R v Joffe; R v Stromer - [2011] NSWSC 894

Supreme Court

New South Wales

Medium Neutral Citation: R v Joffe; R v Stromer [2011] NSWSC 894
Hearing dates: 20, 21, 22 June, 19, 20 July 2011
Decision date: 17 August 2011
Jurisdiction: Common Law
Before: Hall J
Decision:
In relation to the notice of motion filed on behalf of Mr Joffe on 11 March 2011 and the notice of motion filed on behalf of Mr Stromer on 11 March 2011, I make the following orders:-

(1) The evidence particularised in the table to the Notice of Coincidence Evidence dated 8 July 2011, being Table A entitled “Table of related events the subject of counts in the Indictment” is admissible pursuant to s.98(1)(b) of the Evidence Act 1995.

(2) The evidence particularised in the table to the Notice of Coincidence Evidence dated 8 July 2011 being Table B entitled “Table of related events not the subject of counts in the Indictment” is not admissible under s.98(1)(b) of the Evidence Act.
(3) Leave is granted to any party to apply with respect to any consequential or ancillary orders.
Catchwords: EVIDENCE – insider trading offences charged under s.1043A of the Corporations Act 2001 (Cth) – 10 counts charged against two accused – applications for orders determining admissibility of evidence in the Crown case particularised in a Notice of Coincidence Evidence being evidence in relation to each of the counts charged against each accused and evidence in relation to three uncharged maters – orders sought for separate trial of some charges – ADMISSIBILITY OF EVIDENCE – s.98(1)(b) and s.100(2) of the Evidence Act – approach to be taken when assessing “significant probative value” of coincidence evidence – meaning of “probative value” – distinction between probative value under s.98(1)(b) and actual probative evidence at trial – whether in evaluating evidence under s.98(1)(b) alternative rational inferences or explanations to those contended for by the Crown must be evaluated and assessed so as to determine whether the inferences relied upon by the Crown have greater strength than the alternative inferences – approach to be taken in a circumstantial evidence case – proof of facts in issue by inferential reasoning.
Legislation Cited: Corporations Act 2001 (Cth)
Crimes Act 1900
Criminal Law Consolidation Act 1935 (SA)
Criminal Procedure Act 1986
Evidence Act 1995
Jury Act 1977
Cases Cited: Adam v R [2001] HCA 57; (2001) 207 CLR 96
Attorney General's Reference (No 1 of 1983) [1983] 2 VR 410
Deutsch v The Queen [1986] 2 SCR 2
Edwards v The Queen [1993] HCA 63; (1993) 178 CLR 193
HML v The Queen [2008] HCA 16; (2008) 235 CLR 334
Hoch v The Queen [1988] HCA 50; (1988) 165 CLR 292
Papakosmas v The Queen [1999] HCA 37; (1999) 196 CLR 297
Perry v The Queen [1982] HCA 75; (1982) 150 CLR 580
Pfennig v The Queen [1995] HCA 7; (1995) 182 CLR 461
Phillips v The Queen [2006] HCA 4; (2006) 225 CLR 303
R v AB [2001] NSWCCA 496
R v Boardman [1975] AC 456
R v Broadfoot (1976) 64 Cr App R 71
R v Carusi (1997) 92 A Crim R 52
R v Ceissman [2010] NSWCCA 50
R v Cengiz [1998] 3 VR 720
R v Cook [2004] NSWCCA 52
R v Doney [1990] HCA 51; (1990) 171 CLR 207
R v Ellis [2003] NSWCCA 319; (2003) 58 NSWLR 700
R v F; Ex parte Attorney-General [2004] 1 QD R 162
R v Folbigg [2005] NSWCCA 23; (2005) 152 A Crim R 35
R v GAC [2007] NSWCCA 315; (2007) 178 A Crim R 408
R v Lockyer (1996) 89 A Crim R 457
R v Scholl (No 2) [2009] VSC 237; (2009) 53 MVR 8
R v Shamouil [2006] NSWCCA 112; (2006) 66 NSWLR 228
R v Teys [2001] ACTSC 29; (2001) 119 A Crim R 398
R v Zhang [2005] NSWCCA 437; (2005) 158 A Crim R 504
Re Attorney General's Reference (No 1 of 1975) [1975] QB 773
Samadi & Anor v R [2008] NSWCCA 330; (2008) 192 A Crim R 251
Shepherd v The Queen [1990] HCA 56; (1990) 170 CLR 573
Sutton v R [1984] HCA 5; (1984) 152 CLR 528
TKWJ v The Queen [2002] HCA 46; (2002) 212 CLR 124
Washer v Western Australia [2007] HCA 48; (2007) 234 CLR 492
Category: Procedural and other rulings
Parties: Regina (Crown)
Daniel Shayne Joffe (Accused)
Nathan Stromer (Accused)
Representation:
Counsel:
J V Agius SC/J Paingakulam (Crown)
R G McHugh SC/G A Bashir (Joffe)
S J Odgers SC/L Fernandez (Stromer)
Solicitors:
Commonwealth DPP (Crown)
Speed & Stracey Lawyers (Joffe)
Johnson Winter & Slattery (Stromer)

File Number(s): 2010/34654; 2010/40493

Judgment

(A) THE PROCEEDINGS ON INSIDER OFFENCES CHARGED

(1) Introduction

The Crown, on indictment, charged Daniel Shayne Joffe with 10 counts pursuant to s.1043A(1)(d) of the Corporations Act 2001 (the Act) and Nathan Stromer, with 10 counts pursuant to s.1043A(1)(c) of that Act.
The provisions of s.1043A form part of Subdivision B – The Prohibited Conduct – under Chapter 7, Part 7.10 (the insider trader prohibitions):-

"1043A Prohibited conduct by person in possession of inside information
(1)   Subject to this Subdivision, if:-
(a)   a person (the insider) possesses inside information; and
(b)   the insider knows, or ought reasonably to know, that the matters specified in paragraphs (a) and (b) of the definition of inside information in section 1042A are satisfied in relation to the information;
the insider must not (whether as principal or agent):-
(c)   apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products; or
(d)   procure another person to apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products.

…”

The elements of the offences with which Mr Joffe has been charged include:-

(1) That he was an insider.

(2) That he "possessed" inside information as defined in s.1042A.

(3) That, contrary to s.1043A(1), he procured another person, namely, the accused Mr Stromer, to apply for, acquire or dispose of relevant Division 3 products being the products in the counts in the indictment.

The Crown alleges against Mr Stromer that he had possession of inside information as particularised in each of Counts 11 to 20 in the indictment and that he intentionally acquired the financial products particularised in those counts whilst in possession of such information.
In relation to the offence with which Mr Joffe has been charged, s.1043A(1)(d) defines the term "procure" as including, without limiting its meaning, “... incites, induces or encourages an act or omission by another person ...”: s.1042F of the Act.
In the indictment, the Crown alleges that between about 1 June 2006 and 31 January 2007, Mr Joffe (through his employment with Moody's Investor Services Pty Ltd) ("Moody's”) came into possession of inside information concerning a number of different corporate entities and that, on each occasion, he procured his friend, Mr Stromer, to acquire the relevant financial products.
The entities, the financial products and the counts in the indictment are as follows:-

"(a)    GasNET Australia Group (GasNet) – financial products acquired by Mr Stromer were GasNet shares – count 1 (Mr Joffe) and [count] 11 (Mr Stromer)
(b)   Auckland International Airport Ltd (AIA) – financial products acquired by Mr Stromer were AIA shares – [count 2 Mr Joffe) and] count 12 (Mr Stromer)
(c)   AWB Ltd (AWB) – financial products acquired by Mr Stromer were AWB CFDs - count 3 (Mr Joffe) and count 13 (Mr Stromer)
(d)   Bora! Ltd (BLD) – financial products acquired by Mr Stromer were BLD CFDs – count 4 (Mr Joffe) and count 14 (Mr Stromer)
(e)   Alinta Infrastructure Holdings (AIHCA) – financial products acquired by Mr Stromer were AIHCA CFDs – count 5 (Mr Joffe) and count 15 (Mr Stromer)
(f)   Sydney Roads Group Ltd (SRG) – financial products acquired by Mr Stromer were SRG CFDs and SRG warrants – counts 6-9 (Mr Joffe) and counts 16-19 (Mr Stromer)
(g)   Rinker Group Ltd (RIN) – financial products acquired by Mr Stromer were RIN CFDs & RIN shares – count 10 (Mr Joffe) and count 20 (Mr Stromer)."

On 4 February 2011, each accused was arraigned before Latham J and pleaded not guilty to all counts.
The trial of the proceedings has been set down to commence on Monday 12 September 2011. The Crown proposes to proceed with all 20 counts in the indictment at trial.

(2) The applications

(a) Mr Joffe's notice of motion

The accused, Mr Joffe, by way of notice of motion filed on 11 March 2011, seeks, inter alia, the following orders:-

"1 An order pursuant to section 192A of the Evidence Act 1995 that the question of the admissibility of the Crown's Coincidence Evidence be determined in advance of the trial.
2. Further to order 1, a ruling pursuant to section 98 or 101 of the Evidence Act 1995 that the Crown's Coincidence Evidence not be admitted at the trial of each of the charges in the indictment.
3. order pursuant to section 21 of the Criminal Procedure Act 1986 that the charges in the indictment, other than charges 6 to 9, be tried separately."

(b) Stromer's notice of motion

A notice of motion was filed on behalf of Mr Stromer on 11 March 2011, in slightly different terms, however, the orders sought are to the same effect.

(3) Advance Ruling

The hearing of the motions proceeded over a number of days (20, 21, 22 June 2011,19 and 20 July 2011). "Advance rulings" on such applications may add to the overall efficiency of a criminal trial and thereby serve the ends of justice: Adam v R [2001] HCA 57; (2001) 207 CLR 96, 112; see also TKWJ v The Queen [2002] HCA 46 at [42]-[43]; (2002) 212 CLR 124 per Gaudron J at 137-138. Difficult questions concerning the admissibility of evidence may qualify in that respect. In the present proceedings, a number of issues have been raised on behalf of the applicants/accused, which, in turn, has required a detailed examination of the evidence proposed to be led in the Crown case in relation to specified "events" as set out in the Coincidence Notice. The detailed documentary analyses undertaken by counsel for the Crown and counsel for Mr Joffe and Mr Stromer, the written primary and reply submissions and the supplementary oral submissions (supplementing both the primary and reply submissions) and the five day hearing all indicate that an advance ruling approach is appropriate. Accordingly, I make an order as sought in paragraph 1 of the notices of motion.

(4) The evidence sought to be admitted under s.98

The Crown seeks to lead coincidence evidence on the basis that the evidence pertaining to each individual count is admissible in respect of each other count.
The Crown also proposes to adduce evidence of three uncharged events relating to the following entities and financial products:-

(1) Publishing and Broadcasting Ltd ("PBL”). The financial products acquired by Mr Stromer in respect of PBL were Contracts for Difference ("CFDs”).

(2) Downer EDI Ltd ("DOW”). The financial products acquired by Mr Stromer in respect of DOW were CFDs.

(3) Australian Pipeline Trust ("APA”). The financial products acquired by Mr Stromer were APA units.

The object of the orders sought in the notices of motion under to s.29(3) and s.21 of the Criminal Procedure Act 1986 is to create the basis for an order severing the counts on the indictment so that there is a trial of each accused on the individual counts (other than in relation to Sydney Roads Group Ltd ("SRG”)).
The separate trial issue is, in that way, interdependent with the coincidence evidence issue. The question of severance of the counts, in other words, turns on whether the Crown is to be permitted, in relation to each individual count, to rely upon the evidence it seeks to tender in proof of each other count and vice versa.
The applications seek orders for joint trials of the two accused in respect of the counts identified below:-

(1) Counts 1 and 11 – GasNet Australia Group ("GasNet”).

(2) Counts 2 and 12 – Auckland International Airport Ltd ("AIA”).

(3) Counts 3 and 13 – AWB Ltd ("AWB”).

(4) Counts 4 and 14 – Boral Ltd ("BLD”).

