R v Heinze
[2005] VSCA 124
•19 May 2005
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 242 of 2004
| THE QUEEN |
| v. |
| FREDERICK RICHARD HEINZE |
No. 289 of 2004
| DIRECTOR OF PUBLIC PROSECUTIONS |
| v. |
| FREDERICK RICHARD HEINZE |
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JUDGES: | CALLAWAY, EAMES and NETTLE, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 26 April 2005 | |
DATE OF JUDGMENT: | 19 May 2005 | |
MEDIUM NEUTRAL CITATION: | [2005] VSCA 124 | First Revision: 19 May 2005 |
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Criminal law – Application for leave to appeal against conviction and Crown appeal against sentence – False accounting, obtaining a financial advantage by deception, making a false document, using a false document and perjury – Whether presentment should have been severed – Whether separate consideration directions adequate – Whether document properly admitted to rebut suggestion of recent invention – Whether document otherwise admissible – Omission to give directions regarding use of document – Whether exception taken – Whether appellate intervention warranted – Whether Jones v. Dunkel direction should have been given adverse to Crown – Judge's direction regarding elements of false accounting – Whether defence counsel wrongly prevented from cross-examining bank officer about bank's alleged bias - Total effective sentence of two years' imprisonment, with three months to serve immediately and 21 months suspended for two years – No effective cumulation – Whether sentence manifestly inadequate despite mitigating factors – Respondent resentenced to four years’ imprisonment with non-parole period of two years – Evidence Act 1958, ss. 58A, 58B.
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| APPEARANCES: | Counsel | Solicitors |
| For the Crown | Mr. P.A. Coghlan, Q.C., D.P.P. with Mrs. C.M. Quin | Mr. S. Carisbrooke, Acting Solicitor for Public Prosecutions |
| For the Applicant/ Respondent | Mr. P.F. Tehan, Q.C. with Mr. R.A.R. Lewis | Cahills |
CALLAWAY, J.A.:
Frederick Richard Heinze applies for leave to appeal against conviction and the Director of Public Prosecutions appeals against the sentence that was imposed. Mr Heinze is the applicant in the first case and the respondent in the second, but I shall follow the convenient course adopted by Nettle, J.A. in his reasons, which I have read in draft, and call him "the applicant" in both parts of this judgment.
As Nettle, J.A. records, the applicant was found guilty, following a trial, on two counts of false accounting (counts 1 and 2), one count of obtaining a financial advantage by deception (count 3), one count of making a false document (count 4), one count of using a false document (count 5) and one count of perjury (count 6). Following a plea for leniency, he was sentenced on 21st September 2004. I shall set out the sentence in full, as it appears in the return of prisoners:
"Count 1. He be imprisoned for a period of 12 months.
Count 2. He be imprisoned for a period of 12 months.
Count 3. He be imprisoned for a period of 15 months.
These sentences be served concurrently on each other an effective sentence on these 3 counts of 15 months.
Count 4. He be imprisoned for a period of 15 months.
Count 5. He be imprisoned for a period of 15 months.
These 2 sentences be served concurrently on each other an effective sentence on these 2 counts of 15 months. Direct that 3 months of this sentence of 15 months be served cumulatively on the 15 months on counts 1, 2, 3.
Count 6. He be imprisoned for a period of 2 years.
Direct that 6 months of this sentence be served cumulatively on the sentence so far passed. An effective sentence of 2 years imprisonment.
Direct that 1 year 9 months of that 2 year sentence be suspended. Further specify the period of 2 years from today's date as the period during which he must not commit another offence punishable by imprisonment if he is to avoid being dealt with under s.31 of the Sentencing Act 1991."
The circumstances of the offences appear from the reasons of Nettle, J.A. except that, on my understanding, the obtaining of a financial advantage by deception (count 3) occurred in September 2000 when the facility was drawn down.
Conviction
I agree with Nettle, J.A., for the reasons his Honour gives, that grounds 1, 2, 3 and 5 should not be upheld. That leaves grounds 4, 6, 7 and 8.
Mr Tehan argued grounds 4 and 6 together. I agree with Nettle, J.A., again for the reasons his Honour gives, that ground 4 fails. It is critical to that conclusion that the words "knowing that the bank has done the wrong thing by Mr Heinze, and may be held to account for it" in the question set out at [56] below referred to the sale of the mortgaged property at an alleged undervalue. Counsel agreed that that was how those words were to be understood. As the evidence was properly admitted, there is no occasion to consider the observation of Hunt, C.J. at C.L. in R v. Pantoja[1] to which reference was made in the course of the argument.
[1](1996) 88 A.Crim.R. 554 at 563-564.
The letter having been admitted to rebut a suggestion of recent invention, there would normally have been a direction to the jury as to the limited way in which it could be used, but no such direction was given and, in my opinion, no exception was taken.
When the jury retired to consider their verdict the judge asked whether there were any exceptions. The prosecutor replied "No" and defence counsel replied, "Not this morning." He went on to repeat his submission that there should have been severance of the presentment. His Honour said, correctly, that he had ruled on that question. The following exchange then took place:
"[DEFENCE COUNSEL]: Your Honour, I just wondered – and I don't know whether I mentioned this on Friday – whether it would be worthwhile giving a direction in respect of the exhibits.
HIS HONOUR: What sort of a direction?
[DEFENCE COUNSEL]: To go through the exhibits and tell them how they can use each one.
HIS HONOUR: I don't think that's necessary.
[DEFENCE COUNSEL]: If your Honour please."[2]
[2]The judge then asked the prosecutor for his opinion. The prosecutor said that it was unnecessary to go through the exhibits and the judge agreed, although he said that, if the matter had been raised before the charge began, he might have paid more attention to it, but he certainly did not propose to do so now.
As Eames, J.A. observed at the hearing of the application, that fell well short of an exception to the effect that the judge should have directed the jury as to the limited use to which the letter could be put. In my opinion, it would be inimical to the criminal appellate process if an exception of that kind could be spelled out from such general words. The judge had no opportunity to rule on the putative exception and the prosecutor had no opportunity to make submissions. The jury were allowed to continue considering their verdict without redirection.
Defence counsel was very experienced and there was more than one reason why he might not have wished to agitate the matter that is now the subject of ground 6. In the first place, he may not have wanted the jury to be reminded again of the letter in any detail. Secondly, the letter was arguably admissible on at least two other bases. One was as "an entry in a book of account" within the meaning of s.58B of the Evidence Act 1958 as construed by the Court of Criminal Appeal in R v. Smart.[3] Another was as an admission by conduct, the letter having been sent to the applicant's solicitor in circumstances in which it might well have been expected that the allegation would be denied if it were not true.[4] If the letter had been admitted on either basis, further directions to the jury would have been necessary, but the foregoing considerations are enough to show that counsel could have had sound reasons for not taking exception.[5] Ground 6 fails too.
[3][1983] 1 V.R. 265 at 290-293.
[4]Compare R v. Salahattin [1983] 1 V.R. 521 and R. v. Debs and Roberts [2005] VSCA 66 at [311] – [312].
[5]Compare TKWJ v. R. (2002) 212 C.L.R. 124 at 158 [107] per Hayne, J. and, more recently, Ali v. R. (2005) 79 A.L.J.R. 662 at 666 [25] per Hayne, J., in whose reasons McHugh, J. concurred at 665 [15].
Little was said about ground 7 in the course of the argument. That was for the very good reason that there was no issue at the trial as to whether the balance sheet of Fishing Information Services Pty. Ltd. or its profit and loss statement was a document made or required for an accounting purpose.[6] That ground should be rejected for the reasons given in R. v. Pope.[7]
[6]I am following the language of counts 1 and 2 on the presentment. I do not overlook that his Honour's charge referred to "a record [rather than a book] required for an accounting purpose."
[7](2000) 112 A.Crim.R. 588 at 591 [11] – [13]; see also 595 [21] - [22].
