R v Jacobson (Ruling No 5)
[2014] VSC 554
•15 October 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
CRIMINAL DIVISION
S CR 2011 0054
| THE QUEEN |
| v |
| MERVYN JACOBSON |
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JUDGE: | KAYE J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 15 October 2014 |
DATE OF RULING: | 15 October 2014 |
CASE MAY BE CITED AS: | R v Jacobson (Ruling No 5) |
MEDIUM NEUTRAL CITATION: | [2014] VSC 554 |
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CRIMINAL LAW ‑ Evidence ‑ Accused charged with conspiracy to take part in share purchases contrary to s 1041A of Corporations Act 2001 (Cth) ‑ Daughter alleged co-conspirator ‑ Whether prior knowledge by accused of previous such purchases by daughter relevant ‑ Whether such evidence rendered admissible by evidence given by accused ‑ Evidence Act 2008 s 137.
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APPEARANCES: | Counsel | Solicitors |
| For the Crown | Mr J Rapke QC and Mr C Winneke | Solicitor to the Director of Public Prosecutions (Commonwealth) |
| For the Accused | Dr J Wilson QC, Mr A Burns and Mr S Tovey | Markotich Lawyers |
HIS HONOUR:
The accused is in the course of being cross-examined. An issue has arisen whether Mr Rapke of Queen’s Counsel, who appears with Mr Winneke for the prosecution, should be permitted to ask the accused, Dr Jacobson, questions about share trading conducted by his daughter, Tamara, in 2005 through a National On-Line Trading account (hereafter referred to as the NOLT account) in GTG shares.
The matters, which Mr Rapke wishes to put, are part of a larger section of evidence relating to trading by Tamara Newing on the NOLT account in 2005 which, before the commencement of the trial, I had ruled to be inadmissible.[1]
[1]R v Jacobson (Ruling No 2) [2014] VSC 368.
The issue is whether, as a result of evidence now given by Dr Jacobson during his evidence-in-chief and in cross-examination, the evidence, which Mr Rapke now wishes to elicit, has become admissible.
The questions, which Mr Rapke wishes to ask Dr Jacobson, concern a series of emails by Tamara to Dr Jacobson between 21 April and 28 June, and a response by Dr Jacobson on 28 June, together with a cheque sent by him to Tamara on 22 April, which the prosecution submits disclose that at that time Tamara Newing was, to the knowledge of Dr Jacobson, manipulating the price of GTG shares on the ASX by trading in them on her NOLT account.
As I have said, those emails, and that cheque, form part of a larger section of evidence relating to the trading by Tamara on the NOLT account in 2005, which was the subject of my previous ruling. The prosecution originally had intended to lead that larger section of evidence on the basis that it is relevant as the context or background to the transactions which are the subject of the charges against the accused. In particular, in that ruling, the question, of the admissibility of the evidence, related primarily, although not wholly, to its relevance to the first count on the indictment.
In my previous ruling, I held that the evidence was relevant as context and background evidence, but, because of its prejudicial effect, I excluded it under s.137 of the Evidence Act because the potential prejudicial effect outweighed its then probative value. In my ruling, I did, however, caution defence counsel that my ruling was subject to the issues which might be raised at trial.
I interpolate that during this trial on a number of occasions, I have expressly cautioned defence counsel that the NOLT transactions, to which I have referred, could become admissible, if care were not taken to avoid raising them by opening issues in the trial which are not necessary.
The present issue arises out of evidence given by Dr Jacobson at the end of his evidence-in-chief, and also some matters volunteered by him in cross-examination. They relate primarily to the circumstances in which he revoked the authority of Tamara to instruct Bell Potter, Wollongong, to place orders on behalf of XY Inc to purchase shares in GTG. That matter had already been the subject of evidence of Rocco Musumeci.[2] Mr Musumeci stated that, on 3 November 2006, Dr Jacobson spoke to him and instructed him not to take any further orders for the purchase of GTG shares on behalf of XY Inc from Tamara. According to Musumeci, he was instructed to take orders from Gail Bratz, who was then the secretary of XY Inc. Mr Musumeci further said that Dr Jacobson told him that the board of XY Inc would be more comfortable, if the orders were placed by Gail Bratz rather than Tamara.
