R v Narayanan

[2002] NSWCCA 200

CITATION:	R v. NARAYANAN & ANOR. [2002] NSWCCA 200
FILE NUMBER(S):	CCA 60768/01
HEARING DATE(S):	26 April 2002
JUDGMENT DATE:	30 May 2002
PARTIES :	Regina - respondent Natesan Narayanan - appellant Singapore Exchange & Finance Pty. Limited - appellant
JUDGMENT OF:	Hodgson JA at 1; Barr J; Greg James J

LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S) :	00/11/0811
LOWER COURT JUDICIAL OFFICER :	Holt ADCJ

COUNSEL :	Mr. T.A. Game SC with Mr. M. Buscombe for appellants Mr. P. Roberts SC with Mr. R. Bromwich for Crown
SOLICITORS:	David Giddy & Associates, Vaucluse for appellants Commonwealth DPP, Sydney for Crown
CATCHWORDS:	CRIMINAL LAW - Cash transaction - Structuring - Whether same events can amount to a significant cash transaction and also several non-reportable cash transactions
LEGISLATION CITED:	Financial Transactions Reports Act 1988 (Cth) ss.3, 7, 28, 31
CASES CITED:	Beckwith v The Queen (1976) 135 CLR 569 Leask v The Commonwealth (1996) 187 CLR 579 Maric v R (1978) 52 ALJR 631 Question of Law Reserved (No.2) of 1998 (1998) 70 SASR 502 R V Hannes [2000] NSWCCA 503 R v Leask [1999] NSWCCA 33 R v Stewart (2001) 52 NSWLR 301
DECISION:	1. Appeal against conviction on counts 39 and 40 allowed, and those convictions quashed 2. Otherwise, appeal against convictions dismissed 3.Leave to appeal against sentences in respect of counts 51-54 and 57 and 58 granted, but appeals dismissed.

CCA 60768/01

HODGSON JA
BARR J
GREG JAMES J

Thursday 30 May 2002

REGINA v. Natesan NARAYANAN and

SINGAPORE EXCHANGE & FINANCE PTY. LIMITED

Judgment

1 HODGSON JA: On 15 August 2001 in the District Court at Sydney, two accused, namely Natesan Narayanan and a company Singapore Exchange & Finance Pty. Limited (SEF), appeared before Holt ADCJ, each charged with offences against the Financial Transactions Reports Act 1988 (Cth) (FTR Act).

2 The indictment contained fifty-eight charges in all, comprising twenty-eight charges against each accused alleging offences against s.31(1) of the FTR Act, and one charge against each accused alleging an offence under s.28(1)(a) of the FTR Act. In relation to all charges, SEF was charged as principal and Narayanan was charged as having procured the offence by SEF (pursuant to s.7 Crimes Act 1914 (Cth)).

3 Both accused pleaded not guilty to all charges, and a trial ensued lasting 16 days.

4 On 5 September 2001, the jury returned verdicts of guilty in relation to: count 39 (s.31(1) FTR Act offence – Narayanan); count 40 (s.31(1) FTR Act offence – SEF); count 51 (s.31(1) FTR Act offence – Narayanan); count 52 (s.31(1) FTR Act offence – SEF); count 53 (s.31(1) FTR Act offence – Narayanan); count 54 (s.31(1) FTR Act offence – SEF); count 57 (s.28(1) FTR Act offence – Narayanan); and count 58 (s.28(1) FTR Act offence – SEF). In relation to all remaining counts in the indictment, the jury returned verdicts of not guilty.

5 On 15 November 2001, Holt ADCJ sentenced Narayanan. On counts 39, 51 and 53, Narayanan was sentenced to ten months imprisonment to date from 15 November 2001, to be released after serving six months imprisonment upon entering a recognisance to be of good behaviour for a period of six months. In relation to count 57, Narayanan was sentenced to four months imprisonment to date from 15 November 2001.

6 On 15 November 2001, Holt ADCJ sentenced SEF. On counts 40, 52 and 54, SEF was fined $30,000.00 on each count. In relation to count 58, SEF was fined $10,000.00. The total amount of the fines was $100,000.00.

7 Narayanan and SEF have appealed against their convictions and seek leave to appeal against sentence.

BACKGROUND AND STATUTORY PROVISIONS

8 SEF was a company whose business included currency exchange and sale of travellers cheques. It had a number of offices in Sydney, with its head office at Centrepoint Tower. It was a “cash dealer” for the purposes of the FTR Act. Narayanan was CEO and a director and shareholder of SEF.

9 The FTR Act makes provision for the monitoring of movements of large amounts of cash. Cash dealers are required to report particulars of “significant cash transactions”; and the Act also makes it an offence to attempt to avoid the operation of the Act by structuring transactions.

10 Section 3 of the Act contains the following relevant definitions:

"cash transaction" means a transaction involving the physical transfer of currency from one person to another.

"currency" means the coin and paper money of Australia or of a foreign country that:
(a) is designated as legal tender; and
(b) circulates as, and is customarily used and accepted as, a medium of exchange in the country of issue.

"non-reportable cash transaction" means a cash transaction:
(a) to which a cash dealer is a party; and
(b) that is not a significant cash transaction or is an exempt cash transaction.

"significant cash transaction" means a cash transaction involving the transfer of currency of not less than $10,000 in value.

