R v O'Driscoll - [2003] NSWCCA 166

No judgment structure available for this case.

Reported Decision:
57 NSWLR 416
141 A Crim R 368

New South Wales

Court of Criminal Appeal

CITATION: REGINA v O'DRISCOLL [2003] NSWCCA 166 revised - 8/06/2004

HEARING DATE(S): 20 May 2003

JUDGMENT DATE:
26 June 2003

JUDGMENT OF: Spigelman CJ at 1; Hulme J at 116; Carruthers AJ at 149

DECISION: Appeal from convictions on Counts 7-22 allowed, appeal otherwise dismissed.

CATCHWORDS: CRIMINAL LAW - appeal against conviction - structuring cash transactions - meaning of "transaction" - whether two or more non-reportable cash transactions - Financial Transaction Reports Act (Cth) s31 - CRIMINAL LAW - evidence - whether Crown case split - whether error in allowing cross-examination by Crown on evidence of unexplained wealth - whether error in allowing Crown case in reply

LEGISLATION CITED: Crimes Act 1914 (Cth) s 29D
Criminal Appeal Act 1912 ss 6, 6AA
Financial Transaction Reports Act 1988 (Cth) ss 3, 4, 7, 31
Income Tax Assessment Act 1936 (Cth)

CASES CITED: Bendir v Anson [1936] 3 All ER 326
Chamberlain v R (No 2) (1984) 153 CLR 521
Killick v The Queen (1981) 147 CLR 565
Palmer v Commissioner of Taxation [1976] WAR 37
Palmer v Commissioner of State Taxation (WA) (1976) 136 CLR 406
Pearce v R (1978) 194 CLR 610
Question of Law Reserved (No 2 of 1998) (1998) 101 A Crim R 317
R v Chin (1984) 157 CLR 671
R v Ditfort (1987) 28 A Crim R 392
R v Ditfort (1991) 91 ATC 4431
R v Campbell & Greig (1999) 109 A Crim R 174
R v Edwards [1998] 2 VR 354
R v McMahon (NSWCCA, 23 June 1978, unreported)
R v Narayanan [2002] NSWCCA 200
R v Simpson (2001) 53 NSWLR 704
R v Soma (2003) 77 ALJR 849
Shaw v The Queen (1952) 85 CLR 365
Shepherd v R (1990) 70 CLR 573)

PARTIES :
Regina (Respondent)
William Benedict O'Driscoll (Appellant)

FILE NUMBER(S): CCA 60022/03

COUNSEL: E. Fullerton SC (Appellant)
D. Staehli (Respondent)

SOLICITORS: James A. Moustacas & Co. (Appellant)
Commonwealth DPP (Respondent)

LOWER COURTJURISDICTION: District Court

LOWER COURT FILE NUMBER(S): 01/11/6660

LOWER COURT
JUDICIAL OFFICER : Blackmore DCJ

60022/03

SPIGELMAN CJ
HULME J
CARRUTHERS AJ
Thursday 26 June 2003

REGINA v William Benedict O’DRISCOLL

The Appellant was convicted on two charges of defrauding the Commonwealth and sixteen charges of “structuring” transactions pursuant to s31(1) of the Financial Transaction Reports Act 1988 (Cth). That Act imposes reporting obligations on cash dealers in respect of cash transactions involving the transfer of $10,000 or more. Under s31 of that Act, it is an offence to be a party to two or more non-reportable cash transactions for the sole or dominant purpose of evading the reporting requirements imposed upon cash dealers. The jury accepted that the Appellant had participated over a number of years in a scheme to defraud the revenue by paying the wages of workers in the construction industry in cash. The structuring charges of which the Appellant was convicted were the result of his cashing multiple cheques for amounts less than $10,000 at the same time. The Appellant appealed against his conviction.

HELD

A.

(per Spigelman CJ, Hulme J and Carruthers AJ agreeing)

In order to make out the requirement of two or more non-reportable cash transactions, a tribunal of fact must find an intention on the part of a person to engage in cash transactions in amounts less than the figure identified in the legislation as significant. The same series of events can lead to both a single reportable transaction and a number of non-reportable transactions. [38], [50], [52], [126]

R v Narayanan [2002] NSWCCA 200 applied.

B.

(per Hulme J, Spigelman CJ and Carruthers AJ agreeing)

The Appellant was not party to two or more non-reportable cash transactions when presenting multiple cheques to be cashed at the same bank on the same day. It is not possible to attribute to the Appellant or the bank officers an intention to engage in a cash transaction with respect to each individual cheque. [49], [50], [122], [133]

R v Ditfort (1987) 28 A Crim R 392 referred to. R v Narayanan [2002] NSWCCA 200 distinguished.

C.

(per Spigelman CJ, Carruthers AJ agreeing)

Evidence of unexplained wealth was admissible in the Crown case in chief on the issue of whether the Appellant was the controller of the scheme. However, as the evidence permitted to be adduced by cross-examination was of low prominence in the trial and the Appellant rejected the opportunity to reopen his evidence in chief, his Honour did not commit an error of law, nor was there a miscarriage of justice. [78], [79], [86], [97]

R v Edwards [1998] 2 VR 354 followed, R v McMahon (NSWCCA, 23 June 1978, unreported) not followed, R v Soma (2003) 77 ALJR 849 discussed. Killick v The Queen (1981) 147 CLR 565, R v Chin (1984) 157 CLR 671 referred to.

(per Hulme J)

The evidence was admissible in the Crown case in chief. There was nothing “very special or exceptional” to permit the Crown to split its case. The proviso should be applied as the Crown case was overwhelming. [141], [143],

R v Soma (2003) 77 ALJR 849 applied.

D.

(per Spigelman CJ, Hulme J and Carruthers AJ agreeing)

His Honour did not err in allowing the Crown to call a case in reply. A combination of the Crown’s reasonable lack of suspicion that evidence would be adduced on the matter on which evidence was led in reply until the defence case and the comparative insignificance of the evidence meant the requisite exceptional circumstances for permitting such a course existed. [103], [146]

R v Chin (1984) 157 CLR 671 referred to.

ORDERS

1. Appeal on Counts 7-22 allowed and convictions quashed.

2. Appeal otherwise dismissed.

60022/03

SPIGELMAN CJ
HULME J
CARRUTHERS AJ

Thursday 26 June 2003

REGINA v William Benedict O’DRISCOLL

Judgment

1 SPIGELMAN CJ: The Appellant stood trial before his Honour Judge Blackmore SC and a jury on two charges pursuant to s29D of the Crimes Act 1914 (Cth) of defrauding the Commonwealth (Counts 1 and 2) and twenty charges of “structuring” transactions pursuant to s31(1) of the Financial Transaction Reports Act 1988 (Cth) (the “FTR Act”) (Counts 3 to 22). A jury returned guilty verdicts with respect to the fraud charges and with respect to sixteen of the twenty structuring charges (Counts 7 to 22).

2 The sentences for Counts 7 to 17 were made concurrent with the sentence for Count 1 in the Indictment. The sentences for Counts 18 to 22 were made concurrent with the sentence for Count 2 in the Indictment. The first ground of appeal before this Court relates only to the offences under the FTR Act. There would be no practical significance for the sentence actually to be served unless an appeal were allowed on sentence. During the course of oral submissions, Ms E Fullerton SC, who appeared for the Appellant, sought to add an appeal against sentence, if Ground 1 were upheld.

3 The second and third grounds of appeal relate to the convictions for defrauding the Commonwealth. They do not concern the structuring counts.

Background Facts

4 The conduct of the Appellant, which was accepted to have occurred by the jury beyond reasonable doubt, involved the participation by the Appellant in a scheme to defraud the revenue by the payment of wages to workers in the construction industry in the form of cash.

5 The Commonwealth has sought to protect the revenue, relevantly, by the enactment in the Income Tax Assessment Act 1936 (Cth) of a special system, known as the Prescribed Payments System (PPS). Under the PPS employers in the construction industry are required to deduct tax from payments made to workers or contractors either at the top marginal rate or, if the worker was registered under the PPS system, at a rate of 20 percent. These deductions are not required to be made if the contractor has had issued to it a Deduction Variation Certificate from the Australian Taxation Office (ATO). Such a variation operates to reduce the rate of taxation to be deducted, in some cases to nil. A variation may be made where, for example, the contractor satisfies the ATO that persons would be unlikely to earn sufficient taxable income to warrant a 20 percent withholding.