(5) Counts 5 and 15 – Alinta Infrastructure Holdings Ltd ("AIHCA”).

(6) Counts 6, 7, 8, 9, 16, 17, 18 and 19 – Sydney Roads Group Ltd ("SRG”).

(7) Counts 19 and 20 – Rinker Group Ltd ("RIN”).

The Crown served a Notice of Coincidence Evidence on 25 February 2011 pursuant to s.98 of the Evidence Act 1995 (the coincidence rule) for the purpose of establishing that each of the accused did the acts alleged against them in the indictment and that each had the required state of mind on the basis that, having regard to the similarity of the events and circumstances, it is improbable that the events occurred coincidentally.
The Crown, therefore, seeks the admission of evidence as referred to in the Coincidence Notice in proof of what is a circumstantial case against the two accused. That case has been described in the Supplementary Submissions on behalf of the Crown as follows (at pp. 1-2):-

"There was a scheme in place whereby Joffe would obtain inside or confidential information through the opportunity afforded by his employment at Moody's. He would then pass it on to his trusted friend, Stromer, whom he had recruited to purchase shares/securities in the circumstances pleaded. Each of the counts in the indictment represents an instance of the scheme in action. The fact that 10 separate charges have been laid against each accused ought not to distract from what is the central allegation of the Crown and that is that there was a scheme in place whereby Joffe would pass the relevant information on to his recruit, Stromer, in the circumstances alleged in the charges. The Crown case is circumstantial. It is the Crown case that taken together, each pair of charges represents the scheme in action."

In the Outline of Submissions on behalf of the Crown, the purpose of the Coincidence Notice was stated to be as follows:-

"Mr Joffe
The evidence of the two or more related events is to be tendered to prove Mr Joffe did the particular acts alleged in each of Counts 1-10 in the Indictment, namely, that he procured Nathan Stromer to acquire the relevant Division 3 financial products identified in each count in the Indictment.
The evidence of the two or more related events is also to be tendered to prove that Mr Joffe had a particular state of mind, namely, that at the time he procured Nathan Stromer to acquire the relevant Division 3 financial products identified in each of the Counts 1-10 in the Indictment, he acted intentionally and was in possession of the inside information as particularised in each of Counts 1-10 in the Indictment.
Conversely, the Crown submits that the evidence will rebut any suggestion that the contacts between Messrs Joffe and Stromer were merely coincidental.
Mr Stromer
The evidence of the two or more related events is to be tendered to prove that Mr Stromer did the particular acts alleged in each of Counts 11-20 in the Indictment, namely, that he acquired the relevant Division 3 financial products identified in each act in the Indictment.
The evidence of the two or more related events is also to be tendered to prove that Mr Stromer had a particular state of mind, namely, that, at the time he acquired the relevant Division 3 financial products identified in each of Counts 11-20 in the Indictment, he acted intentionally and was in possession of the inside information as particularised in each of Counts 11-20 in the Indictment.
Again, conversely, the Crown submits that the evidence will rebut any suggestion that the contacts between Messrs Joffe and Stromer were merely coincidental."

In its Outline of Submissions, the Crown stated that it proposes, in relation to each of Counts 1-10 in the indictment against Mr Joffe, to adduce the evidence in the Crown case in relation to each of the other counts against Mr Joffe. The Crown also proposes, in relation to each of Counts 11-20 in the indictment which concern Mr Stromer, to adduce the evidence in the Crown case in relation to each of the other counts against Mr Stromer.
The substance of the coincidence evidence that the Crown intends to adduce against each accused is set out in a table: Table A of the Crown's Coincidence Notice.
The Crown, accordingly, seeks to lead, in one trial, the evidence that supports the 20 charges alleged to have been committed by Mr Joffe and Mr Stromer on the basis that their conduct was not coincidental, but was an intended course of conduct.

(5) Seven events

The combined course of conduct, summarised in pp.5-8 of the Coincidence Notice, was compartmentalised into seven "events" as follows:-

The receipt by Moody's of information from seven entities the subject of charges, being "inside information".
Mr Joffe's direct receipt of inside information in some instances and indirect receipt of information in others.
Telephone communications between Mr Joffe and Mr Stromer, by which means Mr Joffe allegedly communicated the inside information to Mr Stromer, thereby procuring Mr Stromer to trade whilst in possession of the inside information.
Mr Stromer's acquisition of the financial products in the seven entities whilst in possession of the inside information.
The announcement made to the market of an event that pre‑empted the transaction.
Mr Stromer's trading out of his position in the seven entities.
Mr Joffe's significant surveillance of the share price in the entities traded in by Mr Stromer, usually on CommSec, throughout the material time.
1. The Crown also relies, as indicated above, upon the combined course of conduct not charged but which is summarised at p.9 of the Coincidence Notice, and being constituted by a set of events which correspond with those set out in Table A of the Coincidence Notice, except that it is alleged (in Table B) that Mr Joffe was in direct or indirect receipt of "confidential", as opposed to, "inside" information and that Mr Stromer traded in "confidential", as opposed to, "inside" information.

(B) RELEVANT STATUTORY PROVISIONS

Part 3.6 of the Evidence Act – Tendency and Coincidence – contains the provisions of s.98 and s.101.
Section 98 establishes the "coincidence rule" which excludes evidence of "2 or more events occurred" being adduced to prove that a person did a particular act or had a particular state of mind on the basis that "it is improbable that the events occurred coincidentally" (relying on similarities in the events and/or the circumstances in which they occurred) unless the requirements imposed by s.98(1) are satisfied. The use of such evidence is additionally subject to s.101.
Section 98 is in the following terms:-

"98   The Coincidence Rule
(1)   Evidence that 2 or more events occurred is not admissible to prove that a person did a particular act or had a particular state of mind on the basis that, having regard to any similarities in the events or the circumstances in which they occurred, or any similarities in both the events and the circumstances in which they occurred, it is improbable that the events occurred coincidentally unless:
(a)   the party seeking to adduce the evidence gave reasonable notice in writing to each other party of the party's intention to adduce the evidence, and
(b)   the court thinks that the evidence will, either by itself or having regard to other evidence adduced or to be adduced by the party seeking to adduce the evidence, have significant probative value.
(2)   ..."

Section 101 is in the following terms:-

"101   Further restrictions on tendency evidence and coincidence evidence adduced by prosecution
(1)   This section only applies in a criminal proceeding and so applies in addition to sections 97 and 98.
(2)   Tendency evidence about a defendant, or coincidence evidence about a defendant, that is adduced by the prosecution cannot be used against the defendant unless the probative value of the evidence substantially outweighs any prejudicial effect it may have on the defendant.
(3)   This section does not apply to tendency evidence that the prosecution adduces to explain or contradict tendency evidence adduced by the defendant.

(4) This section does not apply to coincidence evidence that the prosecution adduces to explain or contradict coincidence evidence adduced by the defendant."

As to the requirement specified in s.98(1)(a), the Crown relies upon the Coincidence Notice served on the legal representatives of Mr Joffe and Mr Stromer on 25 February 2011 as sufficient compliance with that requirement.

(C) COINCIDENCE EVIDENCE RELIED UPON BY THE CROWN

(1) Similarities in evidence

In relation to the requirements specified in s.98(1)(b), the Crown set out what it contended were the similarities in the events and circumstances recorded in Tables A and B of the Coincidence Notice. The Crown relied upon the following:-

"A   All information alleged to be inside information or confidential information was received by Moody's by way of Moody's clients, often referred to as Credits.
B   Mr Joffe was employed at Moody's as an associate analyst at all times during which the inside information or confidential information was received by Moody's.
C   Shortly after receipt of the inside information or confidential information by Moody's, Mr Joffe communicated with Mr Stromer.
D   Shortly after communication with Mr Joffe, Mr Stromer acquired the financial products in the entities about which Moody's had received inside information or confidential information.
E   Shortly after Mr Stromer had acquired the financial products, either an announcement was made to the market that made public the information that had previously been inside information or confidential information, or Moody's was advised that the transaction would not be going ahead.
F   Shortly after the public announcements or Moody's being advised that the transaction was not going ahead, Mr Stromer traded out of his position in the financial products.
G   During the time that Moody's was receiving the inside information or confidential information, Mr Joffe maintained significance surveillance of the share price in the entities in which Mr Stromer traded."

(2) The Crown's contentions

The Crown observed that Mr Stromer commenced his trading in and after June 2006 by acquiring shares in GasNet (between 8 June 2006 and 14 June 2006) and AIA (between 1 August 2006 and 8 August 2006).
Following those acquisitions, Mr Stromer principally acquired financial products in the form of derivatives known as CFDs. The Crown anticipated that CFD providers who give evidence in the proceedings will address the characteristics of a derivative.
Ms Natalie Beirne from the CFD market maker IG Australia, it is anticipated, will explain that CFDs are leveraged so that they allow the client to use a small amount of equity to secure a larger exposure of an underlying asset. Leverage can be beneficial in strengthening returns, however, it may also work against the investor, resulting in increased losses.
The Crown's contention was that Mr Stromer was a relatively inexperienced trader. He would not, it was argued, have entered into high risk derivatives without being apprised of the "inside" and "confidential" information about the entities in which he traded. The Crown submitted that Mr Joffe, through his employment at Moody's, had access to inside information in the case of each charged transaction. The evidence, the Crown anticipated, would establish significant telephone contact between Mr Stromer and Mr Joffe at times that were significant in relation to the relevant purchases and sales made by Mr Stromer.
On the "improbability of coincidence", in addition to relevant communications between the two accused, the Crown also relied on the timing of the purchases and sales of the relevant financial products by Mr Stromer.
The submission was that the probability that the acts of Mr Joffe (A, B, C and G in paragraph [31] above) and their circumstances and those of Mr Stromer (C, D, F and G in that paragraph) are coincidental, are reduced once it is understood that the acts were repeated time after time in similar circumstances.
The Crown submitted that that probability is proportionately reduced as each set of similar circumstances is taken into the mix. It is the coincidence in time and circumstance, over and over again, the Crown stated that was relied upon to prove that the conduct of each accused in relation to any one count was not merely innocent and coincidental: Outline of Submissions on behalf of the Crown at p.4.
The Crown therefore contended that it is improbable that the alleged acts and circumstances in relation to each count in the indictment occurred coincidentally. It defied probability, it was argued, that, on each occasion, the same pattern of trading by Mr Stromer took place shortly after Moody's had received "inside" or "confidential" information (which it alleged was known or available to Mr Joffe) always prior to any public announcement of that information, and in circumstances where Mr Stromer always traded out of his position shortly after a public announcement or alternatively Moody's was advised or (to the knowledge of Mr Joffe) that a transaction was not going forward or would occur. The contention was that it was improbable that these events occurred otherwise than as part of a pattern of deliberate conduct on the part of each of the accused.
The Crown also distinguished the "facts in issue" in respect of each accused and the position it understood was adopted by each accused as follows:-

"(a)   As to Mr Joffe:-
(i)   The receipt of inside information in connection with all entities other than GasNet. This is presently accounted for by (Mr Joffe's) submissions to the effect that, aside from GasNet, the information in the charged entities is not inside information, and otherwise that he did not receive any information at all in connection with the entities that he (was) not involved with as a junior analyst (circumstances).
(ii)   The procuring of Mr Stromer to trade in the entities, principally by way of telephone communication of the inside information or confidential information as particularised (act).

(b) As to Mr Stromer:-
(i) Being in possession of the inside information or confidential information as particularised, when acquiring financial products. The submissions made on his behalf indicate that his defence will be that he was merely 'tipped' (circumstance)."

On the question of the admissibility of the evidence, the Crown submitted that the evidence has "significant probative value within the meaning of s.98(1)(b)". The Dictionary to the Evidence Act defines "probative value" as follows:-

"probative value of evidence means the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue."