11 Section 7 of the Act requires cash dealers to report significant cash transactions. Section 7(1) is as follows:

7(1) Where a cash dealer is a party to a significant cash transaction, the dealer shall, before the end of the reporting period:
(a) prepare a report of the transaction; and
(b) communicate the information contained in the report to the Director;
unless:
(c) the transaction is, at the time when it occurs, an exempt transaction; or
(d) the transaction is, at the time when it occurs, eligible for exemption and becomes, before the end of the reporting period, an exempt transaction; or
(e) the cash dealer is an approved cash carrier.

12 Section 7 occurs in Part II of the Act. Sections 9 and 10 deal with exempt transactions and transactions eligible for exemption: it is common ground that these sections have no application in this case.

13 Section 28 of the Act provides for an offence when a cash dealer fails to provide the information required under Part II. Section 28(1)(a) is in the following terms:

28(1) A cash dealer commits an offence against this section if the cash dealer refuses or fails:
(a) to communicate information to the Director when and as required under Part II or III; or
…

14 Section 31(1) makes it an offence to conduct transactions so as to avoid reporting requirements: it is in the following terms:

31(1) A person commits an offence against this section if:
(a) the person is a party to 2 or more non-reportable cash transactions; and
(b) having regard to:
(i) the manner and form in which the transactions were conducted, including, without limiting the generality of this, all or any of the following:
(A) the value of the currency involved in each transaction;
(B) the aggregated value of the transactions;
(C) the period of time over which the transactions took place;
(D) the interval of time between any of the transactions;
(E) the locations at which the transactions took place; and
(ii) any explanation made by the person as to the manner or form in which the transactions were conducted;
it would be reasonable to conclude that the person conducted the transactions in that manner or form for the sole or dominant purpose of ensuring, or attempting to ensure, that the currency involved in the transactions was transferred in a manner and form that:
(iii) would not give rise to a significant cash transaction; or
(iv) would give rise to exempt cash transactions.

15 The offence created by this provision is sometimes called structuring.

CHARGES

16 The charges on which the appellants were convicted under s.31(1) of the FTR Act were in similar terms, apart from variations in the number of non-reportable cash transactions alleged.

17 In count 51, it was charged that Narayanan:

On or about 6 September 1999 procured the commission of an offence by Singapore Exchange & Finance Pty. Limited (“the company”) namely that on 6 September 1999 the company was party to five non-reportable cash transactions which the company conducted in that manner or form for the sole or dominant purpose of ensuring, or attempting to ensure that the currency involved in the transaction was transferred in a manner that would not give rise to a significant cash transaction.

18 In count 52, it was charged that SEF:

On or about 6 September 1999 was party to five non-reportable cash transactions which it conducted in that manner or form for the sole or dominant purpose of ensuring, or attempting to ensure, that the currency involved in the transaction was transferred in a manner that would not give rise to a significant cash transaction.

19 The charges on which the appellants were convicted under s.28(1) were in the following terms.

20 In count 57, it was charged that Narayanan:

Between about 17 August 1999 and about 2 September 1999 procured the commission of an offence by Singapore Exchange & Finance Pty. Limited (“the company”) namely that between about 17 August 1999 and about 2 September 1999 the company, being a cash dealer, failed to communicate information to the director of AUSTRAC as required under part II of the Financial Transaction Reports Act 1988, namely that on 17 August 1999 the company was party to a cash transaction involving the transfer to it by a person unknown of US$40,000.

21 In count 58, it was charged that SEF:

Between about 17 August 1999 and about 2 September 1999, being a cash dealer, failed to communicate information to the director of AUSTRAC as required under part II of the Financial Transaction Reports Act 1988, namely that on 17 August 1999 the company was party to a cash transaction involving the transfer to it by a person unknown of US$40,000.

THE CROWN CASE

22 An important witness for the Crown was Usha Malik, a former SEF employee and an indemnified witness. She had been employed at SEF at the relevant time as a foreign exchange teller and she had also done some work on the company accounts. Her evidence concerned the manner in which transactions were conducted by SEF in particular in relation to transactions involving currency in excess of A$10,000.00, and also Narayanan’s role in the company.

23 Ms. Malik gave evidence that, in relation to transactions involving $10,000.00 or more, the practice was to ask the customer if the customer wanted a cash transaction form to be completed; and if the customer did not want this, she would contact Mr. Narayanan or a Ms. Indu Ram, who would give a higher rate for the transaction. In particular, she gave the following evidence:

CROWN PROSECUTOR: Q. If you receive instructions not to complete the form, and by form what did you understand the form that needed to be completed?
A. The cash transaction report one, that more than 10,000, the green form you showed me.

Q. What was the procedure if the form wasn't to be completed?
A. Then Mr Nat or Indu Ram give us another rate which would normally be extra than the normal rate, and we would give that rate to the customer and if he is happy we would do that transaction.

Q. And would you enter that transaction on the computer?
A. First Mr Nat or Indu will break the transaction less than 10,000, the amount 10,000 each and then we will enter into the computer.

Q. What would you enter into the computer? Suppose someone came along and said they had $20,000 in US currency and asked to change it into Australian dollars. You say, as I understood you, you would ring upstairs and you would either speak to Ms Ram or the accused, is that right?
A. That's right.

Q. And if the transaction went ahead it would be broken up?
A. That's right.

Q. And who would complete the documentation for the computer if anybody in such a situation?
A. Normally it would be held upstairs and done by Ms Indu Ram in the Head Office or Mr Nat himself sometimes.

Q. So as a teller dealing with such a transaction you wouldn't enter anything on to a computer?
A. No, normally if it was 20,000 they would not enter into the branch, it would be done at Head office.