6 Each of the fraud charges related to the operation by the Appellant of one of two companies, each of which pretended, during the period of one of the two charges, to be a labour hire company. The mechanism for perpetrating the fraud was that employers of workers in the construction industry would pay to the sham labour hire company the gross wages due to workers by way of a lump sum cheque. The operator of each company would then bank the cheque, cash it and pay the workers their wages, or return the funds to the employer for payment to the workers, without deducting tax but after deducting a commission for itself, generally, of seven percent.

7 On the Crown case the scheme was operated in two distinct phases through two different companies. For a period of some two years commencing in 1995 the scheme operated through Star Suppliers Pty Ltd (“Star”). From 1997 the scheme was operated in the name of A-Quip Hire Pty Ltd (“A-Quip”). Count 1 related to the former and Count 2 to the latter.

8 The Crown case was that the Appellant controlled and directed each of these companies. The Appellant’s case during the trial was that his actions were carried out at the request of a man named Patrick Finbarr O’Donovan. That included pretending, at O’Donovan’s suggestion, to be either O’Donovan himself or a John Finbarr O’Neill.

9 The Crown case was that:

· In the case of each company the Appellant had adopted an assumed name – O’Donovan in the case of Star and O’Neill in the case of A-Quip – and opened bank accounts in the companies’ names.

· In each case he had filed a false application with the ATO and was issued with a nil variation certificate for purposes of the PPS.

· In each case cheques were deposited in the bank accounts of the two companies, generally from businesses involved in the building and construction industry.

· The cheques deposited over a period of twenty four months in the case of Star amounted to $13,030,097 and in the case of A-Quip to $3,371,959.

· In each case the funds once cleared were withdrawn from the respective accounts in cash, in sums under $10,000 with the consequence that the bank did not observe the reporting provisions of the FTR Act.

· In each case the Appellant had issued false or blank invoices purporting to represent work carried out by Star or A-Quip on behalf of the business. The invoices were in the dollar amounts received by the Appellant but, because of the nil variation certificate, there was no need for the businesses to remit PPS to the ATO.

· The amount of each cheque usually represented the amount owed by the employer business to its sub-contractors but, on occasions, additional amounts were paid. When that occurred, in effect, the Appellant acted as a cheque cashing service by paying the amounts of the cheque, less a commission, to the owner of the business in cash. On that basis the business obtained the amount on the invoice as a tax deduction but kept the cash received, in effect, tax free.

10 The Crown case established that the specimen signature for the account holders in the name of either O’Donovan or O’Neill was in fact written by the Appellant. Similarly, the signatures on the hundreds of cheques used in the operation of the scheme in the name of either O’Donovan or O’Neill were also generally written by the Appellant. The Appellant did not contest that he had completed, signed and cashed the cheques. He was identified in court by a number of bank officers who had come to know him as a regular customer and as either O’Donovan or O’Neill. The Appellant’s case was that the transactions were implemented at the request of O’Donovan.

11 In the case of most withdrawals, cheques were drawn on the accounts each in an amount less than $10,000, even though there were multiple cheques cashed at the same bank at the same time, or at different banks on the same day. A sample of these transactions were identified to form the twenty “structuring” counts against the Appellant. The Appellant was in fact acquitted of four of the structuring counts but no issue of inconsistency in verdicts has arisen on the appeal.

Ground 1

12 The first ground of appeal is that his Honour erred in failing to find that there was no case to answer with respect to the structuring charges. That application was made with respect to Counts 3 to 22 and is now relevant to Counts 7 to 22. This ground involves the meaning of the word “transactions” in s31(1) of the FTR Act.

13 The FTR Act is directed at regulating the cash economy, which permits both tax evasion and money laundering. Section 4(1) of the Act states that the principal object of the Act is to facilitate the administration and enforcement of taxation laws. Section 4(2) indicates that a further object is to facilitate the administration and enforcement of laws of the Commonwealth other than taxation laws. Furthermore, information collected for purposes identified in ss4(1) and (2) is, pursuant to s4(3), able to be made available to State authorities to facilitate the administration and enforcement of laws of the State.

14 The central operating provision of the Act is an obligation upon a “cash dealer”, relevantly in the present circumstances a bank, involved in a “significant cash transaction” to prepare a report of the transaction and communicate the information in the report to the Director of the Australian Transaction Reports and Analysis Centre.

15 Section 3 of the Act contains definitions. There is no relevant definition of “transaction”. Section 3 does contain the following:

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

‘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.”

16 Part V of the Act is concerned with Enforcement. One of its provisions is s31 creating the offence of which the Appellant was convicted. Section 31 relevantly provides:

“(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:

(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.

…

(3) A person who commits an offence against this section is punishable, upon conviction, by imprisonment for not more than 5 years.”

17 The purpose of this section is as set out by Doyle CJ in Question of Law Reserved (No 2 of 1998) (1998) 101 A Crim R 317 at 319:

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

18 The phrase that falls to be construed in s31 is: “2 or more non-reportable cash transactions”. That terminology of “non-reportable” emphasises that the dominant provision or provisions – of which s31 is a reciprocal – is the creation of the obligation to report.

19 Part 2 of the Act provides for Transaction Reports. It includes in Div 1, provision for Cash Transaction Reports by cash dealers. Section 7 provides:

“(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.

(2) The report shall be prepared in the approved form, contain the reportable details of the transaction and be signed by the cash dealer or otherwise authenticated by the cash dealer in a way approved by the Director.

…

(4) In this section:

‘reportable details’, in relation to a transaction, means the details of the transaction that are referred to in Schedule 1.”

20 Division 3 is a parallel scheme with respect to Reports of International Funds Transfers. Division 2 contains a scheme for Reports of Suspect Transactions. Division 1A is a scheme for reports about Transfers of Currency and Div 1B is a scheme for Cash Transaction Reports by Solicitors.

21 The submissions on this ground of appeal focused, by way of example, on the count in which the Appellant had negotiated seven cheques for an aggregate sum of $56,905, in which each cheque was for less than an amount of $10,000. Ms Fullerton SC directed the Court’s attention to the requirement of s31(1)(a) that there be at least “two or more non-reportable cash transactions”. She submitted that although there were seven separate cheques, there was in fact only one cash transaction and that transaction was “reportable”. The single transaction was reportable under s7 of the Act, not as a “suspect transaction” reportable under s16.

22 Ms Fullerton submitted that s31 would prohibit the conduct of the person who cashes multiple cheques for less than $10,000 at different bank branches on the same day, or at the same branch, but at different times of the day. When such conduct occurs, a single bank officer cannot know that a cash transaction in excess of $10,000 has been made and accordingly cannot prepare a report of the transaction pursuant to s7. The position is otherwise, she submitted, where, as in the present case, a group of cheques, which together add up to more than $10,000 are presented to the same bank teller at the same time.

23 The relevant offence under s31(1) is to be found in the concluding words of s31(1)(b)(ii) and (iii) to the effect that having regard to the identified matters, it would be reasonable to conclude that the “transactions” were conducted in a particular “manner or form for the sole or dominant purpose of ensuring … that the currency … was transferred in a manner and form that … would not give rise to a significant cash transaction.”

24 One issue before the Court is whether or not an occasion on which multiple cheques are presented on a single occasion is a single “cash transaction”, so that the requirement that there be “2 or more cash transactions” within s31(1)(a) is not satisfied.

25 The Crown submission to this Court, as before his Honour, was that the presentation of each cheque constituted a discreet transaction. It submitted that the word “transaction” should be understood as a “piece of commercial business done”. (See R v Ditfort (1987) 28 A Crim R 392 at 393-395; see also on appeal (1991) 91 ATC 4431 at 4434). That replaces one general term with another. Which, one asks rhetorically, is the relevant “piece of business”? Is it cashing each cheque or the cashing of a series of cheques?

26 The thrust of the Appellant’s submissions are, in substance, directed at the obligation in s7 upon a cash dealer to report a “significant cash transaction”. If, as the Appellant now submits, such a transaction can comprise a series of cheques cashed on a single occasion, then there was an obligation upon the bank to prepare a report of the transaction.

27 The report pursuant to s7 has to contain the “reportable details” identified in Schedule 1 of the Act. I do not find anything in that schedule which assists in determining the construction issue that has now arisen. Suffice it to say that the obligation to report contains a wide range of specific matters, including relevantly the following in clause 6:

“For any cheque or banker’s draft involved in the transaction:

(a) the name of the drawer of the cheque or banker’s draft; and

(b) the name of the payee, the favouree or the beneficiary of the cheque or banker’s draft (if any); and

(c) the name and branch of the financial institution or foreign financial institution on which the cheque or banker’s draft was drawn, and the country in which the branch is located.”