Ground 8 relates to a question, or possibly two questions, that defence counsel was not allowed to put to an officer of CBA in the course of cross-examination. They were whether the bank had taken proceedings against the applicant’s son and, perhaps also, whether it had called up a guarantee. I would not approach that ground in terms of the bias exception to the collateral evidence rule.[8] The real issue, in my opinion, is whether the questions were permissible by way of cross-examination going to the witness’s credit. They probably were but, if so, I would apply the proviso. To use the language of Fullagar, J. in Mraz v. R.[9], the applicant did not thereby lose a chance of acquittal that was fairly open. That is the same test as in R. v. Weiss.[10]
[8]Attorney-General v. Hitchcock (1847) 1 Exch. 91 [154 E.R. 38]; Nicholls v. R. (2005) 79 A.L.J.R. 468.
[9](1955) 93 C.L.R. 493 at 514 line 16.
[10](2004) 8 V.R. 388 at 400 [70].
The application for leave to appeal against conviction should be dismissed.
Sentence
The Director pointed out that the effect of the judge's directions, set out at [2]
above, was that the total effective sentence equalled the sentence for perjury (count 6) and there was therefore no real cumulation.
It is preferable to cumulate upon the longest sentence.[11] On some occasions, when that is not done, the sentence still works and the adoption of a less than preferred course does not reopen the discretion. On other occasions, failure to cumulate upon the longest sentence means that the sentence does not work or the failure otherwise impugns the discretion. Nothing more need be said about that issue in this case, because the Director properly conceded that appellate intervention would not be appropriate unless the sentence were manifestly inadequate. If a sentence is within the range, the public interest rarely requires the Court of Appeal to increase it. Ex hypothesi, the sentence is one that could properly be imposed and in those circumstances, at least as a general rule, the respondent to a Crown appeal should not be penalised for the judge's error.
[11]R. v. MDB [2003] VSCA 181 at [14] and R. v. Nikodjevic [2004] VSCA 222 at [38]. In R. v. Nikodjevic there was no base sentence at all.
There is nothing further I need say about the sentence. The reasons of Nettle, J.A. at [86] – [88] show that the individual sentences and the degree of cumulation were manifestly inadequate. Sentencing and sentencing method are topics on which reasonable minds may differ. I would not, with respect, resentence the applicant precisely as his Honour proposes, but I agree in the total effective sentence and the non-parole period. In those circumstances, as Eames, J.A. concurs in the proposed orders, I am content that they should be the orders of the Court on the Crown appeal.
EAMES, J.A.:
I have had the advantage of reading in draft the reasons of Nettle, J.A. and adopt his Honour’s statement of the facts and background to the application for leave to appeal against conviction and the Director’s appeal against sentence. Save for what I say concerning ground 6, I agree with his Honour’s reasons and with his
conclusion that the application for leave to appeal against conviction ought be dismissed.
Ground 6 complained of the absence of a direction as to the use to be made of Exhibit “U”, the letter from the bank relied on to rebut recent invention. Mr Tehan submitted that trial counsel had taken exception to the failure of the judge to give an appropriate direction in this regard, but I do not agree. In my opinion defence counsel did not want or seek such a direction, but sought, merely, to place on transcript sufficient material to be called in aid as evidence of exception in the event that a ground of appeal such as this was later raised. I do not suggest that the approach of counsel was in any way improper. If I am right then counsel, who was junior counsel on appeal and is very experienced in criminal trials and appeals, was merely trying to cover all contingencies for his client, and was doing so skilfully. Skilful though it was the approach adopted was a tactical one and complaint that the absence of a direction constituted a miscarriage of justice ought be viewed accordingly.
When the charge concluded and the judge asked for any exceptions the following exchange occurred between the judge and defence counsel and then the prosecutor:
“Mr Lewis: Your, Honour I just wondered – and I don’t know whether I mentioned this on Friday – whether it would be worthwhile giving a direction in respect of the exhibits.
His Honour: What sort of a direction?
Mr Lewis: To go through the exhibits and tell them how they can use each one.
His Honour: I don’t think that’s necessary.
Mr Lewis: If Your Honour please.
His Honour: Do you?
Mr Pirrie: No. no. Your Honour, not at all.
His Honour: I mean if you told me that before the charge began, I may have paid more attention to it, but I certainly don’t propose doing it now. I don’t think it’s necessary, I might add.
Mr Pirrie: I agree.”
I do not consider that that exchange constituted defence counsel taking exception, at all. If it was meant to be then it was couched in the most ambivalent and unenthusiastic of terms. Certainly, Exhibit “U” was not singled out at all.
It is not surprising that the judge did not respond positively to the query or suggestion (i.e., if he thought it would be “worthwhile” to do so) that he “go through the exhibits” and give a direction as to each of them. His Honour’s reluctance is understandable. The prosecution exhibits ran through the alphabet once, from Exhibit A to Exhibit Z, and then from Exhibit AA to AG. Some individual exhibits had multiple documents within them (e.g. “Agreed folder of documents”, Exhibit A). The defence exhibits ran from 1 to 7, and in some cases involved multiple pages. The categories of exhibits ranged widely: taxation returns, bank risk assessment documents, costing documents, loan documents, plans of sub-division, e mails, security documents, brochures, statutory declarations, correspondence, planning documents, the lengthy record of interview, and so forth.
Having already sent the jury out, a great deal of time would have been taken in considering each document in turn, hearing counsel as to what use the jury might make of it and then fashioning an appropriate direction.
In those circumstances, if counsel did intend to seek a direction from the judge concerning the use to be made of Exhibit “U” he ought to have said so expressly, and to have spelled out to the judge why it was required, and in what terms. Had he done so, the judge might readily have agreed to give the direction that it is now said to have been mandatory with respect to a document introduced to rebut recent invention. On the other hand, had the matter been raised it might well have led to discussion as to whether this document was admissible for other purposes, too. Nettle, J.A. has concluded that it constituted prima facie proof of its contents under s.58B of the Evidence Act 1958. I will assume, without deciding, that that is so. (I put to one side the question whether the letter to the applicant’s solicitor, when coupled with evidence that there had been no answer to it, might also have constituted evidence of an admission by the applicant.)
Whilst the applicant might have benefited from a direction that the document could only be used as to credit, for the purpose of considering whether recent invention had been rebutted, highlighting it to the jury for that purpose would have carried serious risks for the defence. It was not a document on which defence counsel would have wanted the jury to closely dwell, even for the limited purposes to which they would be confined by the direction. The fact that counsel suggested to the judge that all of the exhibits might perhaps have been the subject of a direction as to their use, indicates to me that counsel was very well aware of the danger of highlighting this document, and why it was that having taken the “exception”, such as it was, he did not press it at all. In the course of argument I put it to senior counsel that his junior was too experienced not to have appreciated that his remark did not squarely invite a direction as to Exhibit U, and that it was open to conclude that it was merely a tactical preservation of an appeal ground. Mr Tehan responded that the remarks did constitute the taking of an exception, especially when coupled with the earlier debate about the admissibility of Exhibit U. That response did not constitute a denial that counsel had adopted the tactical approach which I have attributed to him. The decision not to press for a direction was a perfectly rational decision to have taken, it being more likely than not that any direction would have drawn unwanted attention to the document.
Appellate courts have been slow to conclude that the absence of an appropriate direction can be overcome by reason of the fact that counsel made a conscious decision not to seek the direction. In BRS v R[12] Gaudron, J. held that a direction as to the use to which similar fact evidence could not be put must be given whenever necessary to avoid a perceptible risk of injustice. In the same case McHugh, J held[13]:
“Trial judges have no authority to dispense with the directions that the law requires them to give in criminal trials. If the failure to give a direction may have resulted in the conviction of the accused person, the trial has not been conducted according to law and the conviction constitutes a miscarriage of justice. It is no answer that the directions which were given or not given gave the accused a better chance of acquittal than the direction that the law required. A person is entitled to be tried according to law. If the failure to give a required direction may have brought about the accused’s conviction, there is a miscarriage of justice”.