Q. More than 20,000 it would be done at Head Office?
A. Yes, if it is 20,000 of course it would be done at Head Office-

HIS HONOUR: Q. If it is 10,000 or 11,000?
A. It depends what they want, what Mr Nat wanted to do.

CROWN PROSECUTOR: Q. Suppose if a customer was prepared to fill the details in. What would happen on that occasion if you had to fill in the financial transaction report details?
A. They would get the normal rate, the same. We will ask upstairs, and say "yes, the customer is filling the form" and we will get the normal rate and the whole amount will be entered. It can be done in the booth. Mostly it is in the booth if the form is filled out.

Q. So you perform the transaction in the booth if the customer was prepared to fill in the details?
A. Yeah, if customer comes to booth, yes.

Q. Whilst you were employed in the booths as a teller, on how many occasions can you recall handling a transaction involving more than $10,000 Australian dollars?
A. I don't remember how many, but maybe twice a week or like that, I don't remember.

24 Ms. Malik also gave evidence of the particular events relied on by the Crown to support counts 51 to 54, which concerned two transactions (or groups of transactions) with a person called Tony.

25 Counts 51 and 52 concerned the purchase by Tony of travellers cheques for $43,600.00. Ms. Malik gave evidence to the effect that, on 3 September 1999, Tony paid $14,000.00 as a “deposit” for a proposed transaction; and that she was present at a meeting on that day between Tony and Narayanan, during which Tony said he did not want to fill in any forms and Narayanan said words to the effect: “If you don’t want to fill in the form how can I give you a good rate, let’s make a deal. You help us and we help you”, after which Narayanan gave an exchange rate saying “this is the exchange rate if you don’t want to fill in the form”.

26 Ms. Malik gave evidence that Tony came to SEF’s office on 6 September at about 12.30pm. Ms. Malik obtained travellers cheques from Ms. Ram, who gave instructions to her to tell Tony to put whatever names he liked on the travellers cheques. She then spoke to Tony, gave him green American Express purchase records and sales receipts to fill out. He then filled them out and signed them in a number of different names.

27 Copies of these documents are in evidence. They show that twenty-five $100 cheques and one $1,000 cheque was obtained in the name of Patrick Hoffman, 1/6 Hunter St. Ives; that fifty $100 cheques were obtained in the name of Tony Collins, 8 Victoria, Manly; that six $1,000 cheques were obtained in the name of Albert Rafter, 20 Manly Road, Manly; that six $1,000 cheques were obtained in the name of George Davis, 54 Victory Parade, Manly; and that six $1,000 cheques were obtained in the name of John Adams, 54 Punch Bowl, St. Ives. All these cheques were in US currency.

28 Ms. Malik handed over the travellers cheques, and took cash in exchange which, together with the $14,000.00 paid previously, amounted to $43,600.00. She then went upstairs and handed the cash to a Mr. Krishnamurty and the documents to Ms. Ram. This occurred at about 1pm. She did not enter the transactions on the computer at that time. There were in evidence computer records of SEF purporting to show the following transactions, all on 6 September 1999, relating to the issue of American Express travellers cheques at specified times for specified amounts of foreign currency, at specified exchange rates and for specified amounts of Australian dollars. These records show the following:

Time	Forex Amt	Foreign Exchange	AUD
1. 14.55.15	6,000	.60852	9,860
2. 14.55.34	6,000	.60790	9,870
3. 14.55.58	5,000	.60901	8,210
4. 14.56.18	3,500	.60806	5,756
5. 14.56.31	6,000	.60582	9,904

29 It is plain that lines 1, 2 and 5 related to the American Express cheques in the name of Rafter, Davis and Adams; line 3 to American Express cheques in the name of Collins; and line 4 to American Express cheques in the name of Hoffman. Cheques to the total of US$26,500.00 were handed to Tony, in return for cash totalling $43,600.00.

30 Ms. Malik gave evidence that she made entries in a book called the sellers register. These entries are in evidence, originally dated 9/9 but altered to 6/9. They show twenty-five $100 cheques issued to Patrick Hoffman; fifty $100 cheques issued to Tony Collins; six $1,000 cheques issued to each of John Adams, George Davis and Albert Rafter; and one $1,000 cheque issued to Patrick Hoffman.

31 In relation to the different exchange rates shown in the computer printout, Ms. Malik gave the following evidence:

Q. And each of these transactions appears to have a slightly different exchange rate is that right?
A. Yes.

Q. Did you give a different exchange rate for any of the transactions you conducted with Tony?
A. No it was the same rate but we put different, to just make it like it is not the one transaction. Australian amount should be the same so accordingly we put the rate to the transactions.

Q. So do you say that this document is made to appear that there were five transactions where in fact there was only one?
A. That is right.

Q. And does the time difference of just a few seconds for each one does that indicate anything to you in relation to these sorts of documents generally?
A. Yes because normally we don't get customer, like one second like that, so time difference also shows me that this is one transaction.

32 There was evidence to similar effect regarding counts 53 and 54. There were similar computer documents in evidence concerning counts 39 and 40, which concerned a transaction (or group of transactions) with a person called George.

33 In relation to counts 57 and 58, which concerned the same transaction (or group of transactions) as counts 39 and 40, evidence was given by two other former employees of SEF, namely Michaela Spejchalova and Marek Rybar.