28 On one view, the identification of “any cheque” may suggest that a transaction can comprise more than one cheque. Alternatively, the word “any” should be understood in the sense of “if any” so that a specific obligation applies only in a case when a cheque was involved in the relevant transaction. In this regard the details, including those required by clause 6, are equivocal on the issue of construction which has arisen.

29 The word “transaction” is not a term of art. (See Bendir v Anson [1936] 3 All ER 326 at 330.) In a taxation context the word has been applied to a series of steps linked together to “attain a definitive objective”. (Palmer v Commissioner of Taxation [1976] WAR 37 at 41; approved Palmer v Commissioner of State Taxation (WA) (1976) 136 CLR 406 at 412.)

30 The statutory scheme was considered by this Court in R v Narayanan [2002] NSWCCA 200. In that case a cash dealer was prosecuted for contravention of s31(1) of the FTR Act. The practice of the company was to ask a customer with respect to a transaction involving $10,000 or more whether they wished to have a cash transaction form to be completed under the FTR Act. If they did not wish that to occur then a higher rate of foreign exchange would apply to the transaction. The cash dealer would then split the application for traveller’s cheques into smaller parcels not exceeding $10,000 each.

31 Counsel for the Appellant submitted that there had been no offence committed under s31 on a similar basis to that submitted in the present case. There was not, counsel there submitted, “two or more non-reportable cash transactions” within s31(1). There was in fact only one transaction which was a reportable transaction.

32 Hodgson JA, with whom Barr and Greg James JJ agreed, rejected the submission on the basis that the fact that a series of events may involve a reportable cash transaction did not necessarily mean that those events did not also give rise to a number of other cash transactions which are not reportable (at [52]-[58]). His Honour gave the example at [54] of an individual applying for traveller’s cheques in his own name and three fictitious names. His Honour said:

“[54] … 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.”

33 His Honour emphasised the significance of what the parties “intended at the time of their dealings with each other” and concluded that the jury should have been directed in those terms. It was necessary to find that the intention was that there be a number of separate transactions (at [57]).

34 In this Court, both Ms E Fullerton SC and Mr Staehli, who appeared for the Respondent accepted that this reasoning was applicable to this case. Accordingly, the same set of circumstances could have given rise to an obligation to report under s7 on the part of the bank and a contravention of s31 on the part of the Appellant.

35 Ms Fullerton relied on that part of the reasoning of Hodgson JA which emphasised the need to identify the intention of the parties as at the time of the transaction. She conceded that this point had not been taken at the trial and applied for leave under r4. The Crown did not oppose leave being granted.

36 Of particular significance is the reasoning of Hodgson JA, with reference to the facts in Narayanan, when his Honour said:

“[59] … 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.”

37 The application of the proviso was dealt with by his Honour in the following way:

“[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 (the customer) and (the cash dealer) 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 these circumstances I am not satisfied that a correct direction may not reasonably have led to a different verdict.”

38 In the absence of any submission to the contrary on the part of either party, this Court will follow its own prior decision. On the basis of the reasoning in Narayanan, some form of intention to engage in “transactions” in amounts less than that identified in the legislation as “significant” must be determined by the tribunal of fact. Furthermore, this Court will proceed on the basis that the same series of events can lead to a conclusion that there was both a single reportable transaction and a number of subsidiary transactions, each of which was not reportable.

39 In order to apply the reasoning of Narayanan to the facts of this case it is necessary to refer in some detail to the evidence relating to the respective counts on which a conviction against the Appellant was recorded.

40 With respect to the counts of which the Appellant was convicted all but one shared the following characteristic. The Appellant obtained monies from two different banks on the same day on the basis of a series of cheques drawn on each of the respective banks. In all cases the total value of the cheques exceeded $10,000 from both banks, but no individual cheque exceeded $10,000. In the one exceptional case the total value of the cheques drawn on one bank did not exceed $10,000 but the total value of the cheques cashed on that day from another bank did exceed $10,000.

41 The original submission of the Appellant was that it could not be said that there was more than one transaction on any day which was not reportable. In all but the exceptional case this was because both sets of transactions with the banks constituted a single transaction each of which was a significant cash transaction. In the exceptional case where one bank did not provide cash in excess of $10,000 there was also no offence because in that regard there were not two non-reportable transactions. There was one non-reportable transaction and one reportable transaction.

42 The transactions under consideration in the present case were numerous, occurring over a long period of time involving a number of different bank officers from a number of different banks. The counts related to a selection of the numerous transactions. It is understandable that the recollection of the bank officers as to the precise modus operandi was not identical although certain broad themes emerged from the evidence.

43 The basic themes were as follows:

(i) The Appellant would telephone the bank in advance nominating a total amount of cash in order to ensure that the bank had enough to give to him.

(ii) The Appellant would also usually specify the denominations he wished, the number of $100 notes, the number of $50 notes, etc.

(iii) Cheques were drawn to the total value he had nominated, on some occasions those cheques were signed in the presence of bank officers.

(iv) The Appellant would also specify that the cash should be bundled together in what the Crown referred to as “sub-bundles” into other amounts, some exceeding $10,000 and some not, which is the form in which he would take the cash from the bank.

(v) In the majority of cases there was clear evidence on the back of each cheque in his own handwriting as to the quantum of these sub-bundles. These related to Counts 7, 8, 9, 10, 12, 13, 14, 16 and 18. In the case of the other counts the amounts identified in his handwriting on the back of one of the cheques was a break-up of the denominations only and not into any such sub-bundle. In one case where there was no such annotation.

44 The overall circumstances, particularly the telephone call in advance of each visit to the bank nominating the total amount of cash that would be required on a particular occasion, establishes on the basis of “undisputed and overwhelming evidence”, to use Hodgson JA’s formulation from par [78] of Narayanan as quoted above, that on each occasion there was a reportable cash transaction, save in the case of the visit to one of the two banks the subject of Count 14. In the case of the other bank, the subject of that count, the total amount did exceed $10,000.

45 I note that no submission was put suggesting that anything turned on the particularisation of the counts when cheques were presented to two different banks on the one day (namely Counts 7, 12, 14, 18, 21 and 22). Nor did anything turn on the peculiarity of Count 14 where only a single cheque was presented on one bank and a dozen cheques presented on another bank on the same day.

46 Since writing the above, I have read the judgment of Hulme J in draft. His Honour concludes that there was not, in any case, more than one cash transaction and distinguishes Narayanan on its facts.

47 I note that the Crown has never relied on the “sub-bundles” as constituting “2 or more cash transactions”. In any event, on a number of occasions, a sub-bundle exceeded $10,000. The Crown case was that each cheque when presented was exchanged for cash and that each such exchange constituted a cash transaction.

48 In Narayanan, the cash flow was, in effect, in reverse. It was the cash dealer who supplied the cheque and received the cash from a customer. Nevertheless, the exchange said to constitute the relevant “transaction” was essentially the same. The issue to be determined in the present case is whether it can be said, as Hodgson JA said in Narayanan at [78], that “an appropriate part of the totality paid was to be attributed” to each parcel of travellers cheques.

49 I agree with Hulme J that that was not the case here. No “part” of the cash was ever “attributed to” an individual cheque.

50 The separate bundles of cash in Narayanan were equivalent to the sub-bundles in the present case, not to the individual cheques. None of the sub-bundles, nor any other aspect of the exchange, turned on the presentation of multiple cheques. No one ever dealt with any of the cheques individually. It cannot be said that each cheque was presented for payment. To apply the definition of “cash transaction” in s3 of the Act, there was never “a transaction involving the physical transfer of currency” in the amount of the face value of any cheque.

51 In Narayanan, similarly, no one dealt with individual travellers cheques. The Court’s reasons focused on each “parcel” of travellers cheques.

52 No doubt, the Appellant was exploiting knowledge that it was the practice of the banks with which he dealt to treat each cheque as a separate transaction and to ignore the substance of the overall transaction for purposes of the FTR Act. That fact is not material to the determination of the offences with which he was charged.

53 Nor can it be said that the purpose of the Act is in any way defeated by this interpretation of s31. The scheme, after all, did involve reportable cash transactions.

54 The convictions on the FTR Act charges should be quashed and a verdict of acquittal entered.

Ground 2

55 The Appellant contends that his Honour erred in allowing the Crown to cross-examine the accused in an unfair manner, namely, by splitting his case. Ms Fullerton informed the Court that this ground of appeal was relevant only to the two counts of defrauding the Commonwealth.

56 During the course of his evidence in chief the Appellant gave evidence that he worked for O’Donovan as the principal of both Star Suppliers and A-Quip and had done so for many years. Two distinct lines of cross-examination arose in this regard. First, cross-examination based on the tax returns of the Appellant indicating no identification of O’Donovan or either of the companies as a relevant employer. During the cross-examination the Appellant stated that O’Donovan paid him in cash and those payments had not been declared for taxation purposes. Secondly, cross-examination about the financial circumstances of the Appellant. This included cross-examination as to how he had accumulated assets and, particularly, how he had been able to finance a home purchase and make repayments on his mortgage.