[12](1997) 191 C.L.R. 275, at 301.
[13]At 306.
McHugh, J. concluded that the absence of a direction was advantageous to the appellant in that case, but nonetheless held that had the direction been given it would have avoided the risk that the jury might use the evidence in an impermissible way. Because there was a real danger in that regard there had been a miscarriage of justice and it was impossible to conclude that the appellant must inevitably have been convicted even if the direction had been given[14].
[14]At 310.
In BRS defence counsel had not sought the direction about which complaint was made on appeal. Gaudron, J. held[15] that notwithstanding that fact the judge had a duty to give proper directions where there was “a serious risk of injustice” absent the direction. Her Honour concluded that, in that case, the risk of the jury improperly reasoning towards conviction far outweighed any advantage the defence might have gained by the omission of the direction. Toohey, J. held that the decision of counsel to allow the evidence to be admitted was a deliberate one, taken for good reason by experienced counsel. His Honour said: “If then this appeal turned only on the reception of that evidence, the conscious decision to allow the evidence in as part of the general running of the defence case would inevitably lead to the dismissal of the appeal”[16]. His Honour concluded, however, that failure to seek a direction as to the limited use to which the evidence could be put was not part of a defence strategy.
[15]At 302, citing Bromley v The Queen (1986) 161 C.L.R. 315, at 325; Carr v The Queen (1988) 165 C.L.R. 314, at 330; Longman v The Queen (1989) 168 C.L.R. 79, at 86; Duke v The Queen (1989) 180 C.L.R. 508, at 515; McKinney v The Queen (1991) 171 C.L.R. 468, at 480; Pollitt v The Queen (1992) 174 C.L.R. 558, at 586, and 605.
[16]At 294.
As Kirby, J. held[17] in BRS, the risk of a miscarriage of justice must be real, not fanciful, if the appellate court is to intervene. The direction must have been more than desirable; it must have been necessary to avoid the risk of a miscarriage of justice.
[17]At 330.
Notwithstanding the force of the many pronouncements of appellate courts as to the overriding duty of the trial judge to give all necessary directions the fact that a trial took a particular course because of a tactical decision of counsel has been accepted to be relevant in assessing whether injustice has in fact occurred[18]. Thus, where a tactical decision has been taken by trial counsel not to adduce relevant evidence the critical question is whether the failure to lead the evidence has resulted in a miscarriage of justice, and the fact that it was a rational and deliberate decision of counsel was a pointer against that conclusion[19]. A similar question arises where the complaint is that a direction ought to have been given, but was not because of a tactical decision taken by counsel not to ask for the direction.
[18]See R v. Arundell [1999] 2 V.R. 228, at [45]-[54]; R v Robinson [1998] 1 V.R. 402; R v Wakim [1998] 2 V.R. 46, at 53; R v Lawrence [1997] 1 V.R. 459 at 472. .
[19]TKWJ v The Queen (2002) 212 C.L.R. 124, at 134-5 [31]-[33], per Gaudron, J., at 157 [97], per McHugh, J., at 157 [103] per Hayne, J.
The situation in this case had features very similar to the situation in R v Georgiev[20], where the Court did take into account the fact that a tactical decision had been taken.
[20](2001) 119 A.Crim.R. 363.
In R v Georgiev[21] Brooking and Phillips, JJ.A. held that the failure to take exception and to seek a direction about evidence introduced to rebut recent invention was fatal to the appeal ground complaining of the lack of a direction. Among the factors relevant to that conclusion was their Honours conclusion that the evidence was admissible for another purpose and thus it would have been inappropriate for the judge to have directed the jury that its only use was as to credit, relating to recent invention. Their Honours, however, in rejecting the ground of appeal had regard to the fact that counsel had a tactical reason for not wishing to highlight the evidence and their Honour concluded that had any direction been given it could only have been to the disadvantage of the applicant. Ormiston J.A. dissented[22], concluding that whether or not there was a secondary basis on which the evidence could have been admitted, and irrespective of counsel’s tactical decision, the judge was not relieved from the obligation to give the direction concerning the use they might not make of the evidence, as proof of the truth of what was stated in it[23].
[21](2001) 119 A.Crim.R 363, at 378-9.
[22]At 383-5.
[23]The direction being in terms stated by Windeyer, J. in Nominal Defendant v Clements (1960) 104 C.L.R. 476, at 495.
As in Georgiev, the direction was not sought in this case because, in my opinion, counsel made a tactical decision not to do so. I will assume, for present purposes that the only direction which the judge would have given, if asked, would have been that the use to which the letter could have been put was limited to the credit of the witness challenged for recent invention. (In any event, even if the evidence may also have been admissible under s.58B it could only have been prima facie evidence of the truth of its contents). A direction as to the use to which the exhibit could not be put undoubtedly had some value for the defence, but, as in Georgiev, delivery of that direction would have involved the highlighting of the evidence, that being to the disadvantage of the applicant. Certainly, counsel would have been entitled to so conclude, and I believe that trial counsel must have made that assessment in this case.
I contrast this case with the situation in BRS.
In BRS the direction related to propensity evidence, evidence of a character highly capable, if misused, of producing a miscarriage of justice. I do not consider the evidence in this case to be equally dangerous and capable of misuse. At the highest, if misused and treated as evidence of the truth of its contents, the evidence
provided support for the contention that the applicant or his solicitor, on his behalf, had made admissions at the meeting. If so, it was merely additional evidence tending to support the oral evidence already given by Mr Barbagallo and Mr Orders that the applicant and his solicitor had made the admissions in the meeting to which the letter referred. In his evidence the applicant had simply denied that any admission had been made and claimed that on his solicitor’s advice he had said little at the meeting.
I am not persuaded that the applicant did suffer a miscarriage of justice by the judge’s failure to give a direction in this case. In my opinion, the situation here is quite close to that which applied in Georgiev (even if one assumes that the evidence might not have had another evidentiary basis for its admission). As Gaudron, J. observed in TKWJ v The Queen[24] (when addressing the test stated in Mraz v The Queen[25]), when assessing whether the act or omission in question in a trial “deprived the accused of a chance of acquittal fairly open”, the word “fairly” should not be overlooked. As her Honour held[26]:
“ A decision to take or refrain from talking a particular course which is explicable on [the] basis that it has or could have led to a forensic advantage may well have the consequence that a chance of acquittal that might otherwise have been open was not, in the circumstances, fairly open”.
[24](2002) 212 C.L.R. 124, at 133, [26]
[25](1955) 93 C.L.R. 493, at 514.
[26]At 133 [26], citing Doggett v The Queen (2001) 208 C.L.R. 343, at 357 [55]; Suresh v The Queen (1998) 72 ALJR 769, at 771 [6].
In my opinion that observation applies here. Ground 6 is not made out.
For the reasons given by Nettle, J.A. I agree that the Director’s appeal should be allowed and the respondent to that appeal ought be re-sentenced as his Honour has proposed.
NETTLE, J.A.:
On 3 August 2004 the applicant was presented for trial before the County
Court at Ballarat on two counts of false accounting contrary to s.83(1)(a) of the Crimes Act 1958 (counts 1 and 2); one count of obtaining financial advantage by deception contrary to s.82(1) of the Act (count 3); one count of making a false document contrary to s.83A(1) of the Act (count 4); one count of using a false document contrary to s.83A(2) of the Act (count 5); and one count of perjury contrary to s.314 of the Act (count 6), to all of which he pleaded not guilty. After a trial extending over 18 sitting days, on 31 August 2004 the jury found the applicant guilty on all counts and he was convicted. Following a plea in mitigation, on 21 September 2004, the County Court judge sentenced the applicant on counts 1 and 2 to 12 months’ imprisonment, on count 3 to 15 months’ imprisonment, on counts 4 and 5 to 15 months’ imprisonment each offence, and on count 6 to 2 years’ imprisonment, and ordered that 3 months of the sentences imposed on count 4 and 6 months of the sentence imposed on count 6 be served cumulatively on the sentence imposed on count 1 and on each other. That made for a total effective sentence of 2 years, of which his Honour ordered that 21 months be suspended for a period of 24 months. The applicant now applies for leave to appeal against conviction and the Director of Public Prosecutions has appealed against the sentence on the ground of manifest inadequacy.