34 Ms. Spejchalova’s evidence was that she was asked by Narayanan to stay behind on 18 August 1999 to conduct a special transaction. She was told that a man called George would come in and that a transaction had already been arranged. Her boyfriend Marek Rybar who also worked for SEF was to help her with the transaction. She gave evidence that Narayanan arrived with about US$40,000.00 and that she and Marek counted it. She and Marek completed a Cash Transaction Form and made a computer entry. She said that Narayanan returned and said that the transaction had already been arranged at head office and that there was no need for the form or the computer entries. She then deleted the computer entry. George subsequently arrived with a bag of Australian currency which was counted. Narayanan was then given the Australian currency and George was given the US$40,000.00. The Australian currency was placed in a safe.

35 Marek Rybar gave evidence that the customer George had $60,000.00 in Australian currency when he first dealt with him. When he spoke to Narayanan about the Cash Transaction Form, he was told it had already been arranged.

36 The final witness called by the Crown was Richard Power, who gave evidence identifying the type of form used by cash dealers to report to AUSTRAC. He also gave evidence that AUSTRAC had not received any significant cash transaction reports under the Act in relation to the transactions referred to in the counts contained in the indictment.

THE APPELLANTS’ CASE

37 Narayanan gave evidence in which he stated that all staff of SEF were aware of the requirement to report to AUSTRAC cash transactions involving $10,000.00 or more, and that they had received relevant training. A document containing SEF’s routine guidelines and procedures was tendered: it stated that all AUSTRAC requirements in regard to reporting were followed. Narayanan gave evidence contradicting the evidence of Ms. Malik, in particular in relation to the transactions conducted with Tony. His evidence was that he had told her not to deal with Tony as he was suspicious of him. He also gave evidence of complaints concerning Ms. Malik’s conduct whilst working for SEF.

38 In relation to specific evidence given concerning counts 57 and 58, Narayanan gave evidence that the transaction concerned had been on behalf of six or seven people, and that it was for a group of people staying in a hotel with which he had some connection. He said he had no dispute with the evidence of the two witnesses who gave specific evidence in relation to those counts.

39 The appellants called evidence that Narayanan was a person of good character, that he had been involved in the business of foreign exchange for ten years, and that neither he nor the company had any criminal conviction.

GROUNDS OF APPEAL

40 Both appellants relied on the same grounds of appeal. In relation to conviction, there were four grounds, as follows:

1. The trial judge erred in holding that there was a case to answer on counts 39, 40, 51, 52, 53 and 54.
2. The verdicts on counts 39, 40, 51, 52, 53 and 54 cannot be supported having regard to the evidence.
3. His Honour erred in his directions as to what constituted a cash transaction for the purposes of s.31 of the Financial Transactions Reports Act 1988.
4. The trial judge failed to warn the Jury adequately in relation to the evidence of Ms Malik.

41 As regards sentence, there were two grounds:

1. The sentence is manifestly excessive.
2. Should the appeal be upheld on counts 39, 40, 51, 52, 53 and 54 then the Court should resentence on counts 57 and 58.

SECTION 31 COUNTS

42 The first three grounds in the conviction appeal focus on the question whether the conduct of the appellants involving inter alia the recording of what would be a significant cash transaction as a number of transactions of less than $10,000.00 could be an offence against s.31 of the FTR Act.

43 The trial judge rejected a no-case submission that was made at the trial. His direction to the jury included the following:

A cash transaction does not begin and end with a customer handing over a quantity of cash to SEF. For the present purposes the transaction includes SEF dealing with the currency and entering it in its records. Thus if you find that SEF entered up its books what in reality was one transaction, as a number of smaller transactions, each under AU$10,000, then SEF would be party to a number of transactions each under AU$10,000.

Submissions

44 Mr. Game SC for the appellants submitted that, for an offence to be made out under s.31(1) of the Act, a person must be a party to two or more non-reportable cash transactions, that is, transactions “involving the physical transfer of currency from one person to another”. The Crown case showed that there was, in relation to the counts alleging offences under s.31(1), only one transaction involving cash which was not a non-reportable transaction, but in fact a significant cash transaction. The Crown case was that there was one transaction which was made to look like more than one.

45 Mr. Game submitted that, dealing with counts 51 and 52, the evidence was that Tony handed over a large quantity of cash and was provided with a quantity of travellers cheques: once that transaction occurred, whatever SEF did in relation to the recording of the transaction on the computer and producing several receipts could not change one transaction into several transactions.

46 Mr. Game referred to the judgment of Doyle CJ in Question of Law Reserved (No.2) of 1998 (1998) 70 SASR 502 at 505, where his Honour, in contrasting the reporting requirements of s.28 with s.31(1), noted:

If the Act imposed no controls upon a person engaging in a cash transaction, it would be relatively easy to obey the operation of the Act. All that one would have to do would be split a transaction up into a number of transactions involving the physical transfer of currency less than $10,000 in value. It is no doubt to deal with such evasion that Parliament enacted s.31, which is the provision in question in this case.

To similar effect is the Explanatory Memorandum issued in relation to the Cash Transaction Reports Bill 1987 (which subsequently became the FTR Act).

47 Mr. Game also referred to Leask v. The Commonwealth (1996) 187 CLR 579 at 591, 620-21, 637; R v. Leask [1999] NSWCCA 33; and R v. Hannes [2000] NSWCCA 503.

48 In so far as there was any residual doubt in the effect of the section, that should be resolved in favour of the appellant: Beckwith v. The Queen (1976) 135 CLR 569 at 576.