57 Objection was taken before the trial judge. His Honour referred to the relevant principles in Shaw v The Queen (1952) 85 CLR 365 and The Queen v Chin (1984) 157 CLR 671. Subsequently, the High Court has considered this matter in R v Soma (2003) 77 ALJR 849.

58 Before the trial judge, as in this Court, counsel for the Appellant submitted that the Crown was splitting its case. It was or should have been apparent to the Crown that the modest income declared for income tax purposes when contrasted with the improvement in the assets of the Appellant and his wife over the relevant period were probative of the case that the Crown alleged against the Appellant.

59 Before the trial judge, and in this Court, the Crown asserted that the questions complained of arose only out of the evidence by the Appellant that he had worked for O’Donovan. They did not arise in the Crown case. The detail of the taxation returns became significant only when the Appellant claimed to have been employed by O’Donovan for extensive periods, leading to the proposition that he was a mere employee doing what he was told.

60 In the course of his reasons for rejecting the application to restrict the Crown’s cross-examination his Honour said:

“During the evidence of the accused he has given evidence that he was employed by a Mr O’Donovan for approximately the period 1989 to 1998. The Crown submitted that this was the first time that they became aware that this was what the accused’s line of defence was. There is nothing in the evidence that I have seen that countermands that assertion.

In cross-examination the Crown asked questions of how Mr O’Donovan paid the accused. The accused said that he was paid in cash. The Crown has apparently the tax returns for the accused which would appear to contain prior inconsistent statements with regard to both the accused’s employer and his method and quantity of payment. The Crown now would seek to cross-examine on those reports.

The defence accept that prior inconsistent statements with respect to the name of Mr O’Driscoll’s employer are relevant and prima facie admissible, but argue that the Crown should have predicted the nature of the defence being conducted by the accused and tendered them in chief and that to tender them now or even cross-examine on them is splitting the Crown case.

I disagree with that submission. To predict the nature of the defence in that manner might have led to the tender of a vast quantity of irrelevant material for the jury’s consideration. The accused has, as was his right, never divulged his defence before yesterday. Even in cross-examination of the Crown witnesses the precise nature of his defence was not divulged. I do not say that to criticise the defence. It is merely a fact. In my view the Crown are entitled to explore the answers given by the accused in chief and that must include an examination of the nature, amount, style and quantity of any such payments by Mr O’Donovan.”

61 His Honour went on to say, with respect to the second issue I have identified above:

“In similar vein the accused objects to any cross-examination by the Crown as to the accused’s financial circumstances. Hypothetical questions such as ‘where did you get the money to pay your mortgage payments?’ were posed. Apparently the Crown does propose to ask such questions. The accused points out that the financial circumstances were known to the Crown prior to the trial and that they could have sought to prove that he appeared to have the benefit of unidentifiable enrichment but chose not to do so. The Crown has responded by submitting that they did not know the nature of the defence in that they did not know that the accused would maintain that he was a labourer on the railways at night and that during the day he did errands for Mr O’Donovan. Given the nature of that work, the fact that he was able to pay off large sums of money from his mortgage, if it be a fact, is relevant to show that he was not in fact working as a labourer or an errand runner at all. Again I find that there is substance in the Crown submission. This is not a case where the Crown ought reasonably have anticipated the defence and therefore it is not a question of splitting the Crown case. The evidence is so intrinsically tied in with the accused’s defence that he worked as a labourer for Mr O’Donovan during the day that the questions are relevant to the fact in issue and are prima facie admissible.”

62 The written submissions in this Court put it this way:

“The Crown knew in advance that the modest income declared in tax returns could not have come close to funding the assets the appellant had accumulated. The Crown did not need to know what work the appellant did before adducing evidence of his significant and unexplained accumulation of assets. It was simply a means of adducing evidence which ought to have been lead in its own case and was unrelated to the defence case in any sufficiently material sense.”

63 During the course of oral submissions Ms Fullerton SC narrowed the focus to one particular aspect of the evidence adduced in cross-examination as constituting the splitting by the Crown of its case. She accepted that in the light of the evidence given in chief by the Appellant about his employment by O’Donovan, it was permissible for the Crown to seek to tender the income tax records as a prior inconsistent statement. Those records failed to identify O’Donovan as an employer. Nevertheless, she maintained the position that the Crown ought to have tendered in its case in chief these tax returns together with evidence of unexplained wealth to establish the proposition that it was the Appellant rather than anybody else who was the controller of the scheme.

64 The particular item of unexplained wealth on which she focused was the evidence that the Appellant had been able to obtain $200,000 from Ireland in order to acquire a house. She submitted that the combination of the low income suggested by the tax returns, the knowledge that $200,000 had come from the Bank of Ireland for the private purposes of the Appellant, together with the fact that, during the course of the scheme, drafts on the Bank of Ireland had been purchased in cash was evidence that was admissible to establish the basic Crown case as to the participation in, and the role of, the Appellant in the scheme. It should have been tendered in chief. She accepted that the drafts from the Bank of Ireland which were purchased in Australia were not directly referable to the single transaction of receiving $200,000 from Ireland.

65 The relevant cross-examination included the following (T673-677):

“Q Where did that money come from?

A Well I had money in an account overseas.

Q I’m sorry?

A I had an account with some money in it and – overseas and I got a mortgage for the remainder.

…

Q Was that money which you had put in that account from Australia?

A Yes it would have been.

Q Had you done that using overseas bank drafts?

A I did.

Q How much money did you draw from that account to help pay for the house?

A From memory about 200 maybe - $200,000.

Q $200,000 Australian dollars?

A Yeah $200,000 Australian dollars, around that figure.

Q That was money which you had sent to Ireland from money you had earnt in Australia was it?

A Yeah that’s right.

Q Do you say do you that it was money that you’d earnt from Mr O’Donovan?

A That’s right.

Q Over what period of time had you sent it to Ireland?

A I suppose over a period of a number of years. Probably from about ’89 till 1998.” (T673-674)

66 The questioning went on:

“Q Was that money in the Irish bank account an accumulation of cash drawn from the accounts of Star Suppliers and A-Quip Hire Pty Limited?

A This is drawn from A-Quip and Star Suppliers.

Q Yes. Did you take cash out of those accounts and send it to Ireland to be deposited into that bank account?

A I remember on one occasion I asked Mr O’Donovan would it be okay to get a bank draft and he said it was okay provided I gave him – I had cash at home that was in the house and I sent the bank draft then to a bank in Ireland.

Q Once?

A A couple of times.” (T677)

67 The Appellant also gave evidence that he kept a large amount of cash in his house, some in a wardrobe and some in the freezer. This, he said, was cash that he had earned for working for Mr O’Donovan over the years (T679). He also said that he had paid off a considerable amount of the mortgage within six months and that the cash to make those payments had also come from what he had earned over the years from Mr O’Donovan (T680).

68 Ms Fullerton submitted that the course of this cross-examination allowed this material to be brought out in a manner which put the Appellant in a bad light. The Appellant was denied the opportunity of presenting an explanation for the acquisition of the house in his own case in a manner which was less prejudicial.

69 It was a central part of Ms Fullerton’s submissions that the evidence as to limited earnings and the acquisition of a house with a cash transfer from Ireland was admissible in the Crown case. She submitted that this evidence was at least consistent with the Crown case that the Appellant controlled the scheme and this gave him access to significant amounts of cash, i.e. the 7 percent commission.

70 Mr Staehli submitted that the material was not admissible. He submitted that it was not capable of being tendered because of an inability to link the information of which the Crown did have knowledge in any relevant manner. He submitted, specifically, that it was not until the cross-examination that the Crown had any evidence that the bank draft that came from the Bank of Ireland to the Appellant, in order to pay a substantial proportion of the purchase price of a house, was his own money. No such link could be drawn from the fact that drafts in smaller and different amounts had, over a period of time, been sent from the account of the company to Ireland. This was in part because the company had engaged in activity other than the avoidance of the PPS scheme by means of payments of cash to workers. The amounts sent to Ireland could have been the property of the employers who had used the Appellant’s cheque cashing facility.

71 On the evidence available to the Crown, the companies were involved in a scheme of paying false invoices for contractors in the building trade. The Appellant had issued false or blank invoices purporting to represent work carried out by Star which, in some cases, represented an amount additional to the amount owed to the contractor. On those occasions the owners of the businesses were able to claim the amount of the invoice as a deduction whilst effectively having cash returned to them. On at least some such occasions, according to evidence available to the Crown, the cash of those owners was transferred to them by means of a bank draft drawn by the company Star and payable to Ireland.