The Crown noted that "striking similarities" are not essential, but accepted that the absence of striking or unusual similarities would make it less likely that the requirement of "significant probative value" could be satisfied.
It, however, contended that, in this case, the similarities were striking and that, in all instances, the same pattern is shown.
It was further submitted that the probative value of the coincidence evidence is enhanced by other evidence available to the Crown and which it proposes to adduce.
Importantly to the issues raised on the present applications, the Crown submitted that the Court is confined in determining admissibility of evidence under s.98 to a consideration of the evidence to be adduced by the party seeking to rely on the evidence of those events. The determination, it submitted, is to be made in the absence of any consideration of another party's alternate interpretations of the evidence to the interpretations of the party who seeks to have the evidence admitted.
The Crown, in this respect, referred to the observations of Beazley JA in Samadi & Anor v R [2008] NSWCCA 330; (2008) 192 A Crim R 251 at [97] (with whom Hislop and Price JJ agreed). I will refer to those observations later in this judgment.
In relation to s.101 of the Evidence Act, the Crown submitted that the evidence sought to be adduced in a joint trial does not give rise to any unfair prejudice against the accused. The overwhelming majority of the events of which evidence is sought to be adduced, it observed, are charged as offences.
The Crown also observed that the material events occurred over a short period of time (about seven months) and in alleged circumstances that were similar. It was contended that there was nothing about the circumstances alleged in relation to any particular transaction which could give rise to relevant prejudice.
Any possible prejudice that could arise, the Crown submitted, could be dealt with by the giving of directions to the jury, the presumption being that the jury will obey any such directions.
The submissions on behalf of the accused will be separately considered below.

(3) The facts in issue

Mr Joffe is charged under Counts 1 to 10 in the indictment with having "procured" Mr Stromer to acquire the specified financial products: s.1043A(1)(d).
In understanding what "acts" may be relevant to an offence charged under those counts, it is necessary to consider aspects of the offences charged. In that respect, the following matters arise:-

(1) An offence under s.1043A(1)(d) involves a concept of "procurement". The word "procure" as noted includes incites, induces or encourages an act or omission by another person: s.1042F(1).

(2) As used in s.1043A(d), the term "procure", accordingly, involves the act of procuring a person to do something (as distinct, for example, from simply procuring an act that constitutes an offence).

(3) The acts are stated as being "... to apply for, acquire, or dispose of, relevant Division 3 financial products ..." in s.1043A(1 )(d). So read, the words connote a causal connection between alleged acts directed to procuring another person (in this case, Mr Stromer) to do or undertake the act(s) of applying for, acquiring or disposing of the specified financial products and the acts of the other person in doing so. The concept of an act(s) by one person to "procure" another to do an act has been considered in a number of cases including R v F; Ex parte Attorney-General [2004] 1 QD R 162; Deutsch v The Queen [1986] 2 SCR 2; R v Broadfoot (1976) 64 Cr App R 71, 74 and Re Attorney General's Reference (No 1 of 1975) [1975] QB 773, 779 to 780.

(4) The issue of "procure another" in the present proceedings, accordingly, involves factual matters concerning communications between Mr Joffe and Mr Stromer, the content of any communications and what, if any, related acts occurred at material dates and times.

In the present proceedings the Crown seeks to lead evidence to establish procuring by Mr Joffe of acts by Mr Stromer within s.1043A and in relation thereto to prove the following:-

(1) That whilst in the employ of Moody's in the relevant period Mr Joffe had access to relevant "inside information".

(2) That by one or more means he utilised the means of access available to him to obtain and possess the inside information being:-

(a) inside information within the meaning of s.1042A;

(b) inside information that was provided by specified entities to Moody's;

(c) having obtained the inside information, Mr Joffe conveyed the inside information to Mr Stromer for the purpose of having him perform the acts referred to in that provision;

(d) Mr Joffe procured Mr Stromer to do acts that fell within s.1043A(1)(b);

(e) that Mr Stromer then performed a number of acts by way of applying for, acquiring and disposing of the specified Division 3 financial products.

The Crown's contention is that, when the individual matters are considered together, their probative force is greatly increased. In addition, when evidence on the matters is considered with other evidence in the Crown case, the strength of its circumstantial case will also be increased.
The Crown, in this way, seeks to adduce evidence of basic facts from which the jury will be asked to infer further facts and make intermediate factual conclusions before making ultimate findings arising with respect to each count.
In the written submissions for Mr Stromer, it was stated at [8] that, in respect of financial products acquired by the accused, there is no issue (and it would be, in due course, admitted) that he "acted intentionally", in the sense that he intended to acquire them.

(4) The events relied upon by the Crown

The events specified in the Coincidence Notice were reproduced and set out in a spreadsheet format described as a Table. Particular factual matters concerning each of the events were set out in the document which was marked MFI 1.
A similar spreadsheet analysis was made in relation to PBL, DOW and APA relevant to the "uncharged events":
Particular factual events set out in MFI 1 led to responses by the Crown which were set out in a document, again in spreadsheet format, which became MFI 2.
Accordingly, Mr Joffe's response to the Coincidence Notice, the Crown's response thereto and a Reply by Mr Joffe took the following form:-

Table of responses by Mr Joffe to "events" set out in the Coincidence Notice (MFI 1), being Mr Joffe's responses to each of the events in the Coincidence Notice in relation to the entities identified in the indictment and Coincidence Notice. In MFI 1 there are 91 "events" consistent with the Coincidence Notice together with Mr Joffe's response to each event.

(2) Responses by the Crown in comparable spreadsheet format entitled Response by the Crown to the Table relied upon by Mr Joffe (MFI 2).

(3) Reply by Mr Joffe to the Crown's response to the Table – being a point by point response on behalf of Mr Joffe in the nature of a rejoinder to the Crown's responses in MFI 2 as follows:-

(a) GasNet – specific responses to (i) Event 1; (ii) Event 14; (iii) Event 27; (iv) Event 40; (v) Event 66; (vi) Event 79

(b) AIA – specific responses to (i) Event 2; (ii) Event 28; (iii) Event 41; (iv) Event 54; (v) Event 80

(d) BLD – specific responses to (i) Event 4; (ii) Event 17; (iii) Event 30; (iv) Event 43; (v) Event 56; (vi) Event 69; (vii) Event 82

(e) AIHCA – specific responses to (i) Event 18; (ii) Event 31; (iii) Event 44

(f) SRG (charge 6) – specific responses to (i) Event 6; (ii) Event 19; (iii) Event 32; (iv) Event 84

(g) SRG (charge 7) – specific responses to (i) Event 21; (ii) Event 47

(h) SRG (charge 8) – specific responses to (i) Event 21; (ii) Event 34; (iii) Event 47; (iv) Event 86

(i) SRG (charge 9) – specific responses to (i) Event 9; (ii) Event 22; (iii) Event 35; (iv) Event 48; (v) Event 87

(j) RIN – specific responses to (i) Event 10; (ii) Event 23; (iii) Event 36; (iv) Event 62

(k) PBL – specific responses to (i) Event 11; (ii) Event 24; (iii) Event 37; (iv) Event 50; (v) Event 76

(I) DOW – specific responses to (i) Event 12; (ii) Event 38; (iii) Event 51; (iv) Event 64; (v) Event 77; (vi) Event 90

(m) APA – specific responses to (i) Event 13; (ii) Event 26; (iii) Event 39; (iv) Event 52; (v) Event 78; (vi) Event 91

In addition to the Table (MFI 1), the Crown Response (MFI 2) and the points in Reply by Mr Joffe, the Crown produced a voluminous document entitled Amended Statement of Facts (Exhibit A). The document was admitted subject to objections raised in the Reply Submissions for Mr Joffe. The document sets out in 132 pages containing 603 paragraphs a statement of the particular factual matters about which it intends to adduce evidence at trial and source references to specific matters referred to in the Statement (based on Exhibit C1 to C14). The document was referred to by the Crown in its submissions and constitutes a summary of material in those 14 volumes of material.
"Significant probative value" under s.98 requires an examination of the facts which the Crown contends constitute similarities in the events or in the circumstances surrounding those events, or both. It is necessary for there to be a relevant connection between the evidence of the events and the facts in issue in the proceedings.
A considerable volume of written material and time at the hearing was devoted to a detailed examination of particular facts and events set out or referred to in the Table – MFI 1.
The Appendix to this judgment contains a summary of facts and particular matters that were raised in the submissions for Mr Joffe and in the Crown's reply. For reasons discussed below, I have concluded that there is no requirement for the purposes of a ruling on admissibility under s.98 to determine the existence and weight to be given to inferences that may be considered as alternative or inconsistent with those relied upon by the Crown by analysing parts or segments of evidence in a circumstantial evidence case. In deference to the arguments raised, the Appendix endeavours to capture many matters raised and relied upon in the submissions made on behalf of Mr Joffe. The summary of factual material relating to the "events" in MFI 1 set out in the Appendix also assist in understanding the contentions made on behalf of Mr Joffe and Mr Stromer.
In his oral submissions, Mr R G McHugh SC, who appeared, with Ms G A Bashir of counsel, for Mr Joffe, analysed in some detail the evidence in the Crown case bearing upon particular "events" referred to in the Table to the Coincidence Notice.
The purpose of the analysis was, in part, to identify asserted deficiencies, inadequacies and evidence which was said to have low or no probative value including evidence in relation to the question under s.98(1)(b) of "similarities" and the "pattern" of conduct alleged by the Crown. The submissions also raised matters that were said to support alternative explanations or inferences to those the Crown argued were to be derived from the evidence.
Amongst the matters raised as deficiencies and alternative inferences or explanations in the submissions were the following:-

(1) The absence of evidence to establish that in particular communications (telephone or text messages) between Mr Stromer and Mr Joffe inside information was or could have been conveyed. Reference was made, in this respect, to evidence which would indicate that Mr Joffe was not at his home when a particular call was made or that other calls were of extremely short duration.

(2) The particular timing of specific events which it was argued did not conform with or were inconsistent with the "pattern" of conduct or events asserted by the Crown.

(3) Evidence it was contended that supported an alternative explanation for Mr Joffe having accessed the CommSec internet site on particular occasions (eg, the GasNet share purchase).

(4) Whilst accepting that Mr Wilson's expert opinion to the effect that certain "information" was "material" information and it could not be disputed on the present applications, nonetheless, it was contended that an amount of it could not be regarded as very worthwhile or valuable information. In one submission it was asserted that certain information the subject of the expert opinion of Mr Wilson was "not very good information" or was "terrible information" (t.54).

(5) That the evidence concerning particular trading activities in shares or derivatives could be explained by media releases or other information that had entered the public domain. One illustration was said to be found in a media release dated 24 July 2006 which referred to a re-evaluation of AlA's non-current assets resulting in an increase in value of $1.399 million. The submission was "that is a reason why one might be interested in the company" (t.58). This "event" is discussed in the Appendix to this judgment.

(D) SUBMISSIONS FOR MR JOFFE AND MR STROMER

(1) The issue of alternative or inconsistent inferences

It has been argued on behalf of each accused (although with somewhat different emphasis having regard to the particular nature of the charges presented against each of them), that, in determining the admissibility of evidence sought to be adduced by the Crown under s.98, I am required to consider and evaluate the extent to which "alternative interpretations" of the evidence may be open. In that respect, it has been argued on behalf of Mr Joffe and Mr Stromer that a determination of significant probative value for the purposes of s.98 "... necessarily requires an evaluation of inferences, at least where the evidence raises the possibility of alternative inferences". Mr S Odgers SC, who appeared on behalf of Mr Stromer submitted that the assessment under s.98, in particular in relation to significant probative value is directed to determining whether it could be rationally concluded that the probability of the inference that the Crown seeks to draw is significantly greater than the probability of an inference inconsistent with that inference.

In the submissions for Mr Joffe, it was argued by Mr McHugh that, in discharging the requisite evaluative and predictive function under s.98, it was not only permissible, but it was necessary for the Court, inter alia, to have regard to the availability and strength of inferences founded in the evidence other than the inferences for which the Crown contends.
It was not suggested in the submissions for the accused that there was any case law authority that determined that such an approach was either appropriate or open to be taken when assessing significant probative value under s.98. A number of authorities in relation to common law principles pertaining to similar fact evidence and s.98 were referred to but none have been suggested as standing as authority for the submissions referred to in paragraph [68] and [69].