49 Mr. Roberts SC for the Crown submitted that, in relation to transactions involving the receipt of cash by SEF from a customer, the cash transaction does not begin and end with the customer handing over a quantity of cash. Each transaction is a process involving inter alia SEF dealing with the currency to reflect what is intended by the party or parties involved to be the manner or form of the transaction. In relation to counts 39, 40, 51, 52, 53 and 54, SEF and Narayanan, in dealing with the currency, transformed what otherwise would have been one transaction into a number of smaller transactions, for the purpose of attempting to ensure that the currency was transferred in a manner or form that would not give rise to a significant cash transaction.

Decision

50 One element of the offences charged under s.31(1) is that SEF must have been “party to two or more non-reportable cash transactions”, that is, so far as relevant, cash transactions not “involving the transfer of currency of not less than $10,000”. In relation to counts 51 and 52, this required that the events of 6 September 1999 amounted to SEF being a party to five cash transactions each involving the transfer of currency of less than $10,000.00.

51 The evidence showed that Tony filled in forms relating to the issue of American Express travellers cheques to the face value of US$3,500.00 in the name of Patrick Hoffman, US$6,000.00 in the name of Albert Rafter; US$6,000.00 in the name of George Davis; US$6,000.00 in the name of John Adams; and US$5,000.00 in the name of Tony Collins; and handed over an amount which, together with the $14,000.00 previously handed over, made up a total of $43,600.00 in return for these cheques; and that subsequently SEF recorded these events in its computer as five transactions involving those amounts in US dollar travellers cheques, with five slightly different exchange rates, and amounts in Australian dollars in respect of each transaction appropriate to the amount of the travellers cheques and the exchange rate for that transaction.

52 It is true that, as submitted by Mr. Game, those circumstances may, considered as a whole, mean that SEF was party to a cash transaction involving the transfer of currency of not less than $10,000.00. But in my opinion, that does not necessarily mean that those circumstances do not also mean that SEF was also party to five cash transactions each involving the transfer of currency of less than $10,000.00. This may be illustrated by considering two scenarios.

53 First, suppose that A, B and C each give D $9,000.00; and then A, B, C and D go together to a cash dealer. D hands over $36,000.00, and each of A, B, C and D fill out forms for travellers cheques representing A$9,000.00. The cash dealer issues travellers cheques in those four names, and records the events as four separate transactions, one each with A, B, C and D. In those circumstances, it seems to me that there are simply four non-reportable transactions, each involving the physical transfer of $9,000.00, not withstanding that the money was handed over in one lot of $36,000.00. I do not think those events could be characterised as being a single transaction: that characterisation would not be true as a matter of substance.

54 Secondly, suppose that D goes alone to the cash dealer, hands over $36,000.00, and fills out forms for travellers cheques in the names of A, B, C and D where A, B and C are fictitious. Travellers cheques equivalent o $9,000.00 are issued in each of the four names, and the events are recorded as four separate transactions in the books of the cash dealer. In my opinion, these events can be regarded as amounting both to one significant cash transaction, and also as four transactions, none of which is a significant cash transaction. Although the same parties are involved in all four transactions, and only one sum of money is handed over, the parties to the transaction by their conduct manifested an intention that there be four transactions. In those circumstances, in my opinion a characterisation of the events as one transaction is true as a matter of substance, and characterisation of the events as four transactions is also true as a matter of substance; and these two characterisations are not inconsistent.

55 In my opinion, the terms of s.31(1) confirm this view. They refer to a person being a party to two or more non-reportable transactions for the purpose of ensuring or attempting to ensure that the currency was transferred in a manner and form that would not give rise to a significant cash transaction. The specific reference to “attempting to ensure” shows that the provision contemplates that the conducting of transactions as two or more non-reportable transactions may not be successful in ensuring that they do not also constitute a significant cash transaction.

56 Turning to the events of 6 September, in my opinion there was a transaction whereby Tony obtained a number of travellers cheques in return for a physical transfer of currency of $43,600.00. In my opinion, there was also a transaction whereby Tony obtained travellers cheques for US$3,500.00 in the name of Patrick Hoffman, in return for the physical transfer of cash, namely so much of the $43,600.00 as was or would be allocated to that transaction, that is, $5,756.00. That transaction did not involve the transfer of $10,000.00 or more, because the remainder of the $43,600.00 did not concern this transaction.

57 The same analysis would apply to each parcel of travellers cheques issued in the different names. The analysis is appropriate, in my opinion, because that is what both parties, as shown by their actions, intended at the time of their dealing with each other. But if $43,600.00 had been handed over with no parts allocated to different transactions, there would have been no transaction other than a transaction involving the transfer of a sum of $10,000.00 or more.

58 On that analysis, the direction given by the trial judge was erroneous. It was not correct to say, as the trial judge said to the jury, that if SEF entered up in its books what in reality was one transaction as a number of smaller transactions, each under $10,000.00, then SEF would be a party to a number of transactions, each under $10,000.00. Rather, the jury should have been directed that it was necessary for them to find beyond reasonable doubt that, at the time when Tony and SEF were dealing with each other, their intention as shown by their actions was that there be a number of separate transactions and that there be allocated to each of these separate transactions a part of the total money transferred, that part being less than $10,000.00.

59 In order to find the appellants guilty on these counts, the jury must have accepted Ms. Malik’s evidence and rejected that of Mr. Narayanan. It could be said that, in those circumstances, a finding as to the relevant intention was inevitable. However, the misdirection concerned a point which was well and truly taken at the trial, and it did concern an essential element of the offence with which the appellants were charged. I do not think the direction can be treated as immaterial; so that if the appeal is to be dismissed, it can only be by application of the proviso. I will consider that matter when I have considered the other grounds of appeal.