72 There was, accordingly, Mr Staehli submitted, no inference available that amounts sent by the companies to Ireland by way of bank drafts could be said to be the money of the Appellant. Until the Appellant’s evidence in chief, the Crown could not establish that the money which came from Ireland and which was applied to buying the house had been the property of the Appellant.

73 Mr Staehli relied on the judgment of Lee J, with whom Carmichael and Lusher JJ agreed, in R v McMahon (NSWCCA, 23 June 1978, unreported). In that case the Crown tendered a significant quantity of money. The accused was charged with possession of drugs. Lee J held that possession of the sum of money had no relevance “to the charges that the appellant was facing”. His Honour said:

“I am unable to see how the fact that $2,595 was being carried by the appellant at the time the search was underway to determine whether he was in possession of any heroin, could have any probative value in relation to the issue of possession or no possession of the heroin the subject of the second count and this whether treated alone or in association with the evidence that the appellant was not in employment at the time … although unusual, it was not a state of affairs necessarily pointing to wrong-doing. The possession of the money could only be related to a possible trafficking in heroin or possession of heroin as a matter of pure speculation. There were many sources, legal or illegal – savings, sale of an asset, betting, stealing, robbery to mention some that come to mind – from which a man may have obtained such an amount of money, but no basis at all in my view to make a choice and relate the possession of the money to trafficking in heroin or the possession of heroin in the absence of some other evidence suggesting such a relationship. This was not a case of facts being proved from which an inference could be drawn that the money was related to trafficking in heroin, so as to permit that inference to be drawn if no explanation were put forward by the accused. At its highest the evidence of possession of the money could only be traded as raising a suspicion that it may have come from some dealing in heroin, but that suspicion was always a suspicion only and the money could equally have come from a number of other sources.”

74 Although Lee J did discuss both “possession” and “trafficking”, the case before him was one of possession only. The observations in relation to trafficking are obiter. This is of some significance as it is much clearer that unexplained wealth is not relevant to the issues posed by a charge of possession of drugs.

75 The judgment of Lee J was relied upon by the appellant in R v Edwards [1998] 2 VR 354. In that case the applicant was found guilty of a count of trafficking. One ground of appeal was that the trial judge erred in admitting evidence that the accused had $3,050 in his possession. Eames AJA, with whom Hayne and Batt JJA agreed, distinguished McMahon albeit not on the basis that the counts in the case related only to possession.

76 His Honour did so on the basis that the evidence was admissible only with respect to one of the two counts and with respect to that count there was no other circumstantial evidence. His Honour noted that the possession of the large sum of money was able to be one element in a circumstantial case and that the mode of proof of a circumstantial case had been clarified by the High Court in judgments delivered subsequent to McMahon (i.e. Chamberlain v R (No 2) (1984) 153 CLR 521 and Shepherd v R (1990) 170 CLR 573). His Honour held that the discovery of such a sum of money was an item of circumstantial evidence which the jury could consider along with other circumstantial evidence on the charge before the court.

77 The reasoning in Edwards is, in my opinion, inconsistent with reasoning in McMahon insofar as that reasoning extends beyond a possession charge. In that respect McMahon was obiter and Edwards should be followed. (See also R v Campbell & Greig (1999) 109 A Crim R 174 esp at 180.)

78 A critical issue at the trial was whether or not the Appellant was conducting the scheme as a principal on his own account or, as he claimed, whether he was taking all steps at the direction of O’Donovan. In my opinion, the combined effect of the two items of evidence referred to in the course of these submissions, i.e. the tax returns showing little in the way of income and access for his own private purposes to a substantial amount of money transferred to him in a non-traceable manner was admissible evidence on this issue. The fact that drafts may have been sent from the company Star on account of one of the employer companies as part of the false invoicing scheme is not to the point. That circumstance does not suggest how any money would be transferred from Ireland to be used by the Appellant for his personal expenditure. It may be that a jury, properly instructed to the effect that, in a circumstantial case, there must be no reasonable hypothesis consistent with innocence, may conclude that in the absence of evidence linking the flow of funds to Ireland to the defendant the Crown has not established its case. That, however, is a different proposition to that which arises on admissibility.

79 In my opinion, evidence of unexplained wealth was admissible in the Crown case in chief.

80 In R v Soma, supra at [11] and [14]-[15] the joint judgment in the High Court emphasised the need to identify which limb of the statutory jurisdiction of a court of criminal appeal is invoked. Two limbs of s6 of the Criminal Appeal Act 1912 are relevant:

· “the wrong decision of any question of law”

· “there was a miscarriage of justice”.

81 The specific ground relied on is:

“His Honour erred in allowing the Crown to cross-examine the accused in an unfair manner, namely by splitting its case.”

82 So expressed, the ground can be understood to invoke each of the two limbs of s6 I have highlighted.

83 In R v Soma, the joint judgment affirmed that, as a matter of practice and procedure, rather than of substantive law, there is a general principle or rule that “the prosecution must offer all its proof before the accused is called on to make his or her defence” ([29] and see [27]-[28]). There can, however, be departures from the general rule ([28]).

84 The rule is not a technical rule but is based on fairness (see e.g. Killick v The Queen (1981) 147 CLR 565 at 569; R v Chin, supra at 686). Where an issue arises in the course of cross-examination, Dawson J in Chin at 686 posed the test in terms of whether:

“… its admission for the first time during cross-examination would unduly prejudice the accused, having regard to the obligation resting upon the prosecution to make its case known before the presentation of the defence case.”

85 What constitutes relevant unfairness or prejudice must depend on all the circumstances of a case. It is pertinent to consider the reasons why the Crown did not adduce the evidence in its own case. In Soma, for example, it was not a good reason that the Crown anticipated an objection may be taken to its tender. (See R v Soma (2001) 122 A Crim R 537 at [26] approved in the High Court at [31] and see at [12]-[13].)

86 In the present case, the explanation proffered was that the Crown was unaware that the $200,000 that came from Ireland was the Appellant’s own money, rather than a loan or gift or pre-existing capital. That, however, went to the weight of the evidence it could adduce, rather than to its admissibility. In the reasons I have indicated above, the evidence which the Crown was in a position to prove was admissible. It could not, in my opinion, be said that this evidence was “marginally, minimally or doubtfully relevant”. (See R v Chin supra at 676.9 per Gibbs CJ and Wilson J.) The combined effect of low income over a long period of time and access to substantial funds was probative of the Crown case. The amount of $200,000 was sufficiently large although, in the scheme as a whole, not patently so, to be relevant to the issue of whether the Appellant was the controller of the scheme.

87 I have indicated in par [64] above, the submission made for the Appellant as to the prejudice suffered during the trial. The issue arose before the relevant cross-examination occurred. His Honour’s judgment was given in anticipation of the line of cross-examination. At that stage the Appellant had been cross-examined on other matters for one afternoon (T439-482).

88 The next day Counsel for the Appellant identified the relevant prejudice as being the loss of the ability to give his own version of the facts in chief, rather than to give the appearance that he had been seeking to conceal it. His Honour thereupon gave counsel leave to reopen examination in chief (T527). Ms Fullerton rejected the opportunity to do that (T540).

89 Where, as here, an Appellant has been given an opportunity to substantially, if not completely, alleviate the unfairness involved in the Crown splitting its case, this is a material factor to consider in determining whether an error of law or a miscarriage of justice occurred.

90 This is reinforced by the comparatively insignificant, albeit not marginal, nature of the evidence that the Crown should have adduced in chief.

91 The significance of the evidence in the context of the Crown case on the two defrauding the Commonwealth counts appears from the summing-up of the trial judge. His Honour identified the case as almost entirely a circumstantial one and gave the appropriate direction to the jury as to how to approach such a case (T19).

92 His Honour also identified that the nature of the case was such that it was an essential requirement that the Crown establish that it was the Appellant who controlled and directed the affairs of the company (T33). He directed the jury that they had to be satisfied that he was controlling and directing the companies beyond reasonable doubt (T34).

93 His Honour then directed the jury that it had to be satisfied of intentional dishonesty and the elements of the offence about which he directed them (T35).

94 When his Honour came to summarise the evidence (T51) he did so by identifying matters in the following sequence:

· Incorporation of the companies and their application for tax file numbers and for deduction variation certificates, many of these documents were executed either in the name O’Donovan or O’Neill by the Appellant and in the case of the company A-Quip the accountant who conducted the incorporation identified the Appellant as using the name John O’Neill. The Appellant’s evidence had been that all of this, including the impersonation of a Mr O’Neill, had occurred at the direction of Mr O’Donovan.