(2) Submissions for Mr Joffe

Detailed written submissions were made on behalf of Mr Joffe. These were supplemented by oral submissions. The written submissions were:-

(1) Defence Written Submissions on separate trial application dated 13 May 2011.

(2) Mr Joffe's Submissions in Reply dated 18 July 2011

(a) The circular reasoning submission

Mr McHugh, on behalf of Mr Joffe, in the course of his oral submissions, as indicated, above undertook an analysis of specific matters relating to certain of the "events" set out in MFI 1.
He contended that, insofar as the Crown seeks to prove that Mr Joffe possessed inside information by reference to factual matters concerning other events referred to in the Coincidence Notice, there is a problem with the Coincidence Notice "because it becomes circular" (t.19).
Mr McHugh in this regard referred to the High Court's decision in Perry v The Queen [1982] HCA 75; (1982) 150 CLR 580. It is necessary in order to deal with the submission to refer here to the facts of that case.
Mrs Perry was tried on indictment on two charges of attempting to murder Mr Perry, who was her third husband. The Crown case was that in two separate periods, the first in 1978, the second in 1979 she administered poison to her husband with intent to kill him. She was convicted on the two counts and sought special leave to appeal to the High Court which was granted upon one ground only, namely, that the trial judge wrongly admitted evidence which the Crown contended showed that three other persons with whom the applicant had had a close relationship had died of poisoning.
The issue in the case turned on the admission of evidence that the accused's second husband and her brother (M) had died of arsenic poisoning in 1961 and 1962 respectively and that her de facto husband (D) had died of an overdose of barbiturates in 1970. The accused benefited financially from the deaths of her second husband and de facto husband and would have benefited financially from the death of her third husband if he had died.
However, it had not been established that D had, in fact, ingested any poison. It was necessary for the Crown to rely on the other instances of poisoning, including those the subject of the particular charges in question, in an attempt to provide an inference that D had in fact suffered from arsenic poisoning. In other words, as Gibbs CJ observed (at 589), it was necessary to assume the guilt of the accused of the offences of which she was charged in order to render admissible the evidence regarding the cause of death of D. Such a line of reasoning was obviously objectionable.
Accordingly, the critical aspect which gave rise to the issue of circular reasoning – the need to assume the guilt of the accused on the subject charges – was the absence of evidence on the critical fact – namely the absence of direct evidence that D had died from arsenic poisoning at all. In fact, it was clear that he died from an overdose of sleeping tablets. Without evidence of death by arsenic poisoning, the evidence could only possess a speculative character.
I am unable, with respect, to accept, as Mr McHugh argued, that there is a parallel in the flawed process of reasoning in Perry (supra) and what is contended for in the present case. Whilst there are a number of disputed factual matters concerning the "events" in the Coincidence Notice and MFI 1, as discussed in the analysis in the Appendix to this judgment, the challenge to particular factual matters, their truth or accuracy does not equate to an unequivocal absence of evidence of a critical fact as occurred in Perry (supra) – the absence of evidence of arsenic poisoning.
It was contended by Mr McHugh in his written submissions that the Crown had applied "reverse and circular logic" in respect of the alleged receipt, either directly or indirectly, of inside information: at [36]. It was further contended that there was "no actual evidence" in respect of a number of matters, in particular as to:-

Mr Joffe having received any confidential information as alleged by the Crown in relation to specified entities: at [38].

Of such information being conveyed to Mr Stromer.

Of what was said during telephone calls or in text messages between Mr Joffe and Mr Stromer.

Of Mr Joffe using text messages as a means of communicating insider information with Mr Stromer or of the content of any such messages.

Of Mr Joffe procuring Mr Stromer to acquire the financial products detailed in Counts 1 to 10 – that the Crown relied entirely on inference.

Reference was made to dicta of Brennan and Murphy JJ in Perry (supra) which, it was stated, explained why, if an event is relied on by the Crown as a "similar event", the existence of that event must be able to be safely concluded on the basis of the evidence led by the Crown. Where, it was submitted, the evidence does not prove the existence of the event, then the Crown used the (presumed) existence of the event to support the charge: at [60]. The dicta of Brennan J in Sutton v R [1984] HCA 5; (1984) 152 CLR 528 was also relied upon in relation to the proposition that one cannot prove a fact by a chain of reasoning which assumes the truth of that fact: at [61].
The fact that the Crown does not have direct evidence (or what was referred to as "actual evidence') in relation to any of the matters referred to in paragraph [80], is not to the point. The Crown case is said to be largely a circumstantial one. Circumstantial evidence is evidence of a basic fact or facts from which a jury is asked to infer a further fact or facts: Shepherd v The Queen [1990] HCA 56; (1990) 170 CLR 573 at 579 per Dawson J. As Dawson J there noted, it is traditionally contrasted with direct or testimonial evidence. In most, if not all, cases the ultimate inference must be drawn from some intermediate fact or conclusion, whether identified expressly or not. Intermediate facts constitute indispensable links in a chain of reasoning towards an inference of guilt.
As outlined by the Crown in its submissions, the evidence to be relied upon is intended to establish a circumstantial case by establishing a sequence of events by adducing evidence of primary facts that are relevant to establishing the facts in issue. Once relevant primary facts have been proved, the Crown then relies upon what it contends are reasonable or rational inferences that such facts permit.
The Crown's Statement of Facts summarises the evidence which it will seek to call to prove that Moody's held inside information at relevant times and that Mr Joffe had access to computerised and other information, including information communicated to him orally.
The fact that the Crown seeks to prove particular facts such as the possession of inside information by Mr Joffe and Mr Stromer and the subject matter of communications between Mr Joffe and Mr Stromer as well as the issue of "procuring" under s.1043A(1)(d) by inferential reasoning as part of a circumstantial evidence case, does not mean that it is engaged in a process of circular reasoning. In other words, by seeking to prove a sequential set of primary facts by the tendering of evidence and relying upon the drawing of circumstantial inferences does not constitute the Crown relying upon similar fact evidence to prove a critical fact not otherwise proved as occurred in Perry (supra). There is, in my opinion, no foundation for the proposition that the Crown is proceeding upon an assumption as to the existence of a fact in order to give cogency to the evidence it seeks to adduce under s.98: Perry (supra); Sutton (supra).
The Crown case, as it presently stands, proceeds upon the basis of establishing a sequence of factual events and surrounding circumstances relevant to those events including the acquisitions of the financial products the subject of the counts in the indictment. Clearly, a sequence of interrelated events may constitute a chain constituting circumstantial evidence capable of establishing facts in issue.
The Crown's proposed course of establishing primary facts linked by circumstantial evidence does not, in my opinion, constitute circular reasoning in these proceedings. The use of such evidence to establish facts, including facts in issue, is unexceptional. Whether it does so will depend upon the nature and cogency of the evidence ultimately adduced.

(b) The issue of "alternative inferences"

It was submitted for Mr Joffe that s.98 and s.101 do not prevent the Court from assessing the probability of inferences other than those relied on by the party who seeks to adduce the evidence.
It was contended that it is logically impossible to assess the relative probability or improbability that a set of similar events occurred coincidentally without considering the likelihood of "alternative available inferences". That is a matter, it was submitted, that can only be rationally assessed in light of all the circumstances in which the events occurred: Mr Joffe's Submissions in Reply at [58]. This, it was said, constitutes the predictive and evaluative exercise to which reference was made in R v Zhang [2005] NSWCCA 437; (2005) 158 A Crim R 504 at [139].
The approach to be taken by the Court in the application of s.98, Mr McHugh submitted, involved six matters as set out in a document dated 22 June 2011 in the following terms:-

“…
The Court's task:
1.   For each accused, for each count, for each particular act or state of mind which the Crown seeks to establish, what are the specific events which the Crown asserts are 'similar' (s.98(1))?
2.   Is the Court satisfied that those events are 'substantially and relevantly similar (Zhang)?
3.   As to proof of the Crown's asserted similar events:-
a.   if the proof of the asserted event is testimonial, the Court is bound to assume that the jury will accept that evidence, without considering credibility or reliability (Shamouil);
b.   but if the asserted event depends on an inference, the Court must form its own view of the probabilities and the process of reasoning must not be circular (Perry, Sutton).
Compare the factual circumstances in cases such as e.g., Perry (as to the deaths other than Duncan's), Folbigg and Zhang, where there was little or no doubt on the evidence as to the existence of the events asserted to be similar.

4.   Taking an evaluative and predictive approach in light of all the anticipated evidence, is it improbable that the [similar] events occurred coincidentally' (s.98(1))?
5.   Taking an evaluative and predictive approach in light of all the anticipated evidence, has the Crown satisfied the Court that (in accordance with the no-coincidence process of reasoning) the evidence of the alleged similar events has ‘significant probative value’ (s.98(1)(b))?
6.   If so, has the Crown satisfied the Court that the probative value of the evidence of the similar events substantially outweighs any prejudicial effect it may have on the accused (s.101)?"

It was submitted on behalf of Mr Joffe that the coincidence evidence in relation to Count 11 lacked significant probative value for a number of other reasons. One reason was stated to be that a particular event did not fit the "pattern" asserted by the Crown. The evidence is relied upon by the Crown to support an inference that, on the one occasion when the accused's father, not the accused, acquired financial products, he did so on behalf of his son, Nathan Stromer. It was submitted (at [6]):-

"... However, even if the other events show a pattern when the accused acquires financial products, it is a large step to extend that pattern to an acquisition by another person ..."

A number of matters were also noted in relation to the GasNet acquisition. They may be briefly stated, as follows:-

(1) The acquisition preceded all other acquisitions. It, therefore, could not be said to fall within the period of the alleged pattern.

(2) If the acquisition by Mr Stromer's father was an attempted disguise, then it would be surprising that it occurred before other acquisitions relied upon by the Crown when no such disguise was adopted.

(3) There was minimal evidence of an opportunity for inside information relating to GasNet to be communicated by Mr Joffe.

(4) There was no evidence that established that Mr Joffe had any interest in GasNet prior to the acquisition on 14 June 2006 (the first inquiry in relation to securities in the company was on the CommSec website on 16 June 2006).

(5) More than two months passed between the relevant announcement and the sale of the financial products by Mr Stromer's father. (The announcement was made on 16 June 2006 and the sale occurred on 23 August 2006).

These matters, it was contended, supported the conclusion that the coincidence evidence lacked significant probative value in establishing that the accused unlawfully acquired the financial products, the subject of Count 11.
The submissions on the question of prejudice were stated in the submissions for Mr Joffe dated 13 May 2011 at [120]) as follows:-

"(a)   The admission of the coincidence evidence would likely lead the jury to place improper emphasis on or to overestimate the weight of the coincidence evidence and distract the jury's attention from the key issues of fact with respect to each charge.
(b)   The admission of the occurrence of the 13 events in a single trial before a single judge would involve great confusion and complication, particularly given the number of witnesses proposed to be called and the number of documents proposed to be tendered.
(c)   It would be near impossible for the jury at the conclusion of the trial to distinguish evidence of one charge from evidence of the other charges when reaching a verdict on each charge separately, as it would be required to do.
(d)   It would be difficult or impossible for the accused to give evidence coherently and to be cross-examined about so many different allegations, given the potential for confusion amongst the charges."

Further, detailed submissions made on behalf of Mr Joffe, in particular, in relation to events set out in MFI 1 and evidence in relation thereto are referred to and discussed later in this judgment.

(3) Submissions on behalf of Mr Stromer

Mr S Odgers SC, who appeared with Mr L Fernandez of counsel on behalf of Mr Stromer, relied on written submissions lodged on 11 May 2011 and submissions in reply dated 17 June 2011. The submissions were supplemented by oral submissions made in the course of the hearing.
In the written submissions it was observed that, as against Mr Stromer, it had been submitted on behalf of the Crown that the evidence was tendered to prove that:-

(1) He "did the particular acts alleged in each of Counts 11-20 in the indictment, namely, that he acquired the relevant Division 3 financial products identified in each count in the indictment".

