R v Phan & Ton

SUPREME COURT OF SOUTH AUSTRALIA
(Court of Criminal Appeal)
R v PHAN & TON
[2010] SASCFC 53
Judgment of The Court of Criminal Appeal
(The Honourable Justice Vanstone, The Honourable Justice White and The Honourable Justice Kelly)
16 November 2010
CRIMINAL LAW - APPEAL AND NEW TRIAL - PARTICULAR GROUNDS OF APPEAL - MISDIRECTION AND NON-DIRECTION - CONSIDERATION OF SUMMING UP AS A WHOLE
Applicants convicted for 20 counts of dishonestly causing a loss - adequacy of judge's direction to jury on elements of offence and the need for dishonesty to accompany relevant conduct - whether directions adequately linked the directions of law to the facts alleged - whether case for applicant Phan adequately put to jury - whether judge's response to jury question might have unwittingly encouraged jury to set aside concern as to sufficiency of proof in case against Ton.
Held: appeal by Ton in respect of counts 15 to 20 upheld and convictions quashed. Appeal otherwise dismissed.
Criminal Code Act 1995 (Cth) s 135.1(5), referred to.
R v Lavery (No 2) (1979) 20 SASR 430; R v Von Einem (1985) 38 SASR 207; R v Whittingham (1988) 49 SASR 67; Reg v Veverka (1978) 1 NSWLR 478; Dominican v The Queen (1992) 173 CLR 555, applied.

R v PHAN & TON
[2010] SASCFC 53
Court of Criminal Appeal: Vanstone, White and Kelly JJ

VANSTONE J: The applicants were each convicted in the District Court by verdicts of a jury for 20 counts of dishonestly causing a loss, contrary to s 135.1(5) of the Criminal Code Act 1995 (Cth). They were joint charges. A single judge of this Court refused permission to appeal against conviction on a number of grounds. Upon renewing the application before this Court, Ms Ton pursued only two grounds of appeal, raising aspects of the summing up of the trial judge. Mr Phan pursued two grounds in identical terms and relied on the argument put by counsel for Ms Ton. He independently pursued a third ground of appeal, asserting that the judge failed adequately to put his defence to the jury.
Background
The applicants were formerly husband and wife. At different times they were proprietors of GoodStart Contractor (GoodStart), a business that supplied manual labour to primary producers in South Australia. The prosecution case was that the applicants, as proprietors of the business, were involved in a dishonest scheme involving failing to remit to the Commissioner of Taxation (ATO) goods and services tax (GST) collected from customers and by failing to withhold pay-as-you-go withholding tax (PAYG) from the wages of employees of GoodStart and to remit it to the ATO.
The approved form of reporting entitlements and obligations relating to GST and PAYG is by the quarterly filing of a Business Activity Statement (BAS) by the entity carrying on the enterprise. It was alleged that for each quarter during the period from 1 January 2004 to 30 June 2006, the entity carrying on the business of GoodStart was required to lodge a BAS reporting amounts of PAYG withheld from wages and amounts of GST collected from customers. The information contained one count in relation to GST and one count in relation to PAYG for each quarter. The crux of the prosecution case was that the applicants overstated expenses by dishonestly claiming that the work provided to customers was performed, not by its own employees, but by one of two contractors for whose work GoodStart was charged. It was alleged the applicants created this fiction so that they could claim GST input tax credits to minimise their liability with respect to the GST they had collected. Further, it was alleged that because GoodStart in fact provided the labour and employed the labourers, the applicants were obliged to withhold PAYG from wages paid and to remit those amounts to the ATO. The applicants failed to do so, again relying on the representation that the business did not have employees.
The case in relation to each applicant was different. The prosecution alleged that both applicants were involved in the GoodStart business throughout the relevant period, but that they had different roles within it. In relation to counts 1 to 14 (the first phase), which spanned a period from 1 January 2004 to 30 September 2005, the GoodStart business was operated using an Australian Business Number (ABN) registered to Ms Ton. The name of the business was also registered in her name. For the second phase an ABN registered to Mr Phan was used. At least for the first phase, Ms Ton dealt with the tax agent used by the business, Ms Phu. Ms Ton was responsible for advising Ms Phu of the details of the business relevant to income and expenses and GST. Along with Ms Phu she met with an ATO officer in January 2006 and made representations to that officer about the business, which the prosecution asserted she must have known to be false. On the other hand, Mr Phan was always responsible for the day to day running of the business. He dealt with the customers. He also organised, supervised and worked alongside the labourers.