· Various bank accounts were set up and bank officers identified the Appellant as the person whose name was Pat O’Donovan.

· A number of bank officers gave evidence of the accused’s modus operandi of obtaining cash on the cheques and using and occasionally in their presence signing the name O’Donovan to cheques. Bank officers identified the Appellant as the person who was known to them as Mr O’Neill with respect to the A-Quip company. Others identified him as O’Donovan in relation to the Star company.

· Various persons in the building industry gave evidence with respect to the cheques they had made up to Star or A-Quip and the way their employees were paid in cash.

95 His Honour gave the jury a direction not to use the evidence of the Appellant, that he had failed to declare income, for a tendency purpose (T90-91).

96 His Honour proceeded to summarise the evidence of the accused over some twenty pages of the summing-up (T92-114). His Honour referred to numerous aspects of the evidence but particularly focused on the existence, identify and conduct attributed to Mr O’Donovan. His Honour focused in detail on the examination in chief and gave a comparatively summary treatment of the cross-examination. In this respect also, however, the primary focus was on the alleged activities of O’Donovan. The evidence of which complaint is now made did not play a sufficiently prominent part in the trial for his Honour, in an otherwise comprehensive summation of the Appellant’s evidence, to refer to it at all.

97 In my opinion although the evidence adduced could not be dismissed as “marginally or minimally or doubtfully relevant” (see Chin at 676.9 quoted above), it was of such low prominence at the trial that, when combined with the offer rejected on behalf of the Appellant to avert the prejudice by reopening his evidence in chief, I have concluded that his Honour committed no error of law and there was no miscarriage of justice in permitting the cross-examination to occur.

98 In my opinion, this ground of appeal should be rejected.

Ground 3

99 The third ground of appeal is that the trial judge erred in allowing the Crown to call evidence in reply. The evidence in reply related to an address in Crown Road, Queenscliff, which had been provided to the Australian Securities Commission as the registered office of Star. The effect of the evidence given in reply was that the address had no connection with the company.

100 During the course of the defence case a witness gave evidence that he had visited O’Donovan at “an apartment” in Crown Road, Queenscliff. Another witness who had resided at 72 Crown Road, Queenscliff was known to the Crown prior to the trial. The effect of this witness’s evidence was that the relevant apartment was occupied by a young couple, not a single man and the occupants were certainly not Irish.

101 The Appellant submitted that the evidence that was eventually led in reply should have been led in the Crown case because it established that the particular apartment used was not connected with the company.

102 The evidence was led without objection but a direction was sought that the jury be instructed to exclude the evidence from their consideration. In his judgment Blackmore DCJ said:

“The issue is who lived at a particular address. Who lived there was raised for the first time in evidence in the defence case squarely by Mr O’Driscoll himself. The Crown did not have evidence of who lived at that address or who stayed there, what they had was evidence of who the tenants were at a particular time. Clearly that evidence would not have illuminated the issue one way or the other, given the nature of the evidence given by the accused. The issue is connected with the defence case that Mr O’Donovan existed and was the one involved with Star Suppliers, which I have already ruled was not one the Crown could have reasonably anticipated as a defence, therefore, in my view the evidence is properly one to be led in reply and will remain before the jury.”

103 Nothing suggests that the Crown had any reason to suspect that any person would attempt to link O’Donovan with the premises used as the registered office of Star until such time as the evidence to that effect was adduced in the course of the defence case. This may not be enough, on its own, to establish the “exceptional circumstance” in which a Crown case in reply may be permitted. (See R v Chin, supra at 686.) However, when this is combined with the comparative insignificance of the evidence, which in the overall scheme of the Crown case borders on the trivial, the requisite circumstances can be seen to exist.

104 In any event, the Crown relied, in the alternative, on the proviso. If it were necessary to do so, this would be an appropriate case to apply it.

105 This ground of appeal should be rejected.

Sentence

106 As noted above, Ms Fullerton sought to add an appeal against sentence during the course of her oral submissions if, as has proved to be the case, Ground 1 was upheld. Ms Fullerton acknowledged that this Court could proceed to re-sentence, but it did not have the evidence before the sentencing judge. Nor was she in a position to make submissions.

107 Ms Fullerton’s submission was that the sentencing judge took into account on the fraud counts the fact that they were perpetrated by means of the structured cash transactions and, for that reason, ordered concurrent sentences. She submitted that his Honour appears to have “factored up the seriousness of the fraud” in a manner, which would not be warranted if the conviction on the FTR Act offences were quashed.

108 The relevant passage appears at pp14-15 of his Honour’s remarks on sentence of 28 June 2002. His Honour had already outlined his reasons for the sentence he proposed to impose with respect to each of the two convictions under s29D of the Crimes Act 1914 (Cth). His Honour had also dealt with the factors relevant to the FTR Act offences. In the relevant paragraph, his Honour was dealing with the issue of whether or not he should wholly or partially accumulate the sentences under the FTR Act offences, with those for the Crimes Act offences.

109 The relevant passage is as follows:

The offences were therefore an integral part of the fraud and I have taken that fact into account as part of the commission of the fraud itself.

110 Earlier in his remarks on sentence at p6, his Honour, when dealing with the seriousness of the fraud offences, he said:

“The offences reveal a pre-meditated scheme involving considerable planning which also involved the perpetration of very many criminal acts. The prisoner did not merely assist others to commit fraud, but provided a tax evasion service for which he was paid a commission. He provided blank and/or false invoices to conceal the fraud. He avoided the cash reporting provisions of the Financial Transactions Reports Act by making withdrawals under $10,000. He used false identities.”

111 It does appear that his Honour took into account, at least to some extent, the commission of the offences under the FTR Act.

112 As I pointed out in R v Simpson (2001) 53 NSWLR 704 at [76]-[79], this Court’s jurisdiction turns on the formation of an opinion under s6(3) of the Criminal Appeal Act 1912 that “some other sentence … is warranted in law and should have been passed”. That section does not give this Court jurisdiction to quash a sentence merely “if it is of the opinion that error has occurred in the sentencing process”.

113 The Appellant has not put on any submissions in this regard and should be given an opportunity to do so. It appears to me to be a matter that can be dealt with by way of writing, subject to any application to the Registrar of the Court of Criminal Appeal that an oral hearing occur. It will be desirable for the present bench to consider the sentence appeal, or at least two members of this bench should do so. It may be that when the submissions are filed, it will be appropriate for a direction to be made under s6AA of the Criminal Appeal Act 1912.

114 No appeal has in fact been lodged against sentence. The notice of appeal dated 2 December 2002, filed in the Court on 4 February 2003, is identified as one against “conviction only”. The Appellant should file a separate notice of appeal against sentence. The Court should make the relevant orders and give the necessary directions at this stage, although the parties will have liberty to apply to the Registrar of the Court to vary the orders and directions insofar as the Registrar is empowered to do so.

Orders

115 The orders I propose are as follows:

1. The appeal with respect to Counts 7-22 inclusive is allowed, the convictions quashed and a verdict of acquittal entered.

2. The appeal is otherwise dismissed.

3. Extend up to a date 14 days after the making of these orders the time within which the Appellant may lodge a notice of intention to apply for leave to appeal against sentence.

4. Direct the Crown to file any written submissions within 14 days of the service upon it of the written submissions in support of the appeal.

116 HULME J: In this matter, I have had the advantage of reading in draft form the reasons for judgment of the Chief Justice. His Honour has set out in detail the facts and relevant evidence, so it is largely unnecessary for me to do so.

Ground 1

His Honour erred in failing to find that there was no case to answer with respect to the structuring charges, counts 3 to 22. (As the Appellant was acquitted on counts 3-6, the appeal is confined to counts 7 onwards.)

117 In my view the Appellant’s convictions on the charges that he

“was a party to two or more non-reportable cash transactions and having regard to the manner and form in which the transactions were conducted, it is reasonable to conclude that he conducted the transactions in a 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 would not give rise to a significant cash transaction”

118 Section 31 of the Financial Transaction Reports Act on which the charges were based directs attention to “cash transactions”, a term defined in s3 of the Act to mean “a transaction involving the physical transfer of currency from one person to another”.

119 If I present a bank teller with a $100 note, ask for and receive change in the form of (say) 30 two dollar and 40 one dollar coins, there is one cash transaction. Equally, if in lieu of the $100 note I present two $50, or five $20 notes, there is one cash transaction, not the number of transactions which happens to coincide with the number of notes presented. Similarly if I present a bundle of coins to a certain value and ask for one or more notes in lieu, it cannot seriously be suggested that there are a number of transactions corresponding with the number of coins presented or notes obtained. From each of the bank and myself there is one “physical transfer of currency from one person to another”.