(2) He "had a particular state of mind, namely, that at the time he acquired the relevant Division 3 financial products identified in each of Counts 11-20 in the indictment, he acted intentionally and was in possession of the inside information as particularised in each of Counts 11-20 in the indictment".

The question was whether the evidence could rationally be regarded as having a significant effect on the probabilities relating to the existence of a fact in issue in the trial (Written Submissions, p.3).
Mr Odgers noted that the acquisition of the relevant Division 3 financial products identified in each count of the indictment is not in issue at all in respect of any of the counts, except Count 11 (written submissions at [6]). It was indicated that an appropriate formal admission would be made in due course.
Mr Odgers focussed his submissions under two headings.
The first related to the proposition that, if evidence sought to be admitted under s.98 was susceptible to inferences that were inconsistent with each other, it could not and did not meet the test of "relevance" under the Evidence Act.
Second, if the evidence in question was open to alternative inferences (one or more being consistent with innocence) the evidence could not satisfy the requirement of significant probative value.

(a) "Relevance" and "inconsistent inference"

In the Defence Further Written Submissions on the proper approach to Coincidence Evidence, it was noted that coincidence evidence, as is the case with all circumstantial evidence, must be evidence that satisfies the provisions of s.55 in order for it to be admissible: s.56(2).
Mr Odgers acknowledged that if an inference that the Crown seeks to draw with respect to a fact in issue is one that is reasonably open, the mere existence of other possible inferences will not mean that the evidence ceases to be relevant. However, the submission was that the existence of other possible inferences that are inconsistent with the fact in issue may, in certain limited circumstances, lead to a conclusion that the evidence is not “relevant” (at [5]).
It was contended that if the coincidence evidence on which the Crown relies in the proceedings could rationally only be regarded as "equally consistent with two possible inferences, one that the accused was in possession of inside information" (as contended for by the Crown), the other that he was only the recipient of a tip (an alternative inference said to be open on the evidence), then the evidence is not relevant to the fact in issue of whether the accused was in possession of inside information (written submissions at [13]).
The submissions acknowledged at [14] that this specific issue in relation to s.55 of the Evidence Act has not previously been addressed by courts in this State. However, reliance was placed upon the proposition that the definition of "relevant evidence" reflects the common law. Reference was made in this respect to the observations in footnote 4 in Washer v Western Australia [2007] HCA 48; (2007) 234 CLR 492 (Gleeson CJ, Heydon and Crennan JJ).
The argument was developed by reference to the High Court's decision in Edwards v The Queen [1993] HCA 63; (1993) 178 CLR 193, in particular, to observations concerning the proper approach to be taken with respect to an inference of consciousness of guilt where the Crown wished to invite the jury to infer guilt from a lie told by the appellant in that case.
Relevant principles concerning s.98 enunciated by Simpson J in Zhang (supra) and dicta of Latham J in R v Ceissman [2010] NSWCCA 50 at [8]‑[9] were also noted and the observations of Spigelman CJ in R v Shamouil [2006] NSWCCA 112; (2006) 66 NSWLR 228 at [61] extracted. A little later, the submission was:-

"26 However, Spigelman CJ said nothing in Shamouil about the proper approach to the drawing of inferences in general, or coincidence evidence in particular."

It was submitted that, in applying the test in s.98, namely, in deciding whether it would be open to the jury to consider that the coincidence evidence has a significant probative effect on the probability of the existence of a fact in issue "... necessarily requires an assessment of the strength of the inference sought to be drawn" (at [27]).
It was argued that this proposition was consistent with the common law authorities on the proper approach to similar fact evidence.

One difficulty, apart from the absence of authority to support the above line of argument is that, at this stage of proceedings in which an advance ruling is sought on admissibility, there is evident difficulty in determining the availability of inferences and the comparative strength of alternative inferences in relation to a particular fact or matter. The drawing of inferences will, to an extent, depend, as it does with a jury's finding, upon what particular facts or combination of facts the evidence is found to establish. This, at a pre-trial stage, is problematic where there exists a dispute as to primary facts or where the Crown case is largely or wholly a circumstantial one.
In the present proceedings, in the submissions for Mr Joffe, a number of matters were said to be in issue or in dispute. These included the following:-

(1) The extent or degree of "materiality" of information having regard to other information that had been discussed in the media.

(2) The proposition that, on particular occasions, Mr Joffe was available to discuss particular proposed acquisitions with Mr Stromer when there was evidence to the contrary.

(3) The proposition that Mr Joffe could have had access to inside information in relation to particular acquisitions made by Mr Stromer.

(4) The question as to whether Mr Joffe was present at particular meetings when inside information was discussed.

(5) That certain acquisitions could be explained as based on information that was publicly available.

The capacity to draw inferences depends upon the facts that go into the mix of facts. The drawing of inferences will often depend upon the weight to be given to particular facts and the interrelationship between facts.

(b) Alternative inferences

Whilst it was accepted that Mr Stromer "acted intentionally" insofar as he intended to acquire the financial products in question, there were a number of matters raised on the question of whether Mr Stromer was in possession of the inside information as particularised. It was submitted that the evidence sought to be relied upon by the Crown was not capable of proving that he did possess such information.
Additionally, on behalf of Mr Stromer, Mr Odgers submitted that it was important to take into account that it was not a fact in issue as regards Mr Stromer that Mr Joffe gave him a "tip" to buy the particular financial products (at [9]):-

"... It would not be an offence under s.1043A(1) for the accused to have received a ‘tip' that a particular financial product should be acquired, even if the person who provided the 'tip' did so on the basis of inside information."

The fact in issue, accordingly, was said to be whether Mr Joffe communicated the particularised (allegedly) "inside" information to Mr Stromer, and not that Mr Joffe gave him a "tip to buy particular financial products" (at [9]).
Mr Odgers argued that the evidence would not satisfy the test of relevance if it was equally consistent with two possibilities, as discussed above, namely, the possibilities that insider information was received or that Mr Stromer merely received a "tip". In that event, Mr Odgers contended it would follow that the evidence would not have significant probative value.
It was also submitted that there was no "substantial evidence" available to the Crown that would provide a clear and persuasive basis for a jury to infer that, at the time Mr Stromer acquired the particular financial products in question, he was in possession of the particularised inside information rather than simply being the recipient of a "tip" (at [11]).
The contention was that the available evidence pointed to the contrary.
The term "tip" was said to refer to a suggestion that a particular trade is likely to result in a profit. The coincidence evidence, it was submitted, did not possess significant probative value to prove the further alleged fact: Reply Submissions at [2].
The issue of "significant probative value" with respect to the particular fact in issue (that the accused Mr Stromer received inside information from Mr Joffe) should be resolved against the Crown where (Reply Submissions at [2]):-

(1) The evidence is equally consistent with two possible explanations –in Mr Stromer's case, one that establishes the fact in issue (that he received inside information from Mr Joffe), the other inconsistent with guilt (he received only "tips" from Mr Joffe).

(2) It would be a matter of speculation to choose between the two possible explanations.

(3) There is no clear and persuasive basis available from the evidence on which the tribunal of fact could be satisfied beyond reasonable doubt of the first explanation rather than the second.

It was submitted that there is no evidence to support the proposition that a person in Mr Stromer's position would not have traded in CFDs without being informed of the inside information.
Finally, it was stated that there would be a substantial prejudicial effect on Mr Stromer if the evidence was admitted. In that respect, it was argued, the requirements of s.101(2) had not been satisfied. The particular issues of prejudice were identified in the submissions at [7], as to which, see the discussion below.
It was submitted that it was sufficient that the evidence may, rather than it necessarily would, impact adversely on Mr Stromer, and it should not be assumed that judicial directions to the jury would cure any danger of unfair prejudice: Phillips v The Queen [2006] HCA 4; (2006) 225 CLR 303 at [78] per Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ; R v GAC [2007] NSWCCA 315 at [89]; (2007) 178 A Crim R 408.

(E) CONSIDERATION

(1) Similar fact evidence principles

In the discussion below, references are made to a number of authorities on particular aspects of the common law concept of "similar fact evidence" as variously applied in the case law. Those references are instructive to the extent that they assist in elucidating the application of the provisions of s.98 and s.101. It is, however, the language of the statute (the Evidence Act) which determines the admissibility of the evidence in question: Papakosmas v The Queen [1999] HCA 37; (1999) 196 CLR 297; R v Ellis [2003] NSWCCA 319; (2003) 58 NSWLR 700. The present applications are to be determined on that basis.
For coincidence evidence to be admitted, it must be both relevant evidence and adduced for a coincidence reasoning purpose.
Evidence admitted under s.98 is intended to be adduced for the purpose of establishing that, because of the improbability of two or more events occurring coincidentally, a person did a particular act and/or he or she had a particular state of mind at the time.
In Perry (supra), the High Court determined that in order to render admissible similar fact evidence, a species of propensity evidence, it could not be assumed that the accused had committed the crime charged (at 589, 594-595, 607, 612). That, of course, is a fundamental proposition to be borne in mind and applied throughout the consideration of the present applications. The facts of Perry (supra) and the principle to be derived from the case are discussed in paragraphs [75] to [78].
Similar fact evidence, a form of circumstantial evidence, was subject to a special rule of exclusion in criminal cases. Its admission was exceptional: Sutton (supra) at 533 per Gibbs CJ. Gibbs CJ referred to the decision of Lord Wilberforce in R v Boardman [1975] AC 456 where, at [22], it was stated:-

"The basic principle must be that the admission of similar fact evidence (of the kind now in question) is exceptional and requires a strong degree of probative force".

In accordance with common law principles, similar fact evidence could only be admitted if it was relevant in some other way than that of showing that the accused had a propensity or disposition to commit crime, or crime of a particular kind, or that he or she was the sort of person likely to commit the crime charged: Sutton (supra) at 533. Further, in Perry (supra), Wilson J stated at 604:-

"... To be admissible, the evidence must have a sufficiently high degree of probative force to outweigh the inevitable prejudice flowing from the nature of the evidence. It is a question of degree in each case, since probative value will vary with the nature of the similar fact evidence itself, the issues, and the other evidence in the case ..."

Section 101 now provides for a second exclusionary rule relating to tendency evidence and coincidence evidence in criminal proceedings. Section 101(2), which is considered below, calls for a balancing exercise to be conducted on the facts of each case: Ellis (supra) at [95] per Spigelman CJ.

(2) The evaluation of the probative force of similar fact evidence

A question as to the admissibility of evidence, not unlike the position with a "no prima facie case" submission, does not permit a court deciding the issue to make findings on the accuracy or the weight of disputed parts of the evidence especially where the Crown case is wholly or mainly a circumstantial evidence one. In determining whether charges are founded on the same facts or form part of a series of offences of the same or a similar character, it has been held that "It is immaterial that those facts are disputed by the defence": Sutton (supra) per Brennan J at 541.
In assessing probative value under the Evidence Act, the approach to be taken is one based upon an assumption that the evidence in the Crown case will be accepted.
As discussed in greater detail in the Appendix to this judgment, submissions were made to the effect that the probative value of the evidence on a number of aspects was either low or non-existent or diminished or were amenable to alternative explanations or inferences. Particular matters relied upon included:-

(1) Evidence in the Crown case in relation to some events was open to "plausible" explanations or inferences as against the inferences contended for by the Crown.

(2) That there was information about a particular entity in the public domain in relation to a particular count. This included speculation in the media that the entity was a possible or likely takeover target. Such information could provide the basis for some of the trading by Mr Stromer.

(3) That some "events" did not fit the "pattern" alleged by the Crown, eg, the GasNet charge, the absence in some instances of stock-checking by Mr Joffe prior to particular trading by Mr Stromer.

(4) Although particular information was, according to expert evidence in the Crown case, "material" information, in some cases it was contended that the information was "not very good" information and could not be considered as likely to operate as an incentive.

(5) The strength of many inferences as contended for by the Crown, it was argued, was not high.

(6) Phone and text message contacts were in the main initiated by Mr Stromer and not by Mr Joffe.

