R v Peter Cain and Allen Endresz
[2003] ACTSC 114
•11 September 2003
R v PETER CAIN and ALLEN ENDRESZ
[2003] ACTSC 114 (11 September 2003)
RULINGS DURING TRIAL
No. SCC 16, 17 of 2002
Judge: Higgins CJ
Supreme Court of the ACT
Date: 11 September 2003
RULING 1 – 10 SEPTEMBER 2003
In relation to counts 1 and 3, it is the Crown case that Mr Endresz in each case, and Mr Cain in the second case, knew that David Muir had no authority to make the investments in question, and that the funds were transferred fraudulently.
There is no evidence directly supporting that inference. The Crown relies on circumstantial evidence. It is enough that the inference contended for be open on the evidence, even if the basis for the inference is tenuous or inherently weak or vague - to use the terms referred to in Doney v the Queen (1990) 171 CLR 207.
The evidence of Mr McCann, however, strongly supports the view that CTC and Davis Samuel - and I take this not to be in dispute - were engaged in innovative share trading through a number of vehicles including CTC. CTC was a company with accumulated losses, which nevertheless facilitated large profits not only for Davis Samuel, but also for Kamanga Holdings, an associated company, and no doubt anybody else who was involved in the same transactions.
It appeared to be an attractive investment so far as Mr McCann was concerned, and he, with Mr Muir as a silent partner, set up Pellon to process, inter alia, Kamanga’s money to be used for takeover directed share trading. It was clearly intended that both those men would then benefit from CTC and Davis Samuel’s share trading activities. Part of the strategy was for Kamanga to loan monies to an apparently unrelated entity which directly, or through the apparently unrelated entities, would purchase shares in a target company. Those shares would, if the targeting was sound, rise to their “true value” netting all the investors large profits.
It is clear that Mr McCann knew that the funds had been invested by the Australian Property Group Business Services Trust Account, referred to as the BSTA, but believed that Muir had obtained authority to make those investments. It is suggested that it is open to infer that Mr Endresz in relation to both advances, and Mr Cain in relation to the second, knew that they were not. Nor did Mr McCann regard the proposed benefits that he would obtain as being other than investments by Kamanga in Pellon and Callform.
Be that as it may, it was certainly foreseeable that both men would benefit financially from those advances, albeit not, of course, to the extent of the sum advanced.
It is said that those sums advanced, which are referred to in the 2nd and 4th counts, were a reward to Mr Muir for making, or facilitating, the advances referred to in counts 1 and 3, so that Pellon should have the use of the funds referred to in those counts for the benefit, inter alia, of both men and their interests.
To support the inference of “knowledge” to support counts 1 and 3, the prosecution point to the terms of the offers for those advances as being less favourable than offers made to, for example, Mr Muir or Mr McCann’s interests. Mr Maidment also points to Mr Endresz apparently downplaying his relationship with Mr Muir and his knowledge of the Pellon purpose and structure in an interview with police.
The prosecution, however, have not pointed to any knowledge that Mr Muir, by whatever means, did not have authority to make the advances he did. It may well have been the case that Messrs Endresz and Cain, in respect of the two transactions in question, had assumed that Mr Muir would have made presentations such as had been made to him, Mr McCann and Mr Yannopoulos, or was persuaded himself, without such presentations, and had authority to make the funds available.
The investments were not frivolous or hopeless. They were capable of returning considerable profits, though the prospect for the Commonwealth was certainly less favourable than for more favoured investors such as Mr Muir, Mr McCann, or even Mr Yannopoulos. That does not, however, support an inference of knowledge that Mr Muir had acted fraudulently. It’s simply not open.
Counts 2 and 4, however, are in a different position. The fact that a commission is paid to a procurer of investment funds is a normal business transaction, whether the funds are from the Commonwealth or not. However, the Secret Commissions Act is designed to protect lenders or investors from secret benefits conferred on their agents for persuading them to make, or procuring funds.
It is open in my view to infer that, to some extent, Mr Muir would benefit from the provision of the funds made available by the Commonwealth investments as referred to in counts 2 and 4. Whether the purpose in making those funds available, as was done, was as a reward, is open to inference. It’s certainly not the subject of any direct admission. But it was a benefit that, had it been made to a public servant for instance, would clearly be an inducement to approve such an investment as was here made.
The fact that the terms obtained by Davis Samuel in one case, and of course CTC in the other, were not as stringent as they might have been, could be attributed to the expectation of a reward. That at least is open to be inferred.
It seems to me, therefore, that whilst I find that there is no evidence to support the necessary knowledge of Mr Muir’s lack of authority and fraudulent behaviour in respect of counts 1 and 3, there does seem at least to be some evidence from which it could be inferred that counts 2 and 4 could be made out. Even if one were to conclude, and I don’t make this comment myself, that to draw such an inference would be to base that conclusion on a tenuous or insubstantial basis, nevertheless it seems that it is possible to draw it. Those counts, therefore, should be left to the jury.
RULING 2 – 11 SEPTEMBER 2003
It does seem to me that the way in which the Crown opened the case, which was fair and reasonable on the basis of the case the Crown was seeking to make, has been changed and changed significantly by reason of the directed verdicts on counts 1 and 3.
I agree with you, Mr Maidment, that it appears theoretically open to put the alternative case, which you have certainly sought to do, and had it been opened on that basis there would have been evidence fit to go to the jury on those two counts. Whatever may have been the result of that would be another question, but certainly it was evidence fit to go to the jury on those two counts.
However, it seems to me that it would not be fair to leave all the material that is presently before the jury with them, and at the same time expect them to ignore most of it and concentrate merely on the alternative basis for the secret commissions. I don’t think it would be a very easy exercise to unscramble the eggs.
I discharge the jury from further consideration in the matter.
I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Chief Justice Higgins.
Associate:
Date: 11 September 2003
Counsel for the two accused: Mr Glissan QC (Senior Counsel)
Mr Whybrow (Junior Counsel)
Solicitor for the two accused: ACT Legal Aid Office
Counsel for the Crown: Mr Maidment SC (Senior Counsel)
Mr White (Junior Counsel)
Solicitor for the Crown: Commonwealth Director of Public Prosecutions
Date of hearing: 1 – 12 September 2003
Dates of Rulings during Trial: 10 & 11 September 2003
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