120 If I asked the teller to change one $50 note into $2 coins and the other into 5 two dollar and 40 one dollar coins, it would be arguable that there were two transactions but for present purposes that says no more than that there is more than one way of achieving the same result.

121 As is outlined in paragraph 43 of the Chief Justice’s reasons, the general course of action pursued by the Appellant involved him in informing a bank of the total amount of cash required so that the bank could ensure the funds were available and then presenting a number of cheques in amounts totalling that sum. He would commonly specify the denominations in which he desired the money be supplied. Commonly he would also specify “sub-bundles” into which the money supplied was to be bundled although there was no correlation between the denominations or the sub-bundles on the one hand and the amount of any cheque on the other.

122 Given that the break down into denominations and sub-bundles, some of which exceeded $10,000, bore no relationship to the amounts of individual cheques, it does not seem to me possible to say that these breakdowns turned any occasion into more than one cash transaction any more than the examples I have given of the conversion of a number of notes into coins. Nor does it seem to me that the fact that on each occasion more than one cheque was presented makes each occasion in any meaningful way different from the presentation of a number of notes for cashing. On such occasions, one amount is tendered and one is received. On each occasion there is one “physical transfer of currency from one person to another”.

123 Nor do the remarks or decision in R v Narayanan [2002] NSWCCA 2000 require a different conclusion. In that case as an incident of their dealing both parties “by their conduct manifested an intention that there be” more than one cash transaction and there was “undisputed and overwhelming evidence that both (the customer) and (the cash dealer) 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”.

124 Here there was no such manifestation. Certainly, the existence of a number of cheques on each occasion argues in favour of there being more than one transaction but one cannot ignore the fact that one is primarily looking at or for the number of cash transactions and on each occasion, one amount of cash was sought and one amount handed over. The fact that on any one occasion more than one cheque was presented does not of itself provide that manifestation any more than would the presentation of a number of notes by someone who wanted change.

125 Furthermore evidence from most if not all of the bank officers who were called makes it clear that the cash they were dealing with was treated by them as one amount. The sums on the cheques were added and the total checked against a count of the cash. Commonly, the amount was set aside prior to the Appellant’s attendance at the banks, before the cheques were seen or their individual amounts known to the banks (if indeed the cheques were even then in existence).

126 Whatever may have been the Appellant’s intention it is impossible to say that the bank officers who, between them, were on one side of each of the cash transactions, “by their conduct manifested an intention that there be” more than one cash transaction. Certainly on each occasion they knew that there was more than one cheque involved but that cannot be determinative of whether there is more than one cash transaction any more than their knowledge of more than one bank-note, simultaneously presented to be changed, can. The fact that the Appellant may have had some nefarious purpose in mind, even a purpose of avoiding the reporting requirements of the Act, does not change the character of the “cash transaction” which occurred from one such transaction into two or more. And the bank officers were never questioned to suggest they shared any such purpose.

127 Nor do I see how the receipt by a bank officer of a number of cheques (or bank-notes) can be regarded as a manifestation by the bank officer of an intention that there be more than one such item let alone, when a global sum of cash is handed over in return, more than one cash transaction.

128 It must be acknowledged that as part of the transactions which in fact occurred between the Appellant and the banks, prior to the handing over of the cash, both parties knew that a number of cheques were involved. Had there been evidence that in response the banks were providing cash in amounts corresponding to each cheque (and not just ensuring that the totals were the same) then a different conclusion would probably have been required. However, as I have indicated, both parties seem to have approached the cash handling part of the transaction as if either one amount was involved, or one amount broken up into bundles of amounts which did not permit of the conclusion that they were under $10,000 and so broken up so as to justify the conclusion that the transactions were conducted in that form “for the sole or dominant 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”.

129 The circumstances were quite different from those in R v Naraynan which I have referred to above.

130 An argument similar to that which appeals to me was advanced by counsel appearing for the Appellant in support of a no-case submission but rejected, the trial judge responding by saying that:-

“The cheque in each case is a demand made by the presenter of the cheque for payment. In each case full payment was provided following presentation of the cheque. The fact that cash was then accumulated by the bank into a lump sum to represent the total amount demanded by the various cheques presented by the accused, to my mind does not change the fundamental nature of the cash transactions involved, namely that each cash transaction took the same form of the presentation of a cheque and the payment of cash money in exchange for that cheque.”

131 His Honour’s statement that cash was “then accumulated” does not accord with the evidence.

132 When his Honour came to sum-up to the jury, he directed them that in respect of the counts under the Financial Transactions Reports Act, they had to be satisfied that the Appellant was a party to two or more non-reportable cash transactions but added:-

“In this case the accused on the occasions alleged in the counts 3 to 22, presented a large number of separate cheques for amounts of less than $10,000. And they were presented at the one time to the bank and usually, he received in return a lump sum of cash money. That lump sum may have been broken down into small amounts at the request of the accused, but ultimately it was all handed over to him at the one time. In that regard I direct you that if you are satisfied beyond reasonable doubt that the accused presented those cheques to the banks in the manner outlined by the witnesses from the banks, and there really isn’t much of a dispute on the evidence that he did so, and that he received cash in return, then as a matter of law the cashing of those cheques, that is the provision of cash with respect of each individual cheque, even if those individual amounts were aggravated (sic) or joined together and handed over by the bank to the accused as a lump sum, that those individual cheques amounted in the case of their presentation to a non-reportable cash transaction.

Each time in effect, each time an individual cheque, even if it was handed over with a multiple of say 8 or 9 cheques together, each individual cheque amounted to a non reportable cash transaction.”

133 This direction was wrong. Whether, on each occasion, there was one or more than one cash transaction was a matter of fact, not of law. Furthermore, as I have indicated, I regard the totality of the circumstances on each occasion of the cashing of cheques as compelling the conclusion that there was only one cash transaction.

134 As I have said the convictions on counts 7 to 22 should be quashed.

Ground 2

His Honour erred in allowing the Crown to cross-examine the accused in an unfair manner, namely, by splitting its case.

135 As outlined to the jury in the Crown Prosecutor’s opening, the Crown case was that the Appellant had put in place a system so that workers in the construction industry did not pay tax on their earnings. The system involved employers of those workers paying the workers’ wages to 2 companies associated with the Appellant. The cheques in such payment were banked to a variety of bank accounts, the Appellant being involved in that activity, and he would then attend on the banks and by a number of cash cheques in individual amounts of less than $10,000 withdraw the proceeds and pay the workers. In the course of these activities he deducted a 7% commission. In these endeavours the Appellant used 2 companies, one set up using the name Patrick Finbar O’Donovan and the second set up using the name John Finbar O’Neill. The Appellant signed the companies’ cheques using these names and was known to the bank employees by them. According to the Crown opening, Mr O’Neill did not exist as a real person although Pat O’Donovan was the name of someone in the construction industry whom the Appellant had met.

136 However the possibility that someone else was involved was clearly raised during the Crown case. At a stage when there was discussion concerning the admissibility of bank records extending beyond the transactions the subject of the Financial Transactions Reporting Act charges, the following was said:-

“CROWN PROSECUTOR: … they’re relevant … because they have been the subject of identification in the form of handwriting and in some cases fingerprints which, on the Crown case, go to show that it was the accused who was operating the account at all times or at least at other times other than the structuring charges and it foreshadows the potential defence which may or may not be forthcoming that there was someone else who was operating the account or something like that.

HIS HONOUR: It does seem to be a line of defence which is in the air.”

137 Furthermore, the involvement of a Mr Patrick O’Donovan was raised in the cross examination of Mr Brady, one of the employers who had paid money to the Appellant. It was suggested to Mr Brady that he had dealt with Mr Patrick O’Donovan dishonestly by way of obtaining a benefit in cash terms. Mr Brady responded by saying either that he didn’t recall ever meeting a Mr Patrick O’Donovan or denying he had ever met that person. Mr Brady said also that his only dealings with Star Suppliers, one of the two companies through which the activities, the subject of the charges were conducted, were with the Appellant. A number of other suggestions made by counsel for the Accused concerning dealings by Mr Brady with Mr O’Donovan were met with similar responses. Later, in an apparent attempt to stir Mr Brady’s recollection, the cross examiner provided a description of Mr O’Donovan and, met with responses similar to those previously given, suggested to Mr Brady that he was deliberately misleading the jury because he had a corrupt relationship with that person. Reminded also of evidence he had given that the Appellant informed him that there was an investigation on the way it was then put to Mr Brady that it was Mr O’Donovan and not the Appellant who had brought that matter to his attention.