WARNING CONCERNING MS. MALIK

60 The fourth ground of appeal against conviction raises a question under s.165 of the Evidence Act, which is as follows:

165(1) This section applies to evidence of a kind that may be unreliable, including the following kinds of evidence:
(a) evidence in relation to which Part 3.2 (hearsay evidence) or 3.4 (admissions) applies,
(b) identification evidence,
(c) evidence the reliability of which may be affected by age, ill health (whether physical or mental), injury or the like,
(d) evidence given in a criminal proceeding by a witness, being a witness who might reasonably be supposed to have been criminally concerned in the events giving rise to the proceeding,
(e) evidence given in a criminal proceeding by a witness who is a prison informer,
(f) oral evidence of official questioning of a defendant that is questioning recorded in writing that has not been signed, or otherwise acknowledged in writing, by the defendant,
(g) in a proceeding against the estate of a deceased person---evidence adduced by or on behalf of a person seeking relief in the proceeding that is evidence about a matter about which the deceased person could have given evidence if he or she were alive.
(2) If there is a jury and a party so requests, the judge is to:
(a) warn the jury that the evidence may be unreliable, and
(b) inform the jury of matters that may cause it to be unreliable, and
(c) warn the jury of the need for caution in determining whether to accept the evidence and the weight to be given to it.
(3) The judge need not comply with subsection (2) if there are good reasons for not doing so.
(4) It is not necessary that a particular form of words be used in giving the warning or information.
(5) This section does not affect any other power of the judge to give a warning to, or to inform, the jury.

61 The trial judge gave a warning concerning her evidence, in the following terms:

The Evidence Act requires me to give you a warning that the evidence of Ms. Malik may be unreliable. The reason for this is that she could be in the position of an accomplice in relation to the allegations of structuring and has been given an indemnity, which you will have with you, by the DPP, Director of Public Prosecutions, against prosecution for the evidence she gave in this court. Accordingly I am required to warn you that there is a need for caution in determining whether to accept her evidence and the weight to be given to it.

62 Counsel for the accused sought a more extensive warning, making the following submission:

Your Honour, the application is that in addition to what your Honour’s said your Honour tell the jury that it has been found from experience that there are certain classes of witnesses whose evidence is inherently suspect. Accomplices are one such class because they are not impartial witnesses and further your Honour that the rationale for the warning is that the witness’ involvement in the crime in issue may incline them to falsely implicate another person, either with a view to exculpating themselves or with a view to minimising their own role, or perhaps with a view to currying their own favour with the police and that it may incline them to promote their own cause when giving evidence.

The trial judge declined to give any further direction on this matter.

63 Mr. Game submitted that the warning given was inadequate. It did not give the reasons why Ms. Malik’s evidence may have been unreliable, and did not explain either the effect of the indemnity or how that might impact on the manner in which she gave evidence. Mr. Game referred to R v. Stewart (2001) 52 NSWLR 301 at 306, 309 and 329.

64 Mr. Game submitted that Ms. Malik’s evidence was not relevant simply to the specific accounts about which she gave evidence: the evidence of practice was relevant to all counts, and her evidence was relevant to the credit of Narayanan. Narayanan gave evidence directly contradicting her evidence. Accordingly, Mr. Game submitted, the failure to give a proper warning was of central importance and the conviction on all counts should be quashed.

65 Mr. Roberts submitted that it was not necessary that any particular form of words should be used: s.165(4). Furthermore, the form of the warning will often depend on what has occurred at the trial and what is in issue. Ms. Malik was cross-examined to suggest that she had been charged with offences relating to the subject events, and that, if those charged against her were dropped and she obtained an indemnity, this would have assisted her in obtaining permanent residence in Australia. The jury were accordingly aware of possible motivations for Ms. Malik not to give true evidence, and the warning was sufficient in the circumstances.

66 Mr. Roberts also pointed to submissions which occurred prior to the summing up, when the question of a direction under s.165 of the Evidence Act was discussed. When discussing the s.165 direction to be given, Counsel for the appellants submitted that “our case is that she is not telling the truth about the essential matters concerning structuring and she is doing it to protect herself, as was put to her, and she has got the indemnity”. The Crown submitted in response that, if such a direction was given, the trial judge should change his ruling in relation to the admission into evidence of a statement made by Ms. Malik on 28 September, said to have been made before any question of indemnity arose. It had been previously submitted that the cross-examination of Ms. Malik raised a suggestion of recent invention, making that statement admissible; but the statement at that stage had been rejected by the trial judge. Following further discussion, the trial judge indicated that he proposed to warn the jury that her evidence may be unreliable and that it could be so because she could be in the position of an accomplice in relation to the structuring and was given an indemnity by the DPP. To that statement, Counsel for the appellant responded “If that is as far as your Honour wants to go so be it. I say your Honour should go further …”.

67 Mr. Roberts submitted that the fact that the wording of the warning sought was not as requested reflected a forensic choice by the appellants’ Counsel that the additional words would have been neutralised by the admission into evidence of Ms. Malik’s prior consistent statement.

68 In my opinion, there is no force in the lastmentioned submission of the Crown. The appellants’ Counsel did not at the trial concede that, if the statement was not admitted into evidence, it was appropriate for the trial judge to give no greater warning than he in fact gave. There was no relevant forensic decision taken by the appellants’ Counsel.