(7) There was no evidence of the content of such contacts or communications.

A number of submissions for Mr Joffe did not deal with the subject of "alternative inferences" by considering particular evidence referred to in the context of the whole of the evidence in relation to a particular count or the evidence in relation to other counts or both. Rather, the approach was to refer to parts of the evidence in the Crown case relating to particular "events" referred to in MFI 1 as individual segments of evidence. As discussed below, such an approach does not sit comfortably with principles that apply to the assessment of probative value of evidence particularly in circumstantial evidence cases.
In determining the admissibility of evidence under s.98(2), it is necessary to consider both evidence as to discrete facts as well as the relevant interrelation in or between facts which make up the fabric of a circumstantial evidence case.
Brennan J, in referring to the observations of Lord Hailsham in Boardman (supra), referred to in the analysis of particular facts in Perry (supra) at 610:-

"... Lord Hailsham in Boardman referred to the kind of factor which might usefully guide a judge in determining the question: 'the number of instances involved, any interrelation between them, the intervals or similarities of time, circumstances and the details and character of the evidence."

In Perry (supra), Brennan J also observed (at 610):-

"... Evidence of strikingly similar facts may be received in an appropriate case, though they occurred on only one other occasion, as Reg v Straffen (74) illustrates. But evidence of a series of occurrences exhibiting a more attenuated similarity may be admissible because the frequency of the occurrence of the similar fact enhances the probative force of the evidence, though the necessary probative force would be lacking if the similar fact had occurred but once or on a few occasions only ..."

In Perry (supra), Wilson J at 604 stated that "similar facts" involve questions of degree in each case, as probative value will vary with:-

the nature of the similar fact evidence itself;

the issues;

the other evidence in the case.

Brennan J in Sutton (supra) at 550 also emphasised the need to assess evidence in its overall context:-

"... It is often impossible to perceive the similarity between a fact proved directly in evidence and a fact to be proved inferentially or to determine the cogency of the former to prove the latter unless the fact proved directly is seen in the context of the other evidence in the case. Where the Crown seeks to prove or confirm a fact by inference drawn from similar facts, the fact to be proved or confirmed may be likened to a scene depicted in a mosaic and the pieces of evidence - direct and circumstantial -may be likened to the tiles of which the mosaic is composed. The pieces of similar fact evidence may, like the tiles, reveal their significance only in context with the rest of the evidence, appearing insignificant in isolation but clearly revealing the guilty inference when all the evidentiary tiles are locked together." (emphasis added)

The close analysis of principle undertaken by Brennan J in Sutton (supra) upon which evidence may be admitted as coincidence evidence identified the following as necessary inquiries:-

(1) Whether the evidence can be said to be relevant evidence.

(2) Whether, having regard to their number, their context, their nature and similarity, including similarities of time and circumstance, the facts said to be similar have significant probative value by reference to their connection with a fact in issue or to a fact in the chain of a fact in issue.

(3) The cogency of evidence of the commission of other alleged offences is to be ascertained by reference to the whole body of proof in the case viewed in the light of experience. See Hoch v The Queen [1988] HCA 50; (1988) 165 CLR 292 at 301 per Brennan and Dawson JJ; Phillips (supra) at [26] and R v Folbigg [2005] NSWCCA 23; (2005) 152 A Crim R 35 at 80 per Sully J.

(3) Application of s.98 in these proceedings

As discussed above, the Crown seeks to adduce evidence in relation to each of the counts on the basis, inter alia, that the alleged offences represent a pattern of conduct. In that sense, the contention was, in effect, that there is an underlying unity between the offences charged. It was also argued that the alleged offences arose out of a "scheme in action" between the two accused and that the facts associated with each count have a striking similarity about them: Outline of submissions on behalf of the Commonwealth DPP in Response to submissions on a separate trial application, p.7 and Supplementary Submissions for Director of Public Prosecutions, at pp.1-2.
The level or degree of cogency of the evidence sought to be admitted under s.98 in these proceedings was said by the Crown to be established by a number of matters. These include:-

(1) The relationship between Mr Joffe and Moody's. His employment throughout the relevant period by Moody's was as an associate analyst in Moody's Corporate Finance Group (CFG) and Project and Infrastructure Finance Group (PIFG).

(2) The long-term relationship between Mr Joffe and Mr Stromer in the nature of a friendship shared by them.

(3) The receipt by Moody's of information that constituted "inside information" at specified times from entities that were "credits" of Moody's.

(4) The fact that in some cases such information was directly disclosed to Mr Joffe.

(5) The opportunity in other cases, it was claimed, that existed for Mr Joffe to access such information, that is, to indirectly obtain inside information.

(6) The provision of other confidential information to Moody's by "credits" in relation to proposed corporate activity.

(7) The actions of Mr Joffe in making internet searches, usually on the CommSec website, for market information concerning the securities of specific entities that were "credits" of Moody's and the timing of those searches.

(8) Contemporaneous telephone contact between Mr Joffe and Mr Stromer.

(9) The number, nature and circumstances of the trading activities of Mr Stromer in the relevant period. In this respect, the facts relied upon included the acquisition of financial products in the relevant corporate entities after contacts were made by Mr Stromer with Mr Joffe. The Crown contended this usually occurred shortly before a public announcement of the proposed activity.

(10) The timing in relation to the acquisition of financial products by Mr Stromer and announcements made to the market in relation to information that had previously been inside or confidential information. Alternatively, the timing of specific trading where Moody's had advised that a transaction would not be proceeding.

(11) That during the period June 2006 to February 2007, the fact that the only financial products Mr Stromer traded in were in relation to entities that had provided Moody's with confidential/inside information.

(12) The evidence establishing that Mr Stromer traded in those entities a short time after the information had been received by Moody's.

(13) The evidence as to financial dealings between Mr Joffe and Mr Stromer.

In Zhang (supra) at [139], Simpson J, in relation to s.98, identified the following principles:-

"(i)   coincidence evidence is not to be admitted if the Court thinks that evidence would not, either by itself, or having regard to other evidence already adduced, or anticipated, have significant probative value;
(ii) probative value is the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue (see the Dictionary to the Evidence Act);
(iii)   the actual probative value to be assigned to any item of evidence is a question for the tribunal of fact - here, the jury;
(iv)   the probative value actually to be assigned to any item of evidence cannot finally be determined until all of the evidence in the case is complete;
(v)    the task of a judge in determining whether to admit evidence tendered as coincidence evidence is therefore essentially an evaluative and predictive one. The judge is required, firstly, to determine whether the evidence is capable of rationally affecting the probability of the existence of a fact in issue; secondly, (if that determination is affirmative) to evaluate, in the light of any evidence already adduced, and evidence that is anticipated, the likelihood that the jury would assign the evidence significant (in the sense explained by Hunt CJ at CL in R v Lockyer (1996) 89 A Crim R 457) probative value. If the evaluation results in the conclusion that the jury would be likely to assign the evidence significant probative value, the evidence is admissible. If the assessment is otherwise, s.98 mandates that the evidence is not to be admitted."

Her Honour observed at [140], that it is necessary in the case of coincidence evidence to determine whether two or more events being the subject of the evidence sought to be tendered, are substantially and relevantly similar and whether the circumstances in which they occurred or are alleged to have occurred are substantially similar.

Mr Fullerton – Exhibit 3, Tab 23, p.215 – there was no reference to providing information to Mr Joffe.

Mr Brown – Exhibit 3, Tab 23, p.225 – transcript of examination – Mr Brown said he was certain he did not tell Mr Joffe about RIN's third quarterly results which would be released on 30 January 2007.

The contention then was, there was no evidence in support of the proposition Mr Joffe was aware of the information (t.107).

Table B: Related events not the subject of counts in the indictment

Facts: PBL

A meeting took place in the offices of PBL, Park Street, Sydney on Wednesday 11 October 2006. Those present at the meeting included Mr Fullerton and Mr Brown and Ms Sarroff of PBL. The purpose of the meeting was to discuss a publicly announced joint venture involving PBL.
Ms Sarroff raised a question as to the need for a conference in order to obtain details about a transaction that would be likely to be announced the following week. There was no other information provided at that meeting.
Ms Sarroff became treasurer of PBL in 1994. Her responsibilities included dealing with credit agencies such as Moody's in relation to issues such as debt raising and debt rating exposures.
As discussed below, the Crown relies on evidence of an alleged communication between Mr Stromer and Mr Joffe on a number of occasions on Thursday 12 October 2006 and the transfer by Mr Stromer on that date of $30,000 from his account with CMC Markets.

(1) – Moody's received information from three entities not the subject of charges, being confidential information

The Crown relied upon evidence concerning the meeting of 11 October 2006 and emails circulating on Friday 13 October at Moody's concerning a proposed PBL meeting on 17 October 2006.
In response, it was contended on behalf of Mr Joffe that the information was not material. Reference was made to Ms Sarroff's evidence that she did not remember referring to a transaction and, if she did, it would have been a reference to a proposed transaction. Mr Brown did not recall Ms Sarroff making such a statement. The extent of the confidential information was that PBL had organised a meeting with Moody's. Moody's had many meetings with PBL. Mr Fullerton's evidence was that he did not know or suspect that the proposed transaction to be discussed with Ms Sarroff the following week related to PBL's media interests.
In response, in MFI 2, the Crown acknowledged that the information was not material. It was said to be material for the purpose of the charge. It was information provided to Moody's which had not been provided to the market. The Crown case is that it stimulated Mr Joffe's interest, taken together with market speculation that PBL was planning some activity which was likely to affect its share price. The Crown contention was that it was enough for Mr Joffe and Mr Stromer to prepare to implement their scheme whereby Mr Joffe would pass information to Mr Stromer and procure him to trade as it claimed was the case in the 10 charged matters. The Crown contended that there was a deal of "internet traffic" within Moody's concerning the proposed meeting with PBL.

(2) – Joffe was in direct receipt of the inside information in some instances and indirectly in others

The Crown contended that Mr Joffe was told the effect of the information by 10.07 am on 13 October 2006 at which point he accessed the CommSec internet site for PBL.
Mr Joffe was not told the effect of the information by Mr Brown or Mr Fullerton from Moody's, who, it was contended, were all appraised of the information at the meeting with PBL representatives on the afternoon of 11 October 2006 and subsequent received emails regarding the conference.
In response on behalf of Mr Joffe, it was stated that the viewing of a CommSec internet site does not show receipt of inside information.
There was no evidence that Mr Joffe was in possession of the information directly or indirectly. There was no evidence from either Mr Brown or Mr Fullerton that they communicated any information in relation to PBL to Mr Joffe.
In MFI 2, the Crown's response was that this was consistent with Mr Joffe's activity in relation to the charged matters where, it was contended, he monitored share prices after the receipt of information by Moody's and where he allegedly passed information on to Mr Stromer and allegedly procured him to trade. The Crown contends that it is consistent with Mr Joffe's alleged interest in the up-coming meeting with PBL.

Event 37: (3) – Joffe and Stromer communicated by telephone, by which means Joffe communicated the confidential information to Stromer, thereby procuring Stromer to trade whilst in possession of the confidential information

In relation to Event 37, the Crown contended that, after becoming aware of the information on 13 October 2006, Mr Joffe had telephone contact with Mr Stromer on five occasions before 11.13 pm on 16 October 2006.
In response, it was stated on behalf of Mr Joffe, that there was no evidence of the communication of the information. The five calls were all outside work hours and on the weekend. Mr Joffe had become aware of the information by 10.07 am on Friday 13 October 2006, but there was no telephone call from him after 10.07 am on that day. Reliance was placed on the general submissions made in relation to the conversations between Mr Joffe and Mr Stromer. It was also stated that there was no evidence of procuring.
The Crown, in reply in MFI 2, stated that Mr Stromer allegedly communicated with Mr Joffe at 12.20 pm within four minutes of making his purchase (between 12.13 pm and 12.16 pm). In that respect, reference was made to paragraphs 596 and 597 of the Amended Statement of Facts.