138 Against this background, it was clearly relevant for the Crown to adduce evidence of the Appellant’s possession of funds not attributable to ordinary dealings. In that the Crown could show that the Appellant had received $200,000 and his tax returns showed insufficient income to account for that sum, the Crown was part of the way there. Was it necessary if this evidence was to be admissible for the Crown also to show that the $200,000 could not have come from some other source such as a loan, gift or inheritance? I confess that my initial reaction was that it was but on reflection I have concluded that it was not. The receipt of $200,000 is sufficiently unusual for the evidence to have some probative value, particularly in context of its recipient being someone who, as part of the transactions the subject of the charges, was dealing in large amounts of cash and who was remitting at least some money to Ireland, whence the $200,000 received by the Appellant came. (It may be acknowledged that the evidence in the Crown case of remittances to Ireland tended to indicate that these were on account of persons other than the Appellant but in the climate of dishonesty which the evidence revealed, I do not regard this as determinative of the issue of admissibility.)

139 Thus I agree with the Chief Justice that the evidence the subject of this ground was admissible in the Crown case in chief.

140 The Crown elected not to call the evidence. It was not a case where the Crown tried and it was ruled inadmissible at that stage. The relevant principle governing the question whether the Crown should have been permitted to adduce the evidence after the close of its case has been oft stated. For present purposes it is sufficiently stated in the following extract from the remarks of Dixon, McTiernan, Webb and Kitto JJ in Shaw v R (1952) 85 CLR 365 at 379-380, a passage quoted or summarised and accepted in Killick v R (1981) 147 CLR 565 at 568 and 575 and R v Chin (1984-1985) 157 CLR 671 at 676 and 684-685. (The principle was perhaps somewhat understated in R v Soma (2003) HCA 13; (2003) 77 ALJR 849 at [36] but their Honours in that case did not purport to qualify it.):-

“But the prosecution may not split its case on any issue… It seems to us unsafe to adopt a rigid formula in view of the almost infinite variety of difficulties that may arise at a criminal trial. It is probably enough to say that the occasion must be very special or exceptional to warrant a departure from the principle that the prosecution must offer all its proofs during the progress of the Crown case and before the prisoner is called upon for his defence… Further… the English cases make it plain enough that generally speaking an occasion will not suffice for allowing an exceptional course if it ought reasonably to have been foreseen. Again, it may be pointed out that even an unexpected occasion may be of such a nature that it would have been covered, had the Crown case been fully and strictly proved.”

141 I see nothing in the circumstances of the Appellant’s trial which comes close to fulfilling the description “very special or exceptional”. Nor was there anything in the evidence to which I have referred which was not foreseen, even if the further evidence of the Appellant that the money was in fact his was not something the Crown was otherwise in a position to prove in its case in chief. In these circumstances, the trial judge was, subject to one matter, in error in permitting the Crown to adduce that evidence in cross-examination of the Appellant.

142 I have said “subject to one matter”. The income tax returns were also relevant in response to the Appellant’s evidence of employment by Mr Donovan. Accordingly, as counsel for the Appellant conceded, they were admissible in the cross-examination of the Appellant. However the evidence of the receipt of the $200,000 was not. It follows that, subject to the application to the proviso to s6 of the Criminal Appeal Act, the appeal should be allowed.

143 However the case is clearly one in my view for the application of the proviso. It could not reasonably be thought that the Crown’s failure to call the evidence during the Crown case in chief bore on the decision of the Appellant to give evidence because not to do so meant that he was doomed. Nor was the wrongly admitted evidence or the way in which it was dealt with significant in terms of the effect of the cross-examination. And the Chief Justice has pointed out how insignificant was the attention given to the evidence which in my view should not have been admitted and the limited respect in which, during the course of his appeal, it was suggested the Appellant was prejudiced.

144 The Crown case was overwhelming. The Appellant’s case that he had, at Mr Donovan’s suggestion, opened bank accounts and signed the relevant documents to effect that in the latter’s name, signed Mr Donovan’s name to cheques on those accounts and also then adopted the name of Mr O’Neill for the purposes of the formation and then use of the second company, creating another signature for that purpose was laughable.

Ground 3

His Honour erred in allowing the Crown to call a case in reply.

145 The evidence was led by the Crown without objection and, according to the written submissions for the Appellant, after the defence had had the opportunity of conferring with the witness. Four questions before the end of the witness’ evidence in chief counsel for the Appellant foreshadowed an objection to it but said that she would not interrupt the evidence at that stage. After the additional questions she requested a direction that the jury should disregard the evidence, an application the trial judge declined, taking the view that it was properly led in reply.

146 I do not need to decide whether his Honour was correct in that view. The relative inconsequential nature of the evidence, together with the absence of objection prior to or at the time of, the evidence being led, leads to the conclusion that his Honour did not err in refusing to give the direction sought. And even if that view be wrong, again it is a case where the proviso should be applied.

Sentence

147 In sentencing the Appellant in respect of the first 2 counts, his Honour observed that he had taken into account that the fraud had been committed by illegal acts the subject of other counts on which the Appellant had been convicted. Whether in light of the decision in Pearce v R (1978) 194 CLR 610 his Honour should have done so, logically the conclusion at which I have arrived in respect of the first ground means that the sentences imposed may need reconsideration. However, no application for leave to appeal has been lodged, nor has the court been provided with much of the material appropriate in support of any such application.

148 I agree with the orders proposed by the Chief Justice.

149 CARRUTHERS AJ: I agree with the Chief Justice.

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Last Modified: 09/05/2007

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Citations

R v O'Driscoll [2003] NSWCCA 166

Most Recent Citation

Regina v O'Driscoll [2003] NSWCCA 281

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5

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Kroni v The Queen [2021] SASCFC 15

Sayadi v Regina [2020] NSWCCA 28

Cases Cited

12

Statutory Material Cited

4

R v Narayanan [2002] NSWCCA 200

R v Ditfort [1999] NSWCCA 442

R v Soma [2003] HCA 13

Cited Sections

CITATION:	REGINA v O'DRISCOLL [2003] NSWCCA 166 revised - 8/06/2004
HEARING DATE(S):	20 May 2003
JUDGMENT DATE:	26 June 2003
JUDGMENT OF:	Spigelman CJ at 1; Hulme J at 116; Carruthers AJ at 149
DECISION:	Appeal from convictions on Counts 7-22 allowed, appeal otherwise dismissed.
CATCHWORDS:	CRIMINAL LAW - appeal against conviction - structuring cash transactions - meaning of "transaction" - whether two or more non-reportable cash transactions - Financial Transaction Reports Act (Cth) s31 - CRIMINAL LAW - evidence - whether Crown case split - whether error in allowing cross-examination by Crown on evidence of unexplained wealth - whether error in allowing Crown case in reply
LEGISLATION CITED:	Crimes Act 1914 (Cth) s 29D Criminal Appeal Act 1912 ss 6, 6AA Financial Transaction Reports Act 1988 (Cth) ss 3, 4, 7, 31 Income Tax Assessment Act 1936 (Cth)
CASES CITED:	Bendir v Anson [1936] 3 All ER 326 Chamberlain v R (No 2) (1984) 153 CLR 521 Killick v The Queen (1981) 147 CLR 565 Palmer v Commissioner of Taxation [1976] WAR 37 Palmer v Commissioner of State Taxation (WA) (1976) 136 CLR 406 Pearce v R (1978) 194 CLR 610 Question of Law Reserved (No 2 of 1998) (1998) 101 A Crim R 317 R v Chin (1984) 157 CLR 671 R v Ditfort (1987) 28 A Crim R 392 R v Ditfort (1991) 91 ATC 4431 R v Campbell & Greig (1999) 109 A Crim R 174 R v Edwards [1998] 2 VR 354 R v McMahon (NSWCCA, 23 June 1978, unreported) R v Narayanan [2002] NSWCCA 200 R v Simpson (2001) 53 NSWLR 704 R v Soma (2003) 77 ALJR 849 Shaw v The Queen (1952) 85 CLR 365 Shepherd v R (1990) 70 CLR 573)
PARTIES :	Regina (Respondent) William Benedict O'Driscoll (Appellant)
FILE NUMBER(S):	CCA 60022/03
COUNSEL:	E. Fullerton SC (Appellant) D. Staehli (Respondent)
SOLICITORS:	James A. Moustacas & Co. (Appellant) Commonwealth DPP (Respondent)

LOWER COURTJURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	01/11/6660
LOWER COURT JUDICIAL OFFICER :	Blackmore DCJ