[2]T 876.
I note that Musumeci was not cross-examined in relation to the content of that telephone call, and I interpolate also that neither Douglas Symes or Carol Simpson, who were witnesses from Bell Potter, were cross-examined in relation to that matter.
Dr Jacobson gave reasonably lengthy and detailed evidence-in-chief. Towards the end of his evidence-in-chief, he gave evidence relating to monetary gifts he had made to his children. He then gave evidence as to the financial state of GTG in 2006. Those matters were all relevant to the issues of the trial.
Counsel then directed Dr Jacobson specifically to 3 November and asked him if he had a conversation with Bell Potter on that day. Counsel asked him, when he said that he did have such a conversation, who he spoke to and why.
He was invited to state what was the substance of conversation. In response to those questions, Dr Jacobson[3] said this,
That I had received some information which was worrying to me and that I had previously asked them to take instructions from my daughter, Tamara, but as a result of that new information, I wanted him to stop taking instructions from her.
[3]T 1738.
In cross-examination, Mr Rapke questioned Dr Jacobson about evidence which Musumeci gave to the effect that on 21 September he had a conversation with Dr Jacobson about late bids for 5,000 GTG shares being placed on the ASX. According to Musumeci, Dr Jacobson responded, “I have a friend who is also acquiring stock”.
Mr Rapke cross-examined Dr Jacobson about that matter and particularly about what knowledge he had that Tamara was at that time placing bids late on the stock market.
That cross-examination was, of course, relevant particularly to the decision by Dr Jacobson on 27 September to appoint Tamara to give instructions to Musumeci to purchase shares on behalf of XY Inc.
Dr Jacobson stated that the first time he had learnt there was anything untoward about Tamara’s trading was on 3 November. He was asked[4], “You say to this jury it was on or about 3 November that you learnt for the first time your daughter, Tamara, had been manipulating the price of GTG shares on the share market?” The accused responded, “The question is quite ambiguous in a way. I’m trying to answer it honestly but there was a prior event that I had become aware of some years earlier where we thought that all had been overcome and then everything was good again, and I was very comfortable with what she was doing thereafter, and under those new conditions I was comfortable to transfer to her, but as a result of what you have referred to on November 3, my concern was raised that, ‘Here we go again’”. Mr Rapke then asked Dr Jacobson[5] about that matter. In particular he asked the accused about being alerted to some previous problem relation to Tamara. He was asked when that occurred. Dr Jacobson stated that, “It was possibly two years earlier or a year and a half earlier. It was something from a former life of her”.
[4]T 1871.
[5]T 1873.
Mr Rapke asked Dr Jacobson, “Did that former problem involve share trading?” Dr Jacobson responded, “As I found out after the fact, yes.”
The prosecution now seeks to cross-examine Dr Jacobson based on those pieces of evidence further. Mr Winneke, who made the argument on behalf of the prosecution, submitted that the cross-examination in relation to the emails and cheque, to which I have referred, in 2005 would be relevant to the claim by Dr Jacobson that he immediately revoked Tamara’s authority to purchase shares on behalf of XY Inc in November 2006, because that was when he first learnt that Tamara had been involved in untoward conduct in trading in those shares.
Mr Winneke submitted that that answer opened the issue as to when Dr Jacobson first knew that Tamara was, or in the past had been, trading in a manner that was inappropriate in relation to shares and particularly in relation to GTG shares.
He submitted that that issue having been opened, it was relevant to address the knowledge by Dr Jacobson of how Tamara was given to trading in GTG shares at the time that he appointed her to instruct Rocco Musumeci to purchase shares on behalf of XY Inc on 27 September. Mr Winneke submitted that the issue, relating to Dr Jacobson’s knowledge of Tamara’s method of share trading, would be directly relevant to the Crown case in relation to the conspiracy charged in count 35 of the indictment and also in relation to the other charges. In particular, it was relevant indicating that, at the time he appointed her to purchase shares in GTG, he knew that her method of trading included or involved the manipulation of the price of those shares.
