witnesses of truth meant they had to reject the Crown case as a whole. That the jury would accept that reasoning and find the accused not guilty could not be reasonably predicted because the Crown case did not depend on these witnesses alone. The Crown case was supported by independent financial records, documents in the possession for the Hendersons and some incriminating passages captured on the Listening Devices and Telephone Intercepts.
The Crown overreached unnecessarily so far as the allegations concerning SRT's direct dealing with Woolworth's MIS department are concerned. The defence were properly able to exploit this to their advantage. It is clear that the informal nature of Wills' dealings with suppliers generated suspicion when things went wrong but that his actions were also tolerated by Woolworths when things went well. With the exception of count 21 there was little evidence to support anything other than suspicion these direct dealings between SRT and Woolworths were irregular and a wealth of evidence from Woolworths' and SRT staff that they were not.
In brief, the following additional matters seem decisive so far as the principle counts are concerned:
(1) There were documents supporting the existence of a conspiracy to defraud Woolworths, including Kearns reporting to the Hendersons about transfers from Wills used to set up the BVI companies.
(2) So far as Count 21 (Mrs Henderson only) is concerned the offence was well supported by documents indicating the money had its genesis in funds sent by Woolworths to SRT and then back to Wills. The jury not being able to agree so far as Mrs Henderson is concerned can only be regarded as merciful.
(3) The Henderson's received over $900,000 of the money forwarded to Finnigan via BCT or International Retail Systems Ltd (IRS).
(4) The Henderson's received over $500,000 of the money forwarded to Finnigan via Advance Retail Technology Ltd (ART) after it had been paid by NCR.
(5) This money from both sources was out of all proportion to the work done by SRT and the Hendersons on the APOS and other projects.
(6) Documents held by the Hendersons supported the Crown contentions.
(7) Evidence of Kearns and Hanby was supported by these documents.
(8) The documents also indicated far more conclusively than anything said by Weissman that there was a clandestine arrangement for those involved in the APOS contract to share in the proceeds and that those proceeds were inflated by Wills.
(9) While in part exculpatory, the Listening Devices and Telephone Intercepts also carried incriminating comments and a jury could well have accepted the Crown proposition that many conversations were staged.
(10) The Henderson's sought to benefit from the international marketing of APOS and their dealings with Wills. The funding for these arrangements came from Weissman companies after payments from Woolworths had been received by them. Given the initial Az-Ben / Woolworths APOS 2000 proposals required initial funding from the Henderson's of £50,000, the substantial sums used for the proposed international joint venture could only have come from payments made by Woolworths to Weissman.
(11) The prosecution was well supported by the police investigation and the work of Mr Fogarty. Respected and articulate witnesses who were not criminally involved were available to support the Crown case. Documents and financial records provided a sound basis for a case to found all the necessary elements of both conspiracies.
It is trite to say the Crown do not have to prove every asserted fact. Here they clearly overreached. Their principle case was presented in an incoherent manner. The Crown, fortuitously for the defence, opened too broadly and then focussed to narrowly on the award of the APOS 2000 contracts as a foundation for the conspiracy in Count 1 and the subsequent payments to Wills. (See my Judgment of Wednesday 8 August 2012 on Variation of Particulars).
Another disadvantage of the Crown case at trial was the narrowness of the particulars provided for Count 1. The conspiracy particularised was that Mr Wills used his position at Woolworths to influence both the award of contracts to Az-Ben and SRT, and to decide the quantity of equipment required from SRT, and was to, and did, receive a substantial reward over 3.5 million for doing so.
The jury, I suspect, gave each of the accused the benefit of the doubt so far as the Az-Ben contract was concerned because they could not accept to the required high standard that the initial decision to award the APOS contract was corrupt, and so far as the SRT matters were concerned, that there was anything untoward with the work done by SRT for Woolworths.
During the trial the Crown sought to rely on another conspiracy or variation of the Count 1 conspiracy which had not been particularised, but after discussion and being referred by me to Gerakiteys v The Queen (1984) 153 CLR 317, R v Saffron (1988) 17 NSWLR 395, R v Mok (1987) 27 A Crim R 437 and Clause 21 of the 3rd Schedule to the Criminal Procedure Act 1986, that application was withdrawn.
Had the Crown used the information they had to particularise Count 1 in slightly broader terms to include the continuation of the existing contracts with Weissman's companies, of whom Peter Henderson was an agent and Mrs Henderson intimately involved in managing her husbands and their joint business dealings, the outcome based on all the evidence called at trial may well have been different.