During the first two quarters of the first phase (counts 1 to 4), GoodStart was not registered for GST and no BAS was lodged, even though invoices charging GST were issued to GoodStart’s customers. On 25 July 2005 Ms Ton instructed Ms Phu to arrange for registration of the business for GST purposes, but the registration was only backdated to 1 July 2004.
For the next five quarters of the first phase, being the period from 1 July 2004 to 30 September 2005 (counts 5 to 14), BASs were lodged, as a bundle, through Ms Phu. This was done on 10 November 2005. The prosecution case was that these statements falsely disclosed no liability to pay PAYG and dishonestly claimed outgoings (input tax credits) to offset amounts of GST received. The case was that Ms Ton delivered to Ms Phu genuine invoices issued by GoodStart to the customer, Torrens Valley Orchards, along with false invoices purporting to be issued by SNJ Contractor to GoodStart, indicating that the labour supplied to Torrens Valley Orchards was supplied by SNJ. No invoice issued to and paid by other customers was provided. By overstating GoodStart’s expenses, GST input tax credits were obtained. These were set off against GoodStart’s GST collections and its liability to the ATO was thereby reduced. Although Ms Ton was responsible for dealing with Ms Phu, the prosecution case was put on the basis that Mr Phan caused her to deliver the false information to Ms Phu.
What was referred to as the second phase spanned 1 October 2005 to 30 June 2006 and gave rise to counts 15 to 20. By now, Mr Phan was the registered owner of the business name, GoodStart. Ms Ton had applied to cancel her ABN, to be effective on 16 September 2005, on the basis that the entity had stopped operating on a GST registered basis. With Ms Phu’s assistance, Mr Phan had applied for and was granted an ABN and GST registration for the business to operate from the same date.
During this period, Mr Phan operated the business as previously. Here, the only conduct on the part of Ms Ton to which the prosecution pointed was her delivery to Ms Phu, on 23 August 2006, of a number of documents. Ms Phu’s evidence was that on that occasion Ms Ton asked her, on behalf of Mr Phan, to prepare the BASs for GoodStart. Because Ms Phu had been told that the business had been taken over by Mr Phan, she did not discuss the documents with Ms Ton. As regards Ms Ton’s involvement, the prosecution relied on her delivery of the documents to Ms Phu, coupled with proof of her role in the first phase, as a basis for the inference that her role in the second phase remained the same.
This time all of the invoices to Torrens Valley Orchards (being the only relevant customer) were provided to Ms Phu. The prosecution case was that, by these documents, the applicants were representing to Ms Phu that all the labour was supplied through GoodStart by a contractor, namely IC Contractor, and the GST collections were almost entirely offset by payments to IC. For each genuine invoice issued to and paid by Torrens Valley Orchards, a corresponding but false invoice purporting to be issued by IC was produced to Ms Phu. It was alleged by the prosecution that the applicants, by presentation of these documents, falsely represented to Ms Phu that GoodStart had no employees and used only contract labour, so that there was no liability to remit PAYG.
No BAS was lodged with the ATO in respect of GoodStart for phase 2 until after the time that charges were laid. It is important to notice that, although the particulars of each charge in the second phase alleged a dishonest failure to remit to the ATO amounts of GST and PAYG due to it, the prosecution case was presented on the basis that the relevant failure rested on misrepresentations made to Ms Phu via the documents about the income and outgoings of the business and its lack of employees. However, in relation to the second phase, Ms Phu never filed the BASs prepared on the basis of that information because she was not able to make contact with Mr Phan to confirm his instructions. I shall return to this point.
Appeal grounds common to both applicants
The first appeal ground for both applicants focussed on the adequacy of the directions given by the trial judge isolating the case against each applicant. It is convenient to set out the ground in full.
That the Learned Trial Judge erred in law in failing to properly direct the jury as to the basis upon which they could consider the ‘cross-admissible’ evidence concerning the existence of the scheme and the appellant’s involvement in that scheme [pages 25-30 of summing up and discussion at pages 47-48].