The facts
The applicant was a civil engineer and the director of Manenge Services Pty Ltd and a number of companies in what was called the Fishing Information Group. He committed the offences between 15 August 2000 and 19 December 2000 in connection with an application to the Commonwealth Bank of Australia (“CBA”) for a credit facility of some $1.5 million. At the time of the offences he was under severe financial pressure to repay National Australia Bank (“NAB”) and Australia and New Zealand Banking Group Ltd (“ANZ”) funds previously borrowed to develop a proposed residential subdivision known as Ironbark Ridge Estate, at Eaglehawk. NAB was threatening to foreclose on his residential property and the principal purpose of the proposed CBA facility was to repay NAB and thus alleviate the pressure.
On 15 August 2000 the applicant obtained by email from his accountants the financial statements of Fishing Information Services Pty Ltd for the year of income ended 30 June 2000. He then falsified the balance sheet and profit and loss statement by the inclusion in the balance sheet of a fictitious cash management account of some $5.2 million and the addition to the profit and loss statement of fictitious additional profits for the year of income of some $5.5 million. Those were the acts alleged to constitute the substance of counts 1 and 2.
Having so falsified the balance sheet and profit and loss statement, the applicant that day transmitted them by email to CBA in support of his application for the $1.5 million credit facility. Those were the acts alleged to constitute the substance of count 3.
On 20 September 2000 CBA agreed to grant to the applicant a loan facility of $1.5 million on the faith of the falsified balance sheet and profit and loss statement. Thereafter the applicant drew down the facility and used it to pay out existing creditors.
On 28 November 2000 the applicant falsified a planning permit issued by the City of Greater Bendigo for the Ironbark Ridge Estate subdivision. As issued it gave approval only for stages 2 – 4 (stage 1 having already been completed), and there could be no approval for the remaining stages (5 - 8) unless and until a number of complex issues had been resolved. The applicant, however, altered the permit so as to read that approval had been granted for all stages of the subdivision, with the apparent potential effect of increasing the value of the estate for security purposes. He then transmitted the altered permit to the valuers appointed by CBA. Those were in substance the facts alleged to constitute counts 4 and 5.
On 15 December 2000 the City of Greater Bendigo detected that the planning permit had been so altered and made enquiries of the applicant. It sought a written explanation as to how it had come about that the valuers were supplied with a false permit and asked the applicant to provide a statutory declaration detailing the circumstances. In response to that request the applicant falsely declared in a statutory declaration that the creation of the false planning permit was an “office joke” and had been inadvertently sent to the valuers. Those were the facts alleged to constitute count 6.
On 14 May 2001 the applicant with his solicitor attended a meeting at CBA with an officer of CBA, Mr Barbagallo, and the receiver appointed by CBA, Mr Orders. At that meeting, the applicant and his solicitor made admissions as to the applicant’s wrongdoing. It was alleged at the trial that the applicant and his solicitor on his behalf had admitted the falsification of the balance sheet and profit and loss statement and that there was no $5.2 million cash management account. When the receiver took control of Fishing Information Services Pty Ltd he was unable to locate any assets. After the enforcement of securities, CBA was left with a loss of approximately $750,000.
On 30 May 2001 the applicant was interviewed by police and made a number of admissions. At the trial he admitted that he had made the admissions. But he claimed that they were false, the consequence of the stress to which he was subject at the time of the interview.
Ground 1
The applicant’s first ground of appeal is that the judge erred in refusing to sever counts 4, 5 and 6 from the presentment. It is contended that while there was a connection between those and the other counts (in the sense that they were all concerned with obtaining and maintaining the CBA credit facility) there were sufficient differences in terms of the Presentment Rules[27] to make the joinder inappropriate. Reliance is placed upon what are said to be the distinct time periods in which the two groups of offences were committed, the involvement of different parties, and the fact that counts 1, 2 and 3 were concerned with steps directed to obtaining the credit facility whereas counts 4, 5 and 6 were committed after the credit facility had been established. In the alternative, it is submitted that even if the joinder fell within the letter of the Presentment Rules, the judge erred in the exercise of his discretion in refusing to sever, because of the prejudice and embarrassment to the applicant in having both groups of offences heard together.
[27]Crimes Act 1958, Schedule 6.
I consider that the learned judge was right to refuse to sever the presentment. The applicant’s approach involves a degree of technicality and inflexibility that the rules were designed to overcome. As Winneke, P. said in R v Renzella[28]:
“It must be remembered that what is now to be found in r 2 of the 6th Schedule to the Crimes Act was introduced into our statute law, as similar rules have been introduced into the statute law of other States, to overcome the rigidity which once existed in criminal pleadings, largely as a consequence of the distinction drawn by the law between felonies and misdemeanours. The flexibility which was designed to be introduced by the joinder rules would be, in my view, to a large extent set at nought if the rules were to be hedged about with inflexible principles of the type contended for by the applicant in this case. That, of course, is not to say that the rules permitting joinder of counts are intended to work prejudice to an accused person. In a sense, any joinder of counts in a presentment has the capacity to produce prejudice; but it is now a matter for the trial judge, in the exercise of the discretion invested by s.372, to ensure that unnecessary embarrassment or prejudice does not arise at trial by ordering severance where the circumstances require it.”[29]
[28]VSCA 7 August 1997 at 10.
[29]ibid at 11.
It is true that the two groups of offences were not the same offences and it is true that in some senses they did not exhibit a great many common characteristics. But it is not always necessary that different offences exhibit close similarities before one may say that they are or form part of a series of offences in the relevant sense. Depending on the sort of case, and not infrequently in cases of commercial fraud, it is enough that offences or groups of offences have a common genesis or are otherwise linked and associated by commonality of parties or transactions.[30]
[30]R v McLean (2000) 2 VR 118 at 128.
Here the parties involved in and affected by the two groups of offences - the applicant and CBA - were in each case the same, and each group of offences formed part of a series of offences of the same or similar character linked by the common enterprise of obtaining and maintaining the credit facility. In my opinion that brought the combination of counts squarely within Rule 2 of the Presentment Rules.
The discretion to sever fell to be exercised according principally to whether the effect on the jury of hearing evidence relating to both groups of offences could be countered by appropriate directions.[31] In his ruling, the judge made clear that he approached the question on that basis, and that he considered that any prejudice could be countered by appropriate directions. In my opinion his Honour was correct. Such prejudice as might have resulted from the joinder of two sets of counts in the presentment was countered by the directions given by the judge that the jury were to consider each count separately and decide that count only on the basis of the evidence which related to that count, excluding any idea that because the applicant might be thought to have committed one count it could be assumed that he had also committed another or others.
[31]R. v. Sutton (1984) 152 CLR 528 at 541-542; R. v. De Jesus (1986) 22 A Crim R 375 at 378; R v Cogley [1999] 3 VR 366 at 374[25].
Unlike the position in R v Smart[32], where the accused was presented on 63 counts and where it would have proved next to impossible for the jury to discern the evidence relied upon by the Crown to prove each alleged offence, in this case neither the issues nor the evidence were complex. It was clear that the evidence relating to the first group of offences was the making and submission of the false balance sheet and profit and loss statement and that the evidence relating to the second group of offences was the making and submission of the falsified planning permit and the statutory declaration. Therefore, looking at the whole of the evidence and the charge in relation to the evidence, I consider that this court may be satisfied that the jury would have had regard only to the evidence properly admissible in respect of each count.[33]
[32][1983] VR 265 at 286.
[33]cf. R v Smart [1983] VR 265 at 289.