In addition, Mr Winneke submitted that the evidence having been adduced in evidence-in-chief from Dr Jacobson, and the evidence having been elaborated voluntarily by Dr Jacobson in the passage in the transcript to which I referred, the prosecution would be entitled to challenge that evidence, in order particularly to challenge that Dr Jacobson only subsequently learnt of the problem relating to the 2005 share dealing and also to challenge what he has said about the nature of that share dealing at that time.
In response, Dr Wilson, of Queen’s Counsel, who appears with Mr Burns and Mr Sam Tovey on behalf of the accused, submitted that the cross-examination foreshadowed by Mr Winneke is not necessary. He submitted that Dr Jacobson has already given a sufficient explanation as to his knowledge of Tamara’s previous share dealing, that is, that it was a previous event in the last one and a half to two years, it involved share trading, and that he considered that appropriate steps had been taken to ensure that she did not indulge in the same method of share trading when she purchased shares on behalf of XY evening.
Dr Wilson further submitted that the evidence, if admitted, would be prejudicial to his client. In particular, it may induce the jury to indulge in propensity type reasoning, because it would, of necessity, involve the introduction of the evidence of uncharged acts.
In my view, it is clear that the accused man has, by his own evidence, enlivened the issue, of his knowledge of the previous share market malpractice by Tamara, in the course of his evidence-in-chief to which I have referred. His evidence-in-chief, and the passage relating to the circumstances in which he terminated Tamara’s authority to trade in GTG shares on behalf of XY Inc on 3 November, was led to demonstrate that when Dr Jacobson learnt that Tamara had then been involved in trading in an inappropriate manner, he immediately revoked her authority to instruct Musumeci to purchase GTG shares on behalf of XY Inc. That evidence is directly relevant to count 35 on the indictment.
If the jury were to accept it, the evidence would be a powerful factor militating against a finding that Dr Jacobson was a party to a conspiracy between Musumeci and Tamara to manipulate the price of GTG shares between 27 September and 3 November. It would lead the jury to conclude that the moment Dr Jacobson became alerted to the fact that Tamara and Musumeci were engaging in that behaviour, he immediately took steps to put an end to it.
In those circumstances, it is clear that the prosecution is entitled to challenge the answer given by Dr Jacobson at the conclusion of his evidence-in-chief. In particular, the prosecution, in my view, is clearly entitled to challenge the proposition that he revoked Tamara’s authority because it was on 3 November that he learnt that Tamara had been trading inappropriately.
In order to challenge that, it would be relevant for the prosecution to cross-examine Dr Jacobson as to any knowledge he had as to previous acts of share market manipulation or malpractice by Tamara. That matter has been opened by the evidence given in-chief by Dr Jacobson and, in my view, it would be open to the prosecution to challenge that evidence, not only by what he says he first learnt on 3 November, but also by what he knew as to Tamara’s method of purchasing shares in the past.
In addition, in the course of cross-examination, as I stated, when Dr Jacobson was asked as to when he first learnt Tamara had in the past been manipulating the price of GTG shares, Dr Jacobson referred to it as a prior event which he thought had been remedied. The prosecution are entitled to clarify and to test that answer. Dr Jacobson stated that he only learnt about the nature of that trading after the fact. Again, the prosecution would be entitled to challenge that answer, particularly to explore the issue, which has been opened on behalf of the accused, as to his knowledge of the nature of Tamara’s dealing in shares on the share market.
It is therefore clear that the matters, which the prosecution wish to explore in cross-examination, are relevant to issues in the trial and, as I have emphasized, an issue opened by the accused in his evidence-in-chief.
The basis, upon which the evidence has become relevant, is different to the basis of relevance upon which the prosecution sought to rely on the evidence and which I earlier ruled to be inadmissible. As I have stated, my previous ruling concerned the admissibility of the evidence concerning the whole of the NOLT transactions as context or background evidence. The relevance of the NOLT evidence, and particularly the documents to which I have been referred, is now more direct, and relates to an issue that has been enlivened in the evidence-in-chief of the accused.