Particulars
(a)The learned trial judge’s direction failed to make it clear to the jury that they had to find beyond reasonable doubt that the appellant knew of and participated in the dishonest scheme knowing that it was dishonest.
(b)The learned trial judge’s direction failed to distinguish between the existence of a fraudulent scheme per se and the existence of a scheme that the appellant had knowledge of.
(c)The learned trial judge’s direction failed to clearly direct the jury that the appellant needed to know of and participate in the activities pertaining to one count before that evidence could be used in relation to other counts.
(d)The learned trial judge directed the jury in terms that suggested that involvement in the scheme by merely undertaking an action was sufficient to take part in the dishonest scheme. In so doing it was left open to the jury to reason in an impermissibly circular manner that mere actions or mere knowledge by the appellant was sufficient if independently they found that a scheme existed.
(e)The learned trial judge failed to specifically direct the jury as to how any evidence that was cross admissible was capable of being used to show the mental state of the appellant.
Both applicants asserted that their respective roles in the business were different, and the directions to the jury needed to reflect this. It was accepted that the evidence in relation to each count was “cross-admissible” in relation to all other counts. The evidence was admissible to prove the existence of a dishonest scheme and the knowledge of each applicant of the dishonest scheme. It could also rebut any suggestion of innocent involvement in such a scheme.
Counsel for Ms Ton argued this ground and counsel for Mr Phan adopted his argument without supplementation. It was submitted that the direction as to cross-admissibility needed to be tailored in order to reflect the different levels of involvement of the applicants. It was put that the trial judge did not properly explain the way in which evidence of the specific acts of each applicant could be used to throw light on the state of mind of each. In particular, the applicants complained that the judge did not put to the jury the possibility that one applicant might have been dishonestly involved in the scheme and that the other might have innocently participated in it by undertaking particular acts. Although some references in the summing up treated the applicants separately, it was submitted that the totality of the directions would have confused the jury. There was a real danger, it was suggested, that the directions would have encouraged the jury to take as its starting point the question of whether there was a dishonest scheme, and then view any act of the applicant Ms Ton in the course of business as sufficient evidence that she was dishonestly involved in that scheme. It was submitted that many of the relevant directions referred only to a systematic course of dishonest conduct and did not address the different conduct of each applicant. The applicants submitted that the jury might have concluded that dishonesty on the part of one of the applicants could be used to implicate the other.
Counsel for Ms Ton pointed to a number of passages in the summing up as exemplifying the approach taken by the judge. In order to provide a context for the particular directions about which complaint is made, I set out a lengthy passage. I have numbered the paragraphs for convenience and italicised those about which particular complaint is made.
1.You have 20 charges to consider against each of the accused. Each is a separate offence. Upon returning your verdicts you will be asked in relation to each accused whether you find that accused guilty or not guilty of the particular offence. If you are satisfied of the guilt or innocence of both, or either, of the accused on one of the counts, it does not necessarily follow that the outcome should be the same for another offence. The charges do not necessarily stand or fall together and nor do the accused.
2.Finally, if you were to find both the accused, or either of them, guilty of one charge, you must not reason that they, or one of them, are the sort of people likely to commit any, or all of the other charges and for that reason convict them. I know you would accept that as an impermissible form of reasoning.
3.However, what evidence you can use when considering individual counts is another matter. In a case such as this, for the purpose of deciding if the accused had the dishonest intention, the required knowledge, and the realisations required by the mental elements that I have given you for a particular count, you are entitled to have regard to the whole of the evidence. In other words, the evidence relating to all of the counts is cross-admissible to prove the accused’s dishonest intent.
4.I will give you a further explanation of that. Some further explanation is required because there are some limitations to that summarised position which I have just given you.
5.In this case the prosecution contend that the evidence establishes that the accused were embarked upon a dishonest course of conduct over a period of two-and-a-half-years, the object of which was to avoid remitting GST and PAYG (Withholding) Tax to the Commonwealth and that the object was carried into effect and caused a loss to the Commonwealth of in excess of $300,000. The 20 charges emerge from that course of conduct.
6.I emphasise to you, having said that, what is not before you is some rolled up position like that. You have 20 charges to consider. That is the overall summary of the prosecution position. I should say that in that position the prosecution contend that the claim of subcontracting is a fiction.