(4) – Stromer traded in or otherwise acquired a share in the entities whilst in possession of the confidential information

The Crown relied on evidence that on 16 October 2006, Mr Stromer acquired 12,125 PBL CFDs.
In response, on behalf of Mr Joffe, it was said that there was no evidence that Mr Stromer was in possession of the information and that he had explained his reasons for acquiring PBL CFDs. Reference was made to the considerable speculation in the press and amongst broking analysts surrounding changes to Australian cross media ownership rules. It was expected that changes would ignite merger and takeover activity in the sector.
On 16 October 2006, PBL issued an announcement to the ASX in response to the media speculation. This caused a surge in the price and volume of PBL securities. Mr Stromer acquired CFDs within three hours following PBL's ASX announcement. Moody's only became aware that the transaction involved PBL media interests at the meeting on 17 October 2006.
In the Crown's response in MFI 2, it was stated that Mr Stromer's explanations for his purchases are not material at this time. They seek to explain the circumstances and were said to be beyond consideration.

(5) – An announcement is made to the market or an event that occurs that pre-empts the transaction

The Crown relied on the public announcement on 18 October 2006 by PBL that they were recapitalising certain of its media assets, along the lines of the information provided to Moody's at the previous day's meeting.

(6) – Stromer traded out of his position following an announcement or Moody's being advised of the transaction not going ahead

The Crown relied on evidence that on 20 October 2006, Mr Stromer closed out his PBL CFD position. In response, on behalf of Mr Joffe, it was said that, on 20 October 2006 at 3.26 pm, Mr Joffe said in an email to Mr Brown "PBL is flying mate". At 3.27 pm, Mr Brown responded, "There is no stopping it now. 21C up ... from 60c down earlier". Mr Joffe at 3.38 pm replied, "Will hit $21 soon". This was said to be contrary to Mr Stromer exiting his position at 2.32 pm that day at an average price of $19.93.
In MFI 2, the Crown's response was that the fact that PBL “is flying" at approximately 3.30 pm on 20 October 2006 and that Mr Joffe thought that it would continue to go up, is not "contrary to Stromer exiting his position at 2.32 pm". The Crown stated that two days had passed since the relevant announcement when the immediate market reaction had passed, suggesting that the price was towards the top end of the likely gains. It was further said that it was 60 cents down earlier in the day so exiting with a modest gain made sense. The Crown also stated that the subsequent emails between Mr Joffe and Mr Brown suggest that the sudden price rise in PBL was totally unexpected (by them at least). Therefore there should have been no reason for Mr Stromer to maintain his position once the price moved from a loss to a modest gain.
In oral submissions, Mr McHugh stated that, if the Crown theory is a joint enterprise and that Mr Joffe's view was as recorded in the emails, then it is difficult to see why Mr Stromer sold out on 20 October 2006 at less than $50, to be sold at $19.93 and $19.96. If Mr Joffe thought that the stock was going to keep going up and hit $21, then, if they were "in it together" and this was Mr Joffe's view that the stock was going to keep rising and that Mr Stromer had taken a long position, then why would Mr Stromer sell at $19.93. It was submitted that it was certainly not consistent with the Crown theory.

(7) – Joffe maintained significant surveillance of the share price, usually on CommSec, throughout the material time

The Crown relied on evidence said to establish that between 13 and 20 October 2006, Mr Joffe visited websites relating to PBL on 29 occasions.
In response, it was stated that Mr Joffe visited CommSec internet websites in relation to PBL on 13 occasions between 13 and 20 October 2006. Six websites were graphs of the historical price of PBL shares. Seven websites were graphs of historical price of PBL warrants. Mr Stromer acquired PBL CFDs. None of the websites visited by Mr Joffe related to PBL CFDs. In respect of Mr Joffe's share price surveillance, the earlier submissions on such surveillance were relied on.
In MFI 2, the Crown replied that the share price is relevant to the value of CFDs.

Facts: DOW

This matter relates to a consortium which included, amongst others, DOW.
In October 2006, the Moody's senior analyst was Mr Chong. The matter related to a credit rating in respect of a revised tender bid by RRC to construct a large number of railway carriages for RailCorp. The consortium comprised, in addition to DOW, ABN AMRO and B&B. Mr Joffe, at the time, was an associate analyst on this credit.
On 4 October 2006, Mr Chong received an email from Mr Smith at B&B informing him that RRC had been invited to revise its bid for the NSW Government's Rolling Stock Public Private Partnership to supply new carriages for the CityRail network.
On 5 October 2006, Mr Chong forwarded the email to Mr Joffe.
Mr Chong and Mr Joffe received information about the RRC bid from Mr Smith on a number of occasions, 6, 9, 10 and 13 October 2006.
The Crown relies on evidence that on 25 October 2006, Mr Joffe accessed CommSec websites relating to DOW on seven occasions.
The Crown also relies on evidence to establish that on 25 October 2006, Mr Joffe and Mr Stromer made contact by telephone on four occasions.
The Crown further relies upon evidence to establish that between 3.41 pm and 3.43 pm, Mr Stromer acquired 5,000 DOW CFDs through CMC Markets and between 3.44 pm and 3.56 pm, he acquired a further 29,000 DOW CFDs through CMC Markets.
The Crown also points to evidence that Mr Stromer sent two text messages to Mr Joffe after the trading was completed at 4.10 pm and 4.11 pm.
Evidence that Mr Joffe thereafter visited six websites relating to DOW on that day and evidence that Mr Joffe and Mr Stromer spoke to each other by telephone that evening is also said by the Crown to be significant.
On 26 October 2006 at 3.36 pm, Mr Stromer disposed of his holding of DOW CFDs said to have finished with a modest lost.

Event 12: (1) – Moody's received information from three entities not the subject of charges, being confidential information

The Crown, as noted above, points to the above events said to have occurred on 4 and 5 October 2006 and the receipt of further information on 6,9,10 and 13 October 2008
In response, it was contended for Mr Joffe that the information was publicly available and not material. The extent of the confidential information was that RRC had been invited to revise its bid to the NSW Government. The RRC consisted of a number of "partners".
The Crown responded in MFI 2 that it is not intended that the information was material.
In other submissions, Mr McHugh emphasised that the information was not inside information but that could not be upon the basis that the information was already public because the Crown claimed the information was confidential. The only remaining basis, it was submitted, must be on the ground that the information was not such as to induce a person to trade. On that assumption, the premises upon which the Crown proceeded in relation to this information was said to be "irrational" in the sense that it was irrational to have any theory that a person is trading on information that was not material to trade (t.110).
The non-charge matters were said to be of assistance to the defence insofar as they were consistent with a pattern of Mr Stromer trading "under his own sail". The submission was that whatever the explanation was for the trades, they had nothing to do with Mr Joffe and the whole Crown case turned on a pattern. These matters undermined the pattern.
Additionally, reliance was placed on the fact that Mr Stromer did not trade until 25 October 2006 and, therefore, it was difficult to see a connection with the information.
In relation to the email of 4 October 2006, it was stated that its terms indicated that each of the bidders had been asked to revise the bid and that this was plainly information that was not material. As with PBL, it was submitted that, if the information was not material and would not induce somebody to trade, then it was irrational to suggest, by any process of inference, that it must have been communicated by Mr Joffe to Mr Stromer (t.115).

Event 25: (2) – Joffe was in direct receipt of the information in some instances and indirectly in others

The Crown contended that Mr Joffe was a direct recipient of the information via the emails referred to, received on 5, 6, 9, 10 and 13 October 2006.

Event 38: (3) – Joffe and Stromer communicated by telephone, by which means Joffe communicated the inside information to Stromer, thereby procuring Stromer to trade whilst in possession of the inside information

In relation to Event 38, the Crown relied on evidence that between 18 October 2006 and 3.37 pm on 25 October 2006, Mr Joffe and Mr Stromer spoke by telephone on 23 occasions and exchanged four text messages, including occasions on the day of 25 October 2006 prior to Mr Stromer commencing trading.
In response on behalf of Mr Joffe, it was stated that there was no evidence of the communication of the "information". According to prosecution statements for Events 12 and 25, Mr Joffe received the information on 5 October 2006, yet the prosecution only referred to calls between 18 to 25 October 2006. Reliance was placed on other submissions made on the question of communications between Mr Stromer and Mr Joffe. It was also stated that there was no evidence of "procuring".
In MFI 2, the Crown drew attention to paragraphs 608 and 609 of the Amended Statement of Facts and to the closeness in time between Mr Stromer's purchases and his communications with Mr Joffe. The Crown contended there were telecommunications between the two accused at 12.05 pm for 4.30 minutes (Mr Joffe to Mr Stromer) and 1.13 pm for 1.30 minutes (Mr Stromer to Mr Joffe) and text messages from Mr Stromer to Mr Joffe at 2.45 pm and 3.37 pm. Mr Stromer acquired, as noted above, 5,000 DOW CFDs between 3.41 pm and 3.43 pm and then 29,000 CFDs between 3.44 pm and 3.56 pm.
The Crown also relied on evidence to establish that Mr Stromer then sent two text messages to Mr Joffe following completion of his trading at 4.10 pm and 4.11 pm. The Crown contention was that it was likely that Mr Joffe himself sent text messages to Mr Stromer, given the closeness in proximity of Mr Stromer's text messages to him. Meanwhile, the Crown contended, Mr Joffe visited six websites relating to DOW between 4.11 pm and 5.44 pm.
In Mr Joffe's submissions in reply (paragraph 79), it was stated that, having regard to the overall extent of telephone communications between the two men and the overall extent of CommSec searches, it was submitted that it is unremarkable that the Crown is able to identify telephone calls, CommSec entries within hours of trading by Mr Stromer.
Additionally, the Crown did not address, it was contended, the matters referred to in relation to Event 12, which was relevant to the s.98 determination

Event 51: (4) – Stromer traded in the entities whilst in possession of the inside information

The Crown relied on Mr Stromer's acquisition of 34,000 DOW CFDs.
In response, it was stated that 25 October 2006 is 20 days after Mr Joffe is alleged to have received the information and there was considerable speculation in the press before 25 October 2006 that DOW was a takeover target. Further, Mr Stromer had explained his reasons for acquiring the CFDs.
In MFI 2, the Crown stated that it relied upon the timing of telecommunications between the two accused and the purchases by Mr Stromer and the timing and number of DOW website visits by Mr Joffe.
In the reply on behalf of Mr Joffe, reliance was placed on oral submissions at t.115.23 to t.115.44.
Reliance was again placed on the fact that 20 days elapsed after Mr Joffe allegedly acquired the information.
Additionally, it was said that there was a perfectly rational explanation for Mr Stromer's trading. Reference was made to articles behind Tab 51 in Exhibit 3. At p.411 is a copy of an article in the Australian Financial Review dated 19 October 2006 referring to takeover rumours concerning DOW. A further article referred to in the Financial Review on the same date spoke of "talk" concerning a Macquarie Bank led break-up of DOW.
The submission was it was easy to see why Mr Stromer would take the position he did.
In relation to Event 64, it was noted on behalf of Mr Joffe that the RRC had been awarded a tender by the NSW Government on 9 November 2006, that is well after Mr Stromer's trading.
It was stated there was no suggestion that Moody's had any inside information concerning whether the RRC would be selected as the successful tenderer. No bid for DOW eventuated. Mr Stromer sold long before the awarding of the tender.
There was no response in MFI 2 by the Crown to this event. It was submitted for Mr Joffe that this would be because there was no material on which the Crown could link this event to some kind of announcement (t.115).

Event 77: (6) – Stromer traded out of his position following an announcement or Moody's being advised of the transaction not going ahead

The Crown in this respect referred to the fact that on the afternoon of 26 October 2006 Mr Stromer closed out his DOW CFD position.
In response on behalf of Mr Joffe it was noted that this was two weeks before 9 November 2006 when the NSW Government announced that the RRC was the successful tenderer.
Reliance was placed upon the matters raised in oral submissions on behalf of Mr Joffe at t.116.01 to t.117.02 to which the Crown did not provide a response. Reference was there made to Mr Stromer's trading account with CMC Markets. Particular attention was drawn to the trading pattern on 25 and 26 October 2006 which revealed Mr Stromer altering or reversing his position as to whether he acquired short CFDs or long CFDs. The submission was that he closed out in a space of two days and at different times his position was both long and short and it was difficult to make that referrable to anything and it was not referrable to Mr Joffe's information.