Grounds 2 and 3
The applicant contends that the judge failed to direct the jury adequately as to the need to deal with counts 1, 2 and 3 separately from counts 4, 5 and 6 and failed to separate and identify for the jury the evidence referable to counts 1, 2 and 3 and the evidence referable to counts 4, 5 and 6.
I do not think that is so. The judge told the jury that he considered it was unnecessary to “summarise and pull together all the evidence” for them. Standing alone, that suggests the sort of error which was committed in R. v. De Zilwa[34] and R. v.Yusuf[35]. But when the charge is read as a whole it will be seen that his Honour’s observation about not summarising and pulling the evidence together was directed to a distinct body of collateral evidence concerning the applicant’s relationship with CBA and whether the applicant was being prosecuted as part of a campaign by CBA to shift blame to him. The judge explained that such collateral evidence may be relevant as shedding light on the veracity and credibility of witnesses and the matrix of facts in which it was alleged the offences had been committed, and he told the jury correctly that they should take into account what counsel on each side had said about the significance of that evidence but that ultimately it was a matter for them how it bore upon the matter. Thereafter his Honour turned to the evidence which was directly relevant to the offences and related it to the offences.
[34](2002) 5 VR 408 at 416-7.
[35][2005] VSCA 69.
I see no error in any of that. The judge explained to the jury the way in which the case was put on both sides and the evidence that went to the issues.
Ground 4
The applicant contends that the judge erred in admitting into evidence a letter dated 21 May 2001 from Mr Barbagallo to the applicant’s solicitor (Exhibit “U”) concerning the meeting of 14 May 2001. It began with the following paragraphs:
“We refer to our meeting on 14 May 2001, your letter of 18 May 2001 and our telephone conversation of even date.
We note that at our meeting Mr Heinze admitted he fabricated the financial accounts for both Manenge Services Pty Ltd and Fishing Information Services Pty Ltd in order to procure a favourable decision from the Bank at the time that Manenge Services Pty Ltd made an application for refinance of NAB/ANZ debts and meet the cost of a property development in Eaglehawk”.
In examination in chief Mr Barbagallo gave evidence that he asked the applicant at the meeting of 14 May 2001 whether he had falsified the accounts of Fishing Information Services Pty Ltd by the inclusion of the $5.2 million cash management fund and that the applicant had answered: “Yes”. In cross-examination, defence counsel put to Mr Barbagallo that his recollection of the meeting was poor and that he had previously made a statement to police in which he said that the applicant admitted fabricating the financial accounts for both Manenge Services and Fishing Information Services. Mr Barbagallo agreed that he had made the statement, and when it was then put to him that the statement was not true, he said that it was true. Defence counsel thereafter put to Mr Barbagallo that the prosecution had never alleged falsity in the accounts of Manenge Services, seemingly as if to suggest that Mr Barbagallo could not have told police that the applicant made any admissions about Manenge Services, and when Mr Barbagallo attempted to respond, his answer was cut off. Defence counsel returned to the police statement and put to Mr Barbagallo that he had given three different versions of the applicant’s alleged admission. Mr Barbagallo replied that that was not correct. Defence counsel next put to Mr Barbagallo that he was seeking to defend himself against an allegation that CBA had sold the mortgaged land worth millions of dollars at a gross undervalue of only $607,000. Mr Barbagallo replied that he was not defending anything, and he was then cross-examined at length about whether the mortgaged property had been valued before it was sold and as to whether the estate agents engaged to sell the land had a conflict of interest, and as to whether the land could have been realised at far greater value if further funds were spent in completing the subdivision before sale. That culminated close to the end of the cross-examination in defence counsel putting to Mr Barbagallo the following question and receiving the following answer:
“You see, I suggest that your evidence specifically about Mr Heinze supposedly admitting that financial statements, and specifically the $5.2 million as being fabricated, are all part of a defensive strategy by yourself, knowing that the bank has done the wrong thing by Mr Heinze, and may be held to account for it. What do you say about that? --- I refute it.”
In re-examination the prosecutor sought to tender the letter of 21 May 2001 and when objection was taken he submitted that it was admissible as rebutting defence counsel’s suggestion of recent invention, namely, that Mr Barbagallo had invented the admission of 14 May 2001 in order to protect CBA from the allegation that it had sold the land at an undervalue. Defence counsel objected that he was not saying that the admission was a recent invention, but rather “that it did not happen”. The judge overruled the objection and admitted the letter on the basis that it did go to rebut the suggestion of recent invention. The applicant submits that the judge was wrong in holding that the questions about a “defence strategy” amounted to an imputation of recent invention and that in any event the letter does not go to rebut it.
I agree with the judge. An imputation of recent invention may be implicit or explicit[36], and the invention need not be recent. The doctrine is concerned with any fabrication anterior to the trial[37] and arguably extends also to statements made even after the trial has started.[38] As Windeyer, J. put it in Nominal Defendant v Clements[39]:
“There must be an imputation, clearly made and not unequivocally disclaimed, that the witness is not speaking from his own recollection of events, but is recounting a story subsequently made up by him or for him….”
In my opinion it was implicit in the assertion that Mr Barbagallo’s evidence was part of a “defence strategy” that defence counsel was putting to Mr Barbagallo that he was not speaking from his own recollection of events but was recounting a fabrication made up by him or for him as part of his or the CBA’s “defence strategy”.
[36]R v Martin (1996) 65 SASR 590 at 596-599.
[37]Wentworth v Rogers (No 10) (1987) 8 NSWLR 398 at 401.
[38]Fraser v R (1995) 65 SASR 260 at 274.
[39](1960) 104 CLR 476 at 495.
In order that a statement may be used to dispel an imputation of recent invention it must be made in such circumstances that it logically does so. In my opinion the letter of 21 May 2001 does that. As has been seen, the events to which the “defence strategy” were alleged to be directed were the sale of the mortgaged property at a supposed under value of $607,000. It is clear that the letter of 21 May 2001 was written before the land was sold. So much appears from the letter itself – it sets out a proposal to defer realisation if certain conditions are met - and as Mr Barbagallo explained in evidence in chief, the meeting of 14 May 2001 was called by the applicant’s solicitor to discuss the matter only shortly after the receiver was appointed. It follows that the letter of 21 May 2001 was likely to have been written before there could have been any defence strategy, and so logically it was capable of rebutting the suggestion that Mr Barbagallo had invented his evidence as part of the “defence strategy”. In the words of Dixon, J. in Nominal Defendant v Clements[40] “... it rationally tends to answer the attack.”
[40](1960) 104 CLR 476 at 480; see also Damon v Snyder [1970] VR 81 at 82-83.
Ground 6
The applicant contends that even if the letter of 21 May 2004 were admissible to rebut an imputation of recent invention, the judge erred in failing to direct the jury that the letter could not be treated as proof of the contents but only as tending to disprove concoction.[41]
[41]Transport & General Insurance v Edmondson (1961) 106 CLR 23 at 28-29.
Prima facie, there appears to be some force in that submission. If evidence is admissible for one purpose but inadmissible for another, a trial judge should ordinarily direct the jury that they must not use the evidence for the purpose for which it is inadmissible (at least if the use of the evidence for that purpose would be adverse to the accused)[42]. On the other hand, defence counsel did not take an exception on that basis and, as Callaway and Eames, JJ. A. have pointed out, it may be that defence counsel made a tactical decision to refrain from seeking such a direction.
[42]Donnini v The Queen (1972) 128 CLR 114 at 123; B v The Queen (1992) 175 CLR 599 at 619; BRS v The Queen (1997) 191 CLR 275 at 294, 301, 305-6 and 326-7.