7.The defence response is that the claim of subcontracting throughout has not been negatived or disproved as a reasonable possibility and that being the case the dishonesty which underpins the prosecution has not been proved, not to mention the loss to the Commonwealth.
8.It is not contended, directly at least, that Mrs Ton or Mr Phan did not fully appreciate their taxation obligations and have innocently not complied. I think at one stage Ms Chapman might have said something like ‘Mr Charman may say that to you’ but that has not been, at least, articulated in those terms to you.
9.Whether or not it is raised, it is a matter which the prosecution should negative and so it will be mentioned in what I am about to say to you.
10.The contention by the prosecution is that you can have regard to the course of conduct, if you find it proved, in order to come to a conclusion about guilty intention or, rather, the mental elements that I have explained to you in respect of any one of the counts. Each of the charges, as you will see from the elements, have
•conduct elements; and
•mental elements.
11.In respect of conduct elements you will consider the evidence which directly relates to a particular count, for example in count 1 you will have regard to the evidence relating to the March 2004 quarter and whether that evidence satisfies you beyond reasonable doubt that the Commissioner of Taxation was caused a loss by the failure of the two accused, or either of them, to declare and remit GST and PAYG for that period.
12.However, in respect of proving the required mental elements, you are entitled to have regard to the whole of the evidence which you accept as proven, including the evidence as it relates to other charges, in order to discover what was the accused’s state of mind at the time of each of the alleged offences.
13.Most often there is no direct evidence of a person’s state of mind, however what a person intended and realised at a particular time can be inferred from what he did or said and from what his conduct was before during and after the event.
14.Further, in relation to each count and in relation to each accused, you are entitled to have regard to the evidence as a whole, including the evidence relating to the other counts, for the purpose of determining whether the relevant act is a result of innocent mistake or oversight and further whether the prosecution has established that the accused’s conduct is dishonest.
15.In other words, in relation to each count, for the purpose of determining whether the prosecution has established that an accused person acted with the requisite required state of mind, you are entitled to look at the evidence as a whole to see whether it is objectively improbable that the conduct, the subject of the charge, can be explained away as the product of an innocent mistake, or an oversight, or whether it is rather part of a systematic course of dishonest conduct.
16.Can I just pull away from the particular language and say this to you. It is a bit like saying, members of the jury, that if the occasion is amongst a system a particular scheme, if you like, that you can’t say ‘No, I didn’t have re requisite intention there. I didn’t act dishonestly’ because when you look at that in the context of the system, if you like, of dishonest actions, you might say ‘Well, similar things have happened before and after, how can you say you didn’t intend that then?’
17.If you are not satisfied that the evidence as a whole reveals a systematic course of dishonest conduct and the charge being considered was part of it then you will still none-the-less need to consider in relation to each count whether the evidence establishes beyond reasonable doubt that each of the accused performed relevant acts with the required state of mind.
Then a little later in the charge, the judge gave two further directions which are the subject of complaint.
Now, in considering this cluster of mental requirements you can have regard to the evidence relating to all the other counts. That is, all the evidence in the case. So, you can have regard to what Mrs Ton said and did in the course of the operation of the Good Start business, such as when speaking to the tax agent, also what she said to the investigators. You can use this evidence of other conduct if you accept that it is proven beyond reasonable doubt in your consideration whether the mental elements of count 1 are proven. What I mean by that, members of the jury, is that if you look at the other evidence and find it established, you might take the view that there is a systematic course of conduct here doing this same thing and, therefore, you might have difficulty coming to a conclusion that this could have been an innocent aberration because it has happened on other occasions over the course of time.
You can have regard to this other evidence of a systematic course of conduct if you find it is proven but only in relation to deciding whether the guilty intention, the mental elements have been established.

At the end of the summing up a redirection was sought highlighting to the jury that even if Ms Ton knew of a dishonest scheme, that, without more, would not render her guilty.
This ground is very much bound up with what I shall call the second ground of appeal pursued before this court. It is convenient to summarise that ground and then deal with them together.