69 In R v. Stewart, at 329, Howie J said this:

In respect of accomplices or persons otherwise implicated in the offence before the jury, the matters which were considered by the common law as rendering their evidence suspect and which gave rise to the need for a warning were two-fold: firstly, they may have a reason to implicate another person even to the extent of implicating a person who is in fact innocent of the crime and, secondly, they may tend to exaggerate the role of another while minimising their own involvement and fabricate evidence to achieve this end: R v McLachlan [1999] 2 VR 553 at 562; R v Kendrick [1997] 2 VR 699 at 705; Downey (1997) 97 A Crim R 41 at 44; Ware (1994) 73 A Crim R 17 at 28.

As the trial judge in the present case told the jury, these are the matters within the special experience of the courts. Therefore, they are matters which should be drawn to the attention of the jury whenever a warning under the section is given in respect of evidence of a witness falling within this category. These are the matters about which the trial judge is required to inform the jury under s 165(2)(b) unless there is good reason not to do so. In Wood v R [2001] NSWCCA 228 it was argued on behalf of the applicant that the trial judge should have informed the jury that "persons involved in the commission of an offence may make false claims as to the involvement of others out of motives of revenge or antipathy". This Court held that there was no requirement for the trial judge to inform the jury of such a matter because it would have been obvious to them. However, it should be noted that at the trial no request had been made for a warning under s 165(2).

It would appear that Spigelman CJ and Hulme J concurred in this aspect of Howie J’s reasons.

70 In my opinion, the direction given in this case did not satisfy the requirement of s.165(2)(b) that the judge inform the jury of matters that may cause the evidence to be unreliable. I do not think it was adequate merely to point out that Ms. Malik “could be in the position of an accomplice”.

71 The point was adequately taken at the trial, and I do not think it can be said that the deficiency is immaterial. So in relation to this matter also, it will be necessary to consider the effect of the proviso.

PREJUDICIAL EVIDENCE OF MR. SHETTAR

72 The appellants applied to add an additional ground of appeal, namely that the trial miscarried by reason of prejudicial evidence given by Mr. Shettar.

73 The evidence in question was given by Mr. Shettar in the following exchange:

Q. Subject to his Honour's ruling would you answer my question? Were you told you were incompetent or not very good at the job?
A. No sir, I quit myself as per my wife instruction.

HIS HONOUR: Q. Beg your pardon?
A. As per my wife instruction I quit the job.

Q. "I quit the job myself", what was that about your wife?
A. She works in Tax Department. She works in Taxation Department, and I used to tell her what is happening everyday here. [STRIKEOUT BEGINS] and she told me one day "better you quit the job, otherwise you be in trouble". [STRIKEOUT ENDS] Straight away-

HIS HONOUR: I don't know that you can have that. That last bit about that answer about what his wife told him would be struck out.

74 That exchange led to an immediate application for discharge of the jury, to which the trial judge did not accede. However, the trial judge did give directions to the jury in the following terms:

HIS HONOUR: Thankyou members of the jury. There is one matter I would like to say to you. Shortly before lunch Mr Prakash Shettar whilst giving evidence gave an explanation that his wife said something to him before he left his job with the company and you may remember that I ruled that that evidence was inadmissible. You should disregard it. It will not form part of the transcript in the case. The accused is not charged with anything apart from the charges which you have in the indictment before you. Thankyou.

75 Mr. Game submitted that the directions in the circumstance could not suffice, and that the prejudice was such that the trial miscarried: Maric v. R (1978) 52 ALJR 631.

76 In my opinion, as submitted by Mr. Roberts, the correct reading of the transcript is that the question that gave rise to the allegedly prejudicial material was a question asked by the appellants’ Counsel, not by the trial judge. However, even if the question had been one asked by the trial judge, I do not think that the material is of such a prejudicial nature as could have justified a discharge of the jury. The material could not possibly have caused a miscarriage of justice.

PROVISO

77 I have found two errors in the trial judge’s summing up, which cannot be dismissed as immaterial. Accordingly, the appeal should be allowed unless the Crown satisfies the Court that there has been no miscarriage of justice, that is, that the appellant has not lost a reasonable possibility of acquittal.

78 I consider first the misdirection concerning the requirements for a s.31(1) offence. In relation to counts 51 and 52, in my opinion the misdirection could not conceivably have made a difference. There was undisputed and overwhelming evidence that both Tony and SEF intended that there be five parcels of travellers cheques, in different names, for each of which an appropriate part of the totality paid was to be attributed, and thus that there should be five non-reportable transactions (with a view if possible to avoiding there being one significant transaction). The knowing participation of Narayanan in this intention and transaction depended on precisely the same evidence as his knowing participation in the writing up of the transactions. Similar comments apply to counts 53 and 54.

79 As regards counts 39 and 40, the position is not so clear. A reasonable inference was available that George requested that the dealing be treated by SEF as seven transactions, each below $10,000.00; but the evidence was that US$40,000.00 in cash was handed over in exchange for a total of $64,400.00, and the only evidence that there were seven transactions in fact were the subsequent computer entries. In those circumstances, I am not satisfied that a correct direction may not reasonably have led to a different verdict.

80 As regards the direction concerning Ms. Malik, the shortcoming in the direction was not great, in all the circumstances. Ms. Malik had been cross-examined as to her motive to lie, to the extent chosen by the appellants’ Counsel. The authority of the judge was given to the proposition that her evidence should be treated with caution, as it could be unreliable. Reasons for that had already been explored in cross-examination, so that the jury would not be unaware of the reasons. Furthermore, quite apart from her evidence, the Crown case was strong.