Furthermore, the Crown says that Exhibit U was not only admissible on the basis that it went to rebut the imputation of recent fabrication but also under s.58B of the Evidence Act 1958 as an entry made in a book of account and therefore as prima facie evidence of the truth of its contents. Section 58B[43] provides among other things that an entry in a book of account[44] shall be prima facie evidence of the matters, transactions and accounts therein recorded, and in R v Smart[45] it was held that it is sufficient for a document to qualify as a “book of account” that it be one of the documents used in the ordinary business of a bank. Hence diary notes made by bank officers as to the financial standing and condition of two companies the subject of fraud charges were admissible as evidence of the standing and condition of the companies at the time the notes were made. Parity of reasoning suggests that copies of correspondence sent and received by a bank in the ordinary course of its business should also qualify as books of account.
[43] “58B. Entries in book of account to be evidence
[44]“Book of account” is defined in s. 58A as including a ledger, day book, cash book, account book, and any other document used in the ordinary business of an authorised deposit–taking institution.
[45][1983] 1 VR 265 at 290-293.
The applicant resists that conclusion. He submits that there is a significant difference between bank diary notes and mere correspondence and that while it might be supposed that diary notes are made in the ordinary business of a bank, mere correspondence is not.
I see no relevant difference between the diaries in Smart and Exhibit U. It has been held in England that letters are not “books of account” within s.9(2) of the Bankers’ Books Evidence Act 1879 (UK)[46]. But the definition under the English act is narrower than under s.58A of the Evidence Act 1958. The English definition speaks of ledgers, day books, cash books, account books, and all other books used in the ordinary business of the bank (as opposed to all other documents used in the ordinary business of the bank) and as the court noted in R v Smart, the effect of substituting ‘’documents” for “books”[47] was to make admissible all other documents used in the ordinary course of the business of the bank.[48] An analogous approach was taken in New South Wales under s.14 B of the Evidence Act 1898 (NSW). It was held that the phrase “record of a business” was a descriptive term, not confined to any particular category of document, and hence that it included correspondence and internal memoranda[49] as well as notes of a one-off meeting.[50] The same has also been said of s.69 of the Evidence Act 1995 (NSW)[51].
[46]R v Dadson (1983) 77 Cr App R 91 at 94.
[47]The English definition was used in the Evidence Act 1958 until 1965 when it was amended by substituting “all other documents” for “all other books”.
[48][1983] VR 265 at 291.
[49]Atra v. Farmers & Graziers Co-op Co. Ltd (1986) 5 NSWLR 281 at 288.
[50]Feltafield Pty Ltd v. Heidelberg Graphic Equipment (1995) 56 FCR 481 at 483.
[51]Drabsch v Switzerland General InsuranceCo. Ltd. [1999] NSWSC 1030; Global Medical ImagingManagement Ltd. (In Liq.) v. Australian Mezzanine Investments Pty. Ltd. [2003] NSWSC 431; Burgess v. Kelspur Pty Ltd (2001) 21 NSWCCR 490 at [5].
The applicant submits, however, that even if Exhibit U is a book of account within the meaning of the section, an entry in a book of account is not admissible under the section unless the entry records a financial transaction of the bank. He argues that it is only that part of the exhibit which deals with the facility which was admissible, and hence that the second paragraph which records the admission alleged to have been made should have been excluded. In my opinion that submission is not correct. The court said in R v Smart that it is enough that a document be one brought into existence in the ordinary course of business of a bank and that there is no warrant to confine the section to entries which record financial transactions.
The applicant also submits that the section does not render an entry in a book of account admissible unless the entry relates to a transaction to which the bank is a party, and in support of that submission the applicant relies on the obiter dicta observations of Windeyer, J. in Elsey v Federal Commissioner of Taxation[52]. But the answer to that is also in R v Smart[53]. The Court said there that:
[52](1969) 121 CLR 99 at 105.
[53][1983] 1 VR 265 at 292-3.
”It is difficult to see why the plain words of the legislation that the entry is ‘prima facie evidence of the matters transactions and accounts therein recorded’ should not carry with them admissibility, notwithstanding the hearsay character of the entry. It is only possible to restrict these words to the limited role of enabling proof of a copy by implying words to that effect in the section. But such an implication is not really open given the express provisions in the other sections - s5 in the 1876 English legislation and s58D and s58E in the Victorian Act - that cover the reception of copy entries. Nor is it easy to see how the legislation operates to make an exception to the hearsay rule only when the entry records transactions to which the bank is a party but not, for example, other transactions or admissions made by an accused against interest not in respect of a bank transaction…”.
The court in Smart considered that there were only three limitations:
· First, “…the evidence admitted has by the very the phrase ‘prima facie’ a provisional character and will not often be adopted when there is other conflicting evidence, especially as the evidence is usually subject to the infirmity of not being tested by cross-examination.”
· Secondly, “...the width of judicial discretion in criminal cases to exclude evidence in order to ensure a fair trial is sufficient to enable a court to exclude the entries where these offend the hearsay rule on important matters or in circumstances where the absence of any ability on the part of the defence to test the material and the likelihood of prejudice outweigh the inability of the Crown to call more direct evidence by the person whose statements are recorded in the entry.”
· Thirdly,” … the books or other documents must still be only used in the ordinary business of a bank. It is difficult to see how a document recording a subject matter unrelated to the bank’s affairs could properly be said to be used in the ordinary business of the bank. It is not to the point that the manager keeps a diary into which irrelevant matters find their way; to the extent that the diary deals with matters unrelated to the bank’s affairs or - more precisely - its transactions - then it is not used in the business of the bank. That is not to say that the entry must be an entry as to a transaction; it would have a sufficient relationship to be a document used in ordinary business if, for example, it was material to a bank transaction such as the granting or continuance of overdraft accommodation.”
The applicant submits that even if that be so, it is impossible or at least inappropriate to describe an admission of the kind recorded in the second paragraph of Exhibit U as sufficiently material to a bank transaction to satisfy or overcome the third of those limitations. But the answer to that is surely in the exhibit itself. On any fair reading of the document, the assertion in the second paragraph - that the applicant had made the admissions there set out - is put forward in the letter as the basis or principal basis for the decision recorded in the balance of the letter not to extend the facility except on the terms stated. As I see it therefore, the admission is not only “in respect of a bank transaction” but “material to a bank transaction [being] …the continuance of …accommodation”.
The applicant argues that because the exhibit was not tendered as a book of account, the judge did not consider it on that basis, and therefore that the judge did not consider whether as a book of account it should have been excluded from evidence in the exercise of discretion. According to the applicant, he was thereby deprived of the chance of the judge excluding the document from consideration and thus deprived of a chance of acquittal. In my opinion that is not a realistic possibility. In the circumstances of this case, the only rational basis for excluding Exhibit U as a book of account would be unfairness resulting from inability to test the truth of the document. But as it happened there was every opportunity for the applicant to test the truth of Exhibit U, and he did test it extensively in the course of the cross-examinations of Mr. Barbagallo and Mr Orders. In the course of final address counsel for the applicant also invited the jury to use the contents of the exhibit as showing that the evidence in chief given by Mr Barbagallo about the admission was not to be believed.
The applicant argues that if the exhibit had been admitted to evidence under s.58B it would have been incumbent on the judge to direct the jury that it was no more than prima facie evidence, upon which they should not act if there were contrary evidence that they accepted, and inasmuch as no such direction was given it is not now permissible to treat the evidence as admitted under the section. But I think that the answer to that is that such a direction could only have harmed the applicant and hence the failure of the judge so to direct the jury was surely to the advantage of the applicant. As it was, the judge directed the jury that the accused had given evidence contrary to the alleged admission and that their assessment of what happened at the meeting depended on their perception of the applicant’s and Mr Barbagallo’s credibility. In those circumstances it could not have added to the applicant’s chances of acquittal if the judge had also said that the contents of Exhibit U was only prima facie evidence. It could, however, have subtracted from the applicant’s chances of acquittal if the jury had been told not only that the exhibit went to rebut the imputation of recent invention (which is what they were told by the prosecutor) or that it demonstrated that Mr Barbagallo’s oral evidence about the terms of the admission was not to be believed (which is what they were told by defence counsel) but also that it was prima facie evidence of the truth of the contents.