This raises a question: should costs be allowed where the prosecution mistakenly failed to run a case which was supported by sound evidence? If the principle count, as particularised by the prosecution, was not reasonable to run, but it would have been reasonable to allege a slightly broader conspiracy, should the defendant get a double benefit of both acquittal and costs because a Crown case, which was available on the facts, was not run? I think not. Costs should not be awarded if the Crown chose, whether reasonably or not, not to prosecute to the full extend available to them on the known facts.
Much court time was spent, and some wasted, on examining the direct relationship between the Henderson's company SRT and Woolworths. A suspicion was raised that these dealings were also subject to "kickbacks' however with the exception of counts 21 and 22 no direct evidence to support these assertions was called. The circumstantial case relying on SRT's services to Woolworths this was not strong. In fact the bulk of the evidence available to the Crown before trial or led at trial established that SRT provided services to Woolworths for which they were properly compensated.
It was, in my view necessary, for the Crown to raise the Henderson's and SRT's business relationship with Woolworths' MIS and Mr Wills. It was not necessary to allege every contractual relationship was suspect, particularly the MacLiquor and Sidewalk Sales matters. It was however reasonable to raise matters relating to counts 21 and 22 and matters concerning the supply by SRT of the RF guns, as they were contemporaneous with the APOS 2000 transactions and noted in bank transfers and other documents.
If, as I have found, the Crown should not reasonably have prosecuted relying on the SRT / Woolworths contracts alone and so called over ordering, are the two defendants/ applicants entitled to costs for the additional time and effort involved in defending the portion of the allegations which were over particularised?
The test in s 3 relates to the institution of proceedings not to the evidence called to support the charges. As the institution of the proceedings themselves was reasonable, additional wasted costs arising from calling unnecessary additional evidence could not of themselves be subject to an order pursuant to the Act.
Some jurors obviously felt Mrs Henderson deserved the benefit of the doubt on counts 2 and 21 despite the evidence to the contrary. Perhaps they felt that her eagerness to be involved in what was a potential money maker was exploited by others but this display of mercy does not excuse my assessment of the reasonableness of prosecuting her for her actions in dealing with her husband, Wills, Kearns and Hanby regarding transfers of money as evidenced not just by the witnesses testimony but by documents in her possession.
Conclusion
The defence skilfully exploited the fact that Weissman and Kearns used false 'Finnegan' invoices to facilitate the transfer from Az-Ben and or IRS to Finnigan Computers Limited (FCL) of which $937,911.77 was subsequently send on by Kearns to CBH between February 1997 to October 1997. FCL however received $1.921 million from Az-Ben and or IRS, during the period January 1997 - May 1997 via Az-Ben and BCT and direct from IRS between June and September 1997.
The jury did a sterling job. They only convicted on counts where the evidence was overwhelming.
When I consider what should the hypothetical prosecutor reasonably have done I conclude that:
(1) The Crown case did not depend on the evidence of Weissman, Hanby or Kearns.
(2) This was not one of the exceptional cases where it could be concluded it was unreasonable to base a prosecution on witnesses that had been shown to be very substantially lacking in credit.
(3) There was a public interest in prosecuting Peter and Caroll Henderson despite the delay.
(4) There were weaknesses in some counts, which the Crown acting reasonably ought to have been aware, and a small number of counts should not have been brought at all, as an examination of the evidence for those counts reveals the Crown could not have excluded a reasonable possibility of innocence
(5) There was not a substantial failure to investigate.
(6) There were significant problems with how the Crown chose to present its case.
(7) These were skilfully exploited by the defence
(8) Nevertheless, the prosecution for the principle conspiracy counts and a large number of other counts on which those conspiracies were based was in all the circumstances reasonable.
While in my view the key allegations could have been tried by an Indictment with considerably less counts, the principle counts, which occupied the vast bulk of the court time, were reasonably brought. While I have concluded some evidence was not reasonable to lead, the issues to which this evidence went would have still been explored at trial.
Only count 38 was clearly unreasonably brought and while I accept that orders must relate to " any proceedings relating to any offence" (see s 2) and that I could make an order in respect of this individual count; it of itself occupied so little court time that an order would be in inconsequential. I also accept, although it seems there is no provision for it in the legislation, that a court can make a proportionate order (see Treasurer NSW v Ianella & Anor [1999] NSWCA 15 at [30]). Given all the circumstances outlined above however I do not believe it appropriate that I make orders that relate to only a very minor aspect of the Crown case. An order which could not in any event be quantified.
For these reasons the applications of Peter Henderson and Caroll Henderson are refused.
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Decision last updated: 18 January 2013
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