Event 90: (7) – Joffe maintained significant surveillance of the share price, usually on CommSec throughout the material time.

The Crown relied upon the visits by Mr Joffe between 18 and 26 October 2006 relating to DOW on 52 occasions.
In response on behalf of Mr Joffe, it was said that, according to CommSec URL history, Mr Joffe viewed 5,020 CommSec URL searches in this period. Those that related to DOW account for approximately one percent. Mr Joffe also visited websites related to DOW outside the period. None of the websites visited by Mr Joffe were said to be related to DOW CFDs. Reliance was placed on other submissions made on the question of price surveillance by Mr Joffe.
In MFI 2, the Crown contended that the full record of URL records extracted by ASIC officers revealed DOW searches conducted by Mr Joffe as follows: August 2006 – three occasions, October 2006 – 49 occasions (including 47 occasions between 25 and 27 October 2006), November 2006 – two occasions and January 2007 – two occasions.
In reply, Mr Joffe relied on oral submissions made at t.117.04 to t.117.14.
It was there stated again that there had been a lot of speculation in the press about the takeovers for DOW. Also, the information revealed that Mr Joffe was capable of spending a good amount of time checking stocks, even where it had nothing to do with inside information and there was apparently nothing otherwise connected with this work.

Facts: APA

The Crown contends the evidence establishes that Moody's acquired confidential information in connection with APA in the course of Mr Atkins carrying out his duties as an employee of Moody's at about 3.27 pm on Friday 10 November 2006.
The information was said to be that Alinta proposed to announce a bid to acquire all the issued securities of APA soon after it had bid for AIHCA.
The Crown relied on the fact that Mr Joffe and Mr Stromer telephoned each other twice that same day subsequent to the information being received by Mr Atkins.
The Crown also claims that the evidence establishes that Mr Joffe viewed the CommSec website relating to APA at 4.01 pm and 4.05 pm that afternoon.
On 13 and 14 November 2006, Mr Stromer acquired AIHCA CFDs through CMC Markets prior to the announcement of the AIHCA and sold those CFDs on 15 November 2006 after the bid had been announced.
Further, the Crown relies on the acquisition on Tuesday 21 November 2006 by Mr Stromer of 23,750 APA units through UBS.
It also relies upon the fact that Mr Joffe and Mr Stromer were said to have spoken that evening and that Mr Joffe allegedly viewed the CommSec website relating to APA 69 times over the following three days.
On Wednesday 29 November 2006, Mr Stromer sold his APA units. At the time of the sale, it is said that Mr Stromer was making arrangements to acquire securities relating to SRG.
Mr Stromer suffered a loss of $969.88.

Event 13: (1) – Moody's received information from three entities not the subject of charges, being confidential information

As noted above, the Crown relied on the fact that Moody's acquired inside information in the course of Mr Atkins carrying out his duties as an employee of Moody's on Friday 10 November 2006. The information was that Alinta proposed to announce a bid to acquire all the issued securities of APA soon after it had bid for AIHCA.
In response, on behalf of Mr Joffe, it was stated that the information was not material. The proposed bid price ($4.35) was significantly below the closing price of APA on 10 November 2006 ($4.56). There was no proposed time by which the bid was to be made. No bid eventuated.
In response, the Crown stated that the materiality of the information was not alleged. The dealing with APA was intertwined with the evidence relating to the dealing in AIHCA.
In the submissions in reply, reliance was placed on the oral submissions at t.110.01 to t.111.11, t.117.16 to t.117.30

Event 26: (2) – Joffe was in direct receipt of the information in some instances and indirectly in others.

The Crown relied on evidence to establish that Mr Joffe was allegedly told the effect of the inside information by 3.36 pm on Friday 10 November 2006 when he accessed the CommSec internet site for AIHCA.
Mr Joffe was told the effect of the inside information by Mr Atkins who, in turn, it was said had been apprised of the inside information during a call with Mr de Loub from Alinta on that day.
In response, it was stated that there was no evidence that Mr Joffe was in receipt of the information directly or indirectly. Accessing the CommSec URL relating to AIHCA was not evidence that showed that Mr Joffe was in receipt of information relating to APA. Mr Atkins' evidence was that he did not tell Mr Joffe the information.
The Crown relied upon its submissions concerning AIHCA. The relevant information, it was said, came to Moody's on Friday 10 November 2006. The trading in AIHCA commenced the following Monday 13 November 2006 and continued on 14 November 2006 prior to the announcement of the AIHCA bid.
The Crown contends there is an inference that Mr Stromer's trading in APA was related to his trading in AIHCA. Reliance was placed in this regard to his conversation with Ms Sally Pintaric at paragraph 621 of the Amended Statement of Facts.
The Crown contended the evidence establishes that Mr Stromer's first instruction to buy APA was given not long after his conversation with Mr Joffe and that the two accused spoke on the evening of Mr Stromer's last purchases on 21 November 2006.
In reply, Mr Joffe relied upon submissions made in relation to Event 13. It was noted that the Crown sought an inference that the trading in APA was "related to" trading in AIHCA. It is stated that it was unclear what was meant by that phrase. Nevertheless, the inference could not, it was contended, arise, given the apparent unchallenged submissions as to "utility" referred to in the submissions in reply.

Event 39: (3) – Joffe and Stromer communicated by telephone, by which means Joffe communicated confidential information to Stromer thereby procuring Stromer to trade whilst in possession of the confidential information.

In relation to Event 39, the Crown relied upon evidence to establish Mr Joffe spoke to Mr Stromer by telephone at 3.38 pm and 7.38 pm on 10 November 2006.
Between that time and 3.08 pm on 21 November 2006, they spoke a further 46 times by telephone and exchanged three text messages.
In response, it was stated there was no evidence of the communication of information by Mr Joffe to Mr Stromer.
Reference was made to five of the previous Friday afternoons in which there had been telephone contact between the two accused and on 18 of the 22 Fridays in the period 1 September 2006 to 31 January 2007.
In MFI 2, the Crown stated that this was an attempt to explain circumstances in a neutral way. The fact of the circumstances taken with other circumstances, the Crown contended, is what ought to be at issue at this time, not any competing explanations for the circumstances.

Event 52: (4) – Stromer traded in or otherwise acquired share in the entities whilst in possession of the confidential information

The Crown relied upon Mr Stromer's acquisition of 23,750 APA units on Tuesday 21 November 2006.
In response, Mr Joffe referred to the 11‑day gap from when information came to Moody's and when Mr Stromer traded in APA units. He had explained his reasons for acquiring APA CFDs. Five days before he traded on 16 November 2006, APA announced a two for seven renounceable rights issue of 94.9 million shares to raise $356,000,000.
The shares were said to be offered at an issue price of $3.75, a 17% discount to the closing price of APA shares on 15 November 2006. The offer was open until 5.00 pm on 24 November 2006.

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Decision last updated: 26 July 2016

Medium Neutral Citation:	R v Joffe; R v Stromer [2011] NSWSC 894
Hearing dates:	20, 21, 22 June, 19, 20 July 2011
Decision date:	17 August 2011
Jurisdiction:	Common Law
Before:	Hall J
Decision:	In relation to the notice of motion filed on behalf of Mr Joffe on 11 March 2011 and the notice of motion filed on behalf of Mr Stromer on 11 March 2011, I make the following orders:- (1) The evidence particularised in the table to the Notice of Coincidence Evidence dated 8 July 2011, being Table A entitled “Table of related events the subject of counts in the Indictment” is admissible pursuant to s.98(1)(b) of the Evidence Act 1995. (2) The evidence particularised in the table to the Notice of Coincidence Evidence dated 8 July 2011 being Table B entitled “Table of related events not the subject of counts in the Indictment” is not admissible under s.98(1)(b) of the Evidence Act. (3) Leave is granted to any party to apply with respect to any consequential or ancillary orders.
Catchwords:	EVIDENCE – insider trading offences charged under s.1043A of the Corporations Act 2001 (Cth) – 10 counts charged against two accused – applications for orders determining admissibility of evidence in the Crown case particularised in a Notice of Coincidence Evidence being evidence in relation to each of the counts charged against each accused and evidence in relation to three uncharged maters – orders sought for separate trial of some charges – ADMISSIBILITY OF EVIDENCE – s.98(1)(b) and s.100(2) of the Evidence Act – approach to be taken when assessing “significant probative value” of coincidence evidence – meaning of “probative value” – distinction between probative value under s.98(1)(b) and actual probative evidence at trial – whether in evaluating evidence under s.98(1)(b) alternative rational inferences or explanations to those contended for by the Crown must be evaluated and assessed so as to determine whether the inferences relied upon by the Crown have greater strength than the alternative inferences – approach to be taken in a circumstantial evidence case – proof of facts in issue by inferential reasoning.
Legislation Cited:	Corporations Act 2001 (Cth) Crimes Act 1900 Criminal Law Consolidation Act 1935 (SA) Criminal Procedure Act 1986 Evidence Act 1995 Jury Act 1977
Cases Cited:	Adam v R [2001] HCA 57; (2001) 207 CLR 96 Attorney General's Reference (No 1 of 1983) [1983] 2 VR 410 Deutsch v The Queen [1986] 2 SCR 2 Edwards v The Queen [1993] HCA 63; (1993) 178 CLR 193 HML v The Queen [2008] HCA 16; (2008) 235 CLR 334 Hoch v The Queen [1988] HCA 50; (1988) 165 CLR 292 Papakosmas v The Queen [1999] HCA 37; (1999) 196 CLR 297 Perry v The Queen [1982] HCA 75; (1982) 150 CLR 580 Pfennig v The Queen [1995] HCA 7; (1995) 182 CLR 461 Phillips v The Queen [2006] HCA 4; (2006) 225 CLR 303 R v AB [2001] NSWCCA 496 R v Boardman [1975] AC 456 R v Broadfoot (1976) 64 Cr App R 71 R v Carusi (1997) 92 A Crim R 52 R v Ceissman [2010] NSWCCA 50 R v Cengiz [1998] 3 VR 720 R v Cook [2004] NSWCCA 52 R v Doney [1990] HCA 51; (1990) 171 CLR 207 R v Ellis [2003] NSWCCA 319; (2003) 58 NSWLR 700 R v F; Ex parte Attorney-General [2004] 1 QD R 162 R v Folbigg [2005] NSWCCA 23; (2005) 152 A Crim R 35 R v GAC [2007] NSWCCA 315; (2007) 178 A Crim R 408 R v Lockyer (1996) 89 A Crim R 457 R v Scholl (No 2) [2009] VSC 237; (2009) 53 MVR 8 R v Shamouil [2006] NSWCCA 112; (2006) 66 NSWLR 228 R v Teys [2001] ACTSC 29; (2001) 119 A Crim R 398 R v Zhang [2005] NSWCCA 437; (2005) 158 A Crim R 504 Re Attorney General's Reference (No 1 of 1975) [1975] QB 773 Samadi & Anor v R [2008] NSWCCA 330; (2008) 192 A Crim R 251 Shepherd v The Queen [1990] HCA 56; (1990) 170 CLR 573 Sutton v R [1984] HCA 5; (1984) 152 CLR 528 TKWJ v The Queen [2002] HCA 46; (2002) 212 CLR 124 Washer v Western Australia [2007] HCA 48; (2007) 234 CLR 492
Category:	Procedural and other rulings
Parties:	Regina (Crown) Daniel Shayne Joffe (Accused) Nathan Stromer (Accused)
Representation:	Counsel: J V Agius SC/J Paingakulam (Crown) R G McHugh SC/G A Bashir (Joffe) S J Odgers SC/L Fernandez (Stromer) Solicitors: Commonwealth DPP (Crown) Speed & Stracey Lawyers (Joffe) Johnson Winter & Slattery (Stromer)
File Number(s):	2010/34654; 2010/40493