In my opinion therefore the position here is in relevant respects like that in R v Georgiev[54]. A direction that the exhibit could only be used to rebut the imputation of recent fabrication was not appropriate in the particular circumstances of the case - because Exhibit U was also admissible under s.58B as prima facie evidence of the truth of its contents - and if anything more had been said to the jury about the effect of the exhibit it may have worked to the disadvantage of the applicant.
[54](2001) 119 A Crim R 363.
Ground 5
The applicant next contends that the judge erred both in failing to direct the jury that they might draw an inference adverse to the Crown from the Crown’s failure to call witnesses that the Crown might be expected to call and in undermining defence counsel’s address to the jury, by instructing the jury that they should not construe the address as inviting speculation on evidence that might have been given by witnesses who were not called.
Defence counsel’s address on point was as follows:
“Now ladies and gentlemen, there [the applicant] says he did that[55] on advice from his accountants. The Crown have to prove that he knew those figures to be false, he had no reasonable belief that they were true. Now you would have thought that the way to do this is not to call the junior accountant from the firm with which he was dealing to say I gave him a different set of figures, but instead either to call the person who had effectively the overview of those accounts namely Mr Audrey or perhaps to call an expert accountant, but they didn’t so that.
And as I have said to you ladies and gentlemen, you can make no assumption about what those people had to say to you, you just have to work with the facts as they are tried before you. But what I would point out to you, is that it’s abundantly clear you don’t have expert evidence in this case to say that his approach was wrong. You don’t even have the person who had the overview of those accounts, and I’m speaking now of Mr Wharton, to say that they are wrong. Let alone Mr Wharton [sic].”
[55]scil. added figures to the Fishing Information Services figures.
When the jury next retired the prosecutor told the judge that he was concerned that defence counsel had invited the jury to speculate as to the failure of the Crown to call Mr Vawdrey and Mr Wharton and that the invitation was contrary to the decision in Dyers v. The Queen[56]. Defence counsel responded that the decision in Dyers founded the framework of his address. The judge said that he would deal with the matter in his charge by using a neutral method of explanation, along the lines of saying to the jury that: “Because of the way something is said don’t use it as an invitation to speculate. You’ve got to be vigilant; you mustn’t speculate and that’s the law.” Defence counsel did not say anything to indicate that he disagreed with that course, but did observe that he regarded himself as free nevertheless to point out to the jury that they did not have the benefit of expert evidence on the point.
[56](2002) 210 C.L.R. 285.
The matter surfaced again later in defence counsel’s final address when the prosecutor took exception to what he contended were misrepresentations of the evidence as to whether trial balances had been taken out showing balances of millions of dollars. That led in the course of discussion, in the absence of the jury, to a complaint by defence counsel that the Crown had not called witnesses who could have testified to those matters and a request that the judge should issue to the jury a stringent criticism of the Crown for not calling them. The judge responded that on his understanding of the law one was not permitted to comment about the failure of the Crown to call witnesses, because to do so invited speculation as to why they had not been called and, consequently, he did not propose to make any criticism of the kind suggested. Defence counsel responded: “I can’t ask your Honour to, with the law as it stands.”
In his charge, the judge told the jury that:
“I want to come to a matter that concerns me a little bit. A number of witnesses have not been called, and that has been mentioned. The law is that you must decide the case on the evidence which has been called. That is the law. You must not speculate – and I have already said it and I am saying it again because it is important – you must not speculate about evidence which has not been called.
Now [defence counsel] said to you, ‘Don’t speculate’, and told you what I have just said, but you may have interpreted what [defence counsel] said as going a bit further than that. He told you that he was critical of the Crown for not calling witnesses.
There is no evidence of the availability of any of these witnesses, or whether they are not available. There is no evidence, and you do not know why any evidence that was not called was not called. So you only decide the case on the evidence you have heard.
[Defence counsel] said, and you may have interpreted what [defence counsel] said as going further than what I am just telling you, when he said ‘The Crown are trying to blinker the case’. If that is a reference to not calling witnesses, ignore it and do not mis-use it. The evidence that you heard is the evidence you decide the case upon, and you do not speculate. I know [defence counsel] told you that, but he also said the things I said, and they are not necessarily consistent, so I draw them to your attention and tell you clearly what you must do: judge the case on the evidence, without speculation.”
The applicant now contends that the judge was wrong to refer to the availability of witnesses and that his Honour should have given a Jones v Dunkel [57] direction that the jury could infer from the Crown’s failure to call the witnesses that anything that those witnesses might have said would not have assisted the Crown’s case.
[57](1959) 101 CLR 298.
In my opinion the judge was right to adopt the course which he took. As Gaudron and Hayne, JJ. stated in Dyers[58], it is only in exceptional cases that it will be appropriate to given a Jones v Dunkel direction in relation to the failure of the Crown to call identified witnesses. Ordinarily, the obligation of the Crown to call available and material witnesses means that it may be assumed that all such witnesses will be called unless there is some good reason not to do so. So, if in a particular case the Crown chooses not to call a material witness for some good reason, such as, for example, that he or she would be unreliable, untrustworthy or otherwise incapable of belief, it is wrong to invite the jury to conclude that they may draw from the absence of that witness from the witness box an inference adverse to the Crown. It is in effect only where a judge is satisfied that there is no good reason for the Crown’s failure to call a witness, as would be the case if the only reason were that the witness would be likely to give an account inconsistent with the Crown case, that the judge might properly direct the jury that they might draw from the absence of that witness that he or she would not have assisted the Crown case. That was not so here. There was nothing to suggest that there was not a good reason for the failure of the Crown to call Mr Vawdrey and Mr Wharton[59]. Hence it would have been wrong for the judge to invite the jury to speculate about the evidence that those men might have given.
[58](2002) 210 CLR 285 at 291[6]-[18]; see also R v Priest (2002) 137 A Crim R 133 at 138[15].
[59]And there was evidence that Mr Wharton wished not to give evidence because of his relationship with the applicant.
Ground 7
The appellant contends that the judge erred in the directions which he gave the jury on the offence of false accounting contrary to s.83(1)(b) of the Crimes Act 1958 (counts 1 and 2). Section 83 of the Crimes Act provides:
“83. False accounting
(1) Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss to another-
(a)destroys, defaces, conceals or falsifies any account or any record or document made or required for any accounting purpose; or
(b)in furnishing information for any purpose produces or makes use of any account, or any such record or document as aforesaid, which to his knowledge is or may be misleading, false or deceptive in a material particular -
he is guilty of an indictable offence and liable to level 5 imprisonment (10 years maximum).
(2) For purposes of this section a person who makes or concurs in making in an account or other document an entry which is or may be misleading, false or deceptive in a material particular, or who omits or concurs in omitting a material particular from an account or other document, is to be treated as falsifying the account or document.”
The applicant submits that the judge failed to convey to the jury that there must be a substantial connection between a document and the accounting process of a business or other entity before the document may be treated as an account or record or other document made or required for any accounting purpose within the meaning of s.83(1)(b).
In charging the jury on the elements of counts 1 and 2, the judge told the jury that:
“ ... The elements of this offence begin with the words, ‘A record required for an accounting purpose.’ In this case it is said that the Fishing Information Services Pty Ltd balance sheet on count 1, and the profit and loss statement on count 2, were such records, required for an accounting purpose. On the Crown’s case they were required by the Commonwealth Bank for purposes connected with the securing of a loan from the Commonwealth Bank to Mr Heinze’s company, Manenge Services Pty Ltd – and I tell you as a matter of law that such a document does not need to be made for an accounting purpose. Being required for the purpose of granting a loan is enough at law, to be an accounting purpose. So if you find that the document was handed over for the purpose of obtaining a loan, then it would be as a matter of law, a record required for an accounting purpose.”