81 Narayanan gave incredible evidence concerning the George transaction, participation in which he conceded. He claimed that he understood that $64,000.00 was being exchanged on behalf of seven people, yet there was no record of the names of these seven people or of their allegedly separate transactions, apart from a computer record which gave patently false information (as to individual amounts tendered, change given, and different exchange rates) for which Narayanan had no explanation.

82 Narayanan’s evidence that he told Ms. Malik not to deal with Tony was inconsistent with recorded telephone conversations between Narayanan and Tony. There was inherent improbability that Ms. Malik would, contrary to Narayanan’s direction, deal with Tony on her own initiative and set up a record of the same kind as was set up in relation to the George transaction, in which Narayanan admittedly participated.

83 I am not satisfied that the appellants did not lose a reasonable possibility of an acquittal in relation to counts 39 and 40. Otherwise I am so satisfied, and I would apply the proviso and dismiss the appeal.

SENTENCE

84 The maximum penalty by way of imprisonment that may be imposed under s.28 is two years, and the maximum under s.31 is five years. In passing sentence, the trial judge noted evidence that Narayanan was a person of exemplary character. He noted the submission of the Crown that the offences would be viewed as proved instances of ongoing conduct engaged in by a cash dealer, at the direction of Narayanan; and were clearly not isolated instances of such conduct. The trial judge said that he took those submissions into account, and he noted the provisions of s.17A of the Crimes Act, that the Court should not pass sentence of imprisonment unless the Court, having regard to all the available sentences, was satisfied that no other sentence was appropriate in the circumstances. He noted the submission of Counsel for the appellants that the three transactions were proved as isolated instances of conduct and were not evidence of ongoing conduct. He went on to remark that he did not take into account matters on which the appellant was found not guilty, or conduct which did not form part of the offence for which the appellants were to be sentenced. His Honour concluded that, having considered all other sentencing options, that a custodial sentence was appropriate in relation to the appellant Narayanan.

85 Mr. Game submitted that there was no reasoning as to why no other sentence apart from imprisonment was appropriate. He further submitted that the appellants did stand to be sentenced on the basis that the offences were two isolated instances.

86 In my opinion, no error is disclosed in the reasoning of the trial judge concerning sentence, or in the result. His Honour set out at length all the factors that he took into account, including general deterrence, and set out the other sentencing options; and in my opinion, those reasons did support the trial judge’s conclusion that no other sentence apart from imprisonment was appropriate in the case of Narayanan.

87 I accept it would have been an error for the trial judge to pass sentence on the basis that the appellants were guilty of any other conduct apart from the conduct of which they were found guilty. However, in assessing the culpability of that conduct, his Honour was entitled to conclude and proceed on the basis that the conduct in question was not conduct which was wholly contrary to the way in which the appellants carried on business, and in that sense, did not constitute isolated “out-of-character” events.

88 However, in view of my decision in relation to conviction, it is necessary to re-consider the sentence. On that question, in addition to all the subjective matters referred to by the trial judge, there has been tendered in evidence a letter from Dr. R.S. Muthukrishnan giving a medical report on Mr. Narayanan, as follows:

At your request I examined Mr Narayanan today and the following is my medical report:

Mr Narayanan presented himself extremely depressed, melancholic and anxious. He complained of insomnia, panic attacks, loss of appetite, poor motivation and total lack of energy. He told me about the custodial sentencing, being on bail and the consequent social humiliation and suffering. He also told me about the unaccustomed circumstances he had to bear during his period of custody - the passive smoking, the unavailability of vegetarian food and the grouping together of various offenders.

Mr Narayanan also mentioned his travel restrictions and regretted deeply his inability to see his 90-year-old and ailing father. His elder daughter's arranged marriage also is in jeopardy, partly because of his inability to go to India to organise formalities and partly because the social stigma of his jail sentence. Unable to face the local Indian community in Sydney, Mr Narayanan has been living like a recluse. His younger daughter who is in year 12, who is struggling to concentrate on her studies, his wife a very orthodox traditional Indian woman trying to cover up the humiliation - are all showing signs of reactive depression. These domestic and social circumstances make Mr Narayanan's already fragile self-image crumble.

On examination, his BP was very high at 160/100. He was deeply depressed showing signs of emotional exhaustion almost on the verge of a psychological crisis.

He was too depressed to accept my hypnotherapy session today. He also told me that he had not been taking the medications --- Prothiaden prescribed by his psychiatrist Dr Paul Friend. This is a precarious situation and in my opinion, a further custodial sentence may precipitate a major psychosis.

89 In my opinion, the offences for which the appellants were convicted are very serious offences. The objective of monitoring large cash transactions, so as to combat money laundering and tax evasion, are important objectives; and it is vital that cash dealers comply with the requirements of the FTR Act. It is extremely difficult to detect breaches, so the element of general deterrence is extremely important.

90 On the whole, I think the sentences imposed by the trial judge are appropriate in relation to the counts in respect of which the convictions stand, substantially for the reasons he gave.

CONCLUSION

91 In the result, in my opinion the following orders should be made:

1. Appeal against conviction on counts 39 and 40 allowed, and those convictions quashed.
2. Otherwise, appeal against convictions dismissed.
3. Leave to appeal against sentences in respect of counts 51-54 and 57 and 58 granted, but appeals dismissed.

92 BARR J: I agree with Hodgson JA.

93 GREG JAMES J: I agree with the orders proposed by Hodgson JA, and with the reasons he has given.

**********