It arises directly and immediately as a result of Dr Jacobson’s evidence. The prosecution would, of necessity, need to challenge the answer given by Dr Jacobson in his evidence, as it is evidence which, if accepted, would weigh cogently against a finding of guilt on charge 35.
In addition, in cross-examination Dr Jacobson volunteered his knowledge of the previous event and he also volunteered that he learnt about it after the fact. Again, cross-examination as to those matters is a matter of immediate relevance and goes beyond exploring issues as to background and context.
It is for those reasons I consider that the relevance of the evidence now sought to be adduced is more substantial than the basis, upon which the NOLT evidence was sought to be adduced at the commencement of the trial. On the other hand, I consider that its potential prejudicial effect is considerably less substantial than would have been the evidence relating to the NOLT transactions if I had admitted them in my earlier ruling.
If I had admitted the evidence as to the NOLT transactions as context or background evidence at the commencement of the trial, then, as a matter of chronology, it is likely that evidence would have been adduced at the commencement of the trial. As such, it would have assumed a prominent place in the minds of the jury. It would have involved far more substantial evidence than the more confined matters which the prosecution now seek to put to Dr Jacobson in cross-examination.
The cross-examination of Dr Jacobson has been lengthy, and I do not say that in a critical manner, and there are a number of other issues which are required to be explored. I would expect that the matters, in relation to this aspect of the case would, as a matter of timing, assume only a small proportion of the time spent in cross-examination of Dr Jacobson and therefore would not assume a disproportionate significance in the minds of the jury.
In those circumstances, I am satisfied that the relevance of the evidence, sought to be adduced in cross-examination, and its probative value, significantly outweighs any prejudicial effect.
To those considerations I add the following: As I have already stated, in my first ruling, I cautioned defence counsel that the evidence as to the NOLT transactions could well become admissible depending on the issues agitated at trial. I have, on a number of occasions, cautioned defence in this respect. I myself could foresee a number of different issues which were peripheral, or not entirely necessary, but which could open, and would directly lead to the admissibility of, the NOLT evidence. The accused is represented by three experienced counsel, one of whom is Queen’s counsel. I am entitled to infer that a calculated decision was made to adduce the evidence, relating to Dr Jacobson’s decision on 3 November, in evidence-in-chief because of the significance of it. I do not criticize that decision at all. As I stated, that evidence, if accepted by the jury, would be important evidence on behalf of Dr Jacobson. However, as a matter of sheer logic, it is clear that any person contemplating calling that evidence would anticipate that it would therefore enliven the admissibility of the NOLT evidence.
I make these remarks not to exonerate myself from the difficult decision I have had to make, but, rather, it is quite clear that a forensic decision was made, to call the evidence, notwithstanding that it might thereby enliven the admissibility of the NOLT evidence. That matter to which I have just referred adds, in my opinion, to the fairness of permitting the evidence to be adduced in the trial. However, it is not a matter that has otherwise affected the decision which I would have made.
In the course of argument, I did express concern as to the use of the email from Tamara Milstein to Karen Phillips of 21 April and the cheque from the Mervyn Jacobson Trustee account for $75,000 on 22 April. That evidence itself is strongly probative of the issue which the Crown wishes to explore and I would not preclude the Crown from relying on it. However, it would be preferable if the prosecution could gain the appropriate admission that it needs without either referring expressly to the contents of the email or tendering it in evidence.
In other words, if Dr Jacobson made the admission that he knew as at 21 April that Tamara had been supporting the price of GTG stock on the share market, that would be sufficient without necessitating the tender of those two documents. It would seem to me only if Dr Jacobson did not make that concession that it would be necessary to either refer to the contents of those documents or tender them.
With that qualification, I have come to the conclusion that the probative value of the evidence to be adduced in cross-examination substantially outweighs any prejudicial effect of the evidence to be explored. If there is any such prejudicial effect and, in particular, if it does become necessary to tender the email of 21 April and the cheque, then I consider that any prejudicial effect of that evidence could be appropriately dealt with by directions given by me to the jury in my final charge.
I therefore uphold the submission on behalf of the prosecution to cross-examine Dr Jacobson in relation to the matters to which I referred at the outset of my ruling.
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