In R v Jenkins[60] this court decided by majority that for the purposes of s.83(1) of the Crimes Act, a document “required for any accounting purpose” is one which either forms part of, or is made or required in connection with the preparation of the accounts of the business, including both the accounting records as well as the ultimate accounts prepared and published by way of balance sheet, profit and loss account, income and revenue statement or the like, and that for a document to be required for an accounting purpose, there must be a substantial connection with the accounting processes of a business or other entity, not a merely incidental connection. The court also held that the question of what are the accounting purposes of a particular business involves both a factual issue as to what the business did by way of keeping, maintaining and preparing its accounts, and also a purposive issue which requires a consideration of the kind of information used and therefore needed for the keeping of those accounts. Thus to determine whether a document is “required for any accounting purpose”, evidence would be expected both of the connection of the documents with the relevant accounts and also as to their requirement for that purposes. It was therefore not enough to establish that a document was required for the purpose of granting a loan.[61]
[60](2002) 6 VR 81.
[61]ibid at 91[23].
It follows in my opinion that the judge’s directions on counts 1 and 2 were wrong and that other things being equal the verdicts on counts 1 and 2 would have to be set aside. But in this case there has been no miscarriage of justice. It may or may not be that the balance sheet and profit and loss statement were required by CBA for an accounting purpose, and it may or may not be that the jury would have concluded that they were so required if they had been properly instructed on the point. But it cannot be doubted that the balance sheet and profit and loss statement were accounts within the meaning of the section and therefore that the jury would have come to that conclusion if they had been properly instructed. In the circumstances it cannot be supposed that the applicant has been deprived of a chance of acquittal.[62]
[62]cf Mraz v R (1955) 93 CLR 493 at 514; Wilde v R (1988) 164 CLR 365 at 371–2; R v NRC [1999] 3 VR 537 at 558 [45]; R. v. Weiss (2004) 145 A.Crim.R. 478 at 503[62]-[68].
Ground 8
In the course of cross examination, defence counsel sought to ask Mr Barbagallo whether CBA had taken proceedings against the applicant’s son - his son being liable as a surety – and when objection was taken on the ground that defence counsel was seeking to impugn the credit of someone other than the witness, defence counsel sought to justify the questions on the basis that they were directed to establishing bias on the part of CBA. The judge upheld the objection and the applicant’s final contention is that the judge erred by so curtailing defence counsel’s cross examination of Mr Barbagallo.
In my opinion the contention is hopeless. The rule which permits collateral evidence as to bias is directed to establishing bias on the part of a witness, and obviously CBA was not a witness[63]. But even if questions of whether CBA had taken recovery proceedings against the applicant’s son established anything about the mental state of Mr Barbagallo, and the connection is hardly self evident, I am unable to see that taking proceedings against a principal debtor and not against a surety says anything as to whether the creditor is biased against the principal debtor. It may be that taken with other matters it could lead one to that conclusion, but no such other matters are suggested and, more significantly, if there were any, counsel did not seek to and was not prohibited from cross examining upon them.
[63]AG v Hitchcock (1847) 1 Exch 91 at 100, 154 ER 38; Palmer v The Queen (1998) 193 CLR 1 at 22 [50]; Goldsmith v Sandilands (2002) 76 ALJR 1024 at [35].
The Director’s appeal against sentence
In support of the appeal against sentence, the Director submits that the judge erred in failing to treat the sentence imposed on count 6 as the base sentence and thus failed to provide for any degree of cumulation in respect of the sentences imposed on the other counts. He submits that the error manifests itself in the fact that despite the orders for cumulation the total effective sentence is no greater than the sentence imposed on the most serious count. The Director makes plain that he does not attack the sentence on that ground alone. He concedes that such an error should not be regarded as in itself a sufficient basis to uphold a Crown appeal. But he submits that the sentence is manifestly inadequate and it may be seen that the error is the probable cause of the inadequacy.
In my opinion the Director is correct. The judge did err in not treating the count on which he imposed the greatest individual sentence as the base sentence and thus erred in attempting to cumulate in respect of the other sentences [64]. The error re-opens the sentencing discretion.
[64]cf. R v Nikodjevic [2004] VSCA 222 at [37] – [39].
Much was made before the sentencing judge, and much is now made in submissions on behalf of the respondent as to the respondent’s good character and reputation, apart from these offences, and his exemplary behaviour and public service in a wide range of endeavours. He is said to be, and testimonials and evidence given before the sentencing judge tend to bear out that he was, a generous and passionate person who would go out of his way to help other individuals and the community. He has a history of public service with Rotary and youth organisations and in his professional capacity as an engineer in local government (in which he served as shire engineer and chief engineer for a number of municipalities and later operated successfully his own consulting practice). Reliance is also placed upon the findings of the sentencing judge that the offences were committed out of a sense of financial desperation at a time when the respondent was under considerable financial pressure from NAB and that the respondent’s chances of rehabilitation are good. There is as well evidence that the respondent has lost virtually everything as a result of the offences, including his marriage of thirty years and the affection of his daughters. It is submitted on behalf of the respondent that when those considerations are taken into account, as well as that he is now 58 years old, a total effective sentence of two years is not manifestly inadequate but well within the range.
The Director counters by pointing to the fact that these offences involved a sum of $1.5 million of which only half was recovered, that they were carefully planned and carried out with considerable skill, and that they were of a type which strikes at the heart of the commercial system and the trust upon which it is dependent. It is equally important it is said that the sentencing judge could not detect any sign of remorse, and that none is evident even now. The respondent maintained an elaborate and improbable defence throughout the trial which the jury thoroughly rejected. And he still maintains it, thereby failing to acknowledge his criminality and the effect which it has had upon others. The Director argues accordingly that these were serious crimes which call for considerably increased individual sentences and an increased degree of cumulation in order properly to reflect the need for general and specific deterrence and to mark the court’s denunciation.
In my opinion the individual sentences and the degree of cumulation were manifestly inadequate. The maximum penalty for the offences of false accounting and obtaining financial advantage by deception is ten years’ imprisonment and I regard the respondents offences of false accounting and obtaining financial advantage by deception as serious examples of the offences. The amount of money involved and the brazen and calculated manner in which the offences were carried out allows for no other conclusion. The respondent traded on his good reputation and lied to CBA in order to obtain a credit facility for $1.5 million which he surely knew that he would not have obtained if the truth were known.
Bearing in mind the principle of double jeopardy which applies to a Crown appeal, I would re-sentence the respondent on each of counts 1 and 2 to imprisonment for a term of 18 months and on count 3 to imprisonment for a term of three years. Count 4 is in some respects a worse offence than counts 1 and 2, in that it involves the falsification of a public document, and I consider that the difference in criminality should be reflected in a greater sentence. On count 4 therefore I would re-sentence the respondent to imprisonment for a term of two years. I consider, however, that the nature and gravity of count 5 is of similar order to count 3 and therefore on count 5 I would re-sentence the respondent to imprisonment for a term of three years and I would re-sentence the respondent on count 6 to imprisonment for a term of three years.
Again bearing in mind the principle of double jeopardy, but conscious that counts 4 and 5 were as a group separate and distinct from counts 1, 2 and 3 and that count 6 stands separate from all other offences, I would order that six months of the sentence imposed on count 5 and six months of the sentence imposed on count 6 be served cumulatively on the sentence imposed on count 3 and on each other; thereby making for a total effective sentence of four years.
Having regard to the applicant’s general good character and the finding of the judge as to the prospects of rehabilitation, and as to the circumstances in which the offences were committed, I consider that it is in order to set a shorter than usual non parole period and so I would order that the respondent be eligible for parole after serving two years’ imprisonment.
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Subject to the provisions of this Division in all legal proceedings-
(a)an entry in a book of account shall be prima facie evidence of the matters transactions and accounts therein recorded; and
(b) a copy of an entry in a book of account shall be prima facie evidence of the entry and of the matters transactions and accounts therein recorded; and
(c) where in the ordinary course of business a copy of the original book of account has been made and retained as the ordinary book of account, and the original book of account has been destroyed, then an entry in the copy book of account shall be prima facie evidence of the matters transactions and accounts therein recorded.”
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