The second ground for both applicants asserted that the trial judge erred in failing to direct the jury adequately in relation to the elements of the relevant offence. This ground complains of a failure to clearly direct that the mental element – knowledge of the dishonesty of the scheme – had to be present at the time of undertaking the conduct forming the physical element of each of the counts. It was submitted that the trial judge wrongly directed the jury that if it found the scheme in general to be dishonest, it could then reason that knowledge of dishonesty was present at the time of each relevant act said to amount to the conduct. As the counts spanned a lengthy period of time and were divided into phases, it was necessary to stress that if the jury were satisfied of knowledge of dishonesty in relation to certain counts, this was not enough to impute knowledge of dishonesty in relation to all counts. In particular, in relation to Ms Ton, it was submitted that during the second phase, she merely delivered documents to the tax agent. Counsel submitted that it should have been made clear that knowledge of dishonesty and an intention to act dishonestly had to be proved at the time this act was performed in order to find her guilty in relation to those counts. It was submitted that given the judge’s directions as to cross-admissibility, it was incumbent upon the judge to stress that knowledge of dishonesty and intention had to be present at the time of the performance of the physical element of each count.
The judge directed the jury in accordance with the relevant provisions of the Criminal Code 1995 (Cth). He told the jury that the offence of dishonestly causing a loss contained five elements, each of which had to be proved beyond reasonable doubt before an accused person could be convicted of that count. In addition to his more comprehensive oral directions, the judge provided to the jury an aide-mémoire setting out in brief form the nature of each element. I set out the text of that document.
The following elements must be proved beyond reasonable doubt in respect of each of the charges and each of the accused.
(1)     That the accused person engaged in conduct.
(2)     That the conduct was intentional.
(3)     That the conduct caused a loss or a risk of loss to the Commonwealth.
(4)That the accused knew or believed at the time of the conduct, that a loss would be caused by the conduct, or that there was substantial risk of the loss occurring.
(5)That the accused was acting dishonestly when engaging in the conduct.
The complaint of counsel in relation to the second ground focuses on the fifth element, proof of dishonesty. As to that the judge directed in the following terms:
As to the fifth element, which requires proof that the accused was acting ‘dishonestly’ when engaging in the conduct, I instruct you that ‘dishonest’ means dishonest according to the standards of ordinary people and known by the accused to be dishonest according to the standards of ordinary people.
Later in his summing up, the judge linked the facts of the prosecution case to the elements of the charge as he had explained them. He did so by considering the counts in three groups, being counts 1 to 4, 5 to 14 and 15 to 20. Since these directions are the critical part of the charge I shall set them out in full.
Counts 1 to 4
I start with counts 1 to 4. In the six-month period to which those charges apply, namely 1 January 2004 to 30 June 2004, Good Start Contractor, say the prosecution, supplied labour to Torrens Valley Orchards, employed the workers itself and collected GST.
It is contended in this period and, indeed, throughout the two and a half years, Mr Phan was the owner and operator of Good Start Contractor and claims to the contrary by the accused are false.
The prosecution case here, as to the ownership of the business, is that the customer evidence establishes this.
The prosecution case is that in respect of this period, and indeed throughout the two and a half years, there was no subcontracting out of labour.
In summary the prosecution allege that the conduct in the four counts, which caused particular losses particularised in charts A and B, which was dishonest, was as follows. So, this is the conduct claimed in the prosecution case, members of the jury:
•    Mr Phan was the real owner and collects GST in this period but neither declares nor remit it to The Australian Taxation Office;
•    Mr Phan as the real owner, employs the workers who labour at Torrens Valley Orchards but does not remit the PAYG withholding tax to The Australian Taxation Office; and
•    Mrs Ton, as the owner of the registered name, permits the conduct.
For this period no Business Activity Statements remitting the GST and PAYG applicable are lodged, nor are any subcontractor invoices produced at any time, though a claim of subcontracting is made in respect of this period.
That is the Crown case as to conduct by the accused in respect of those counts 1 to 4.
The dishonesty alleged in respect of these four counts against both Mr Phan and Mrs Ton is that they knowingly collected the GST particularised in Chart A and were liable in respect of PAYG quantified on the same chart, but neither declared nor remitted either sum to The Australian Taxation Office.
The prosecution case is that in deciding the mental elements of counts 1-4, that is:
•that the two accused or either of them intentionally engaged in the conduct,
•that the two accused knew or believed that a loss would be caused; and
•that the two accused were dishonest.
regard can be had to the dishonest course of conduct which ensued.
That is that this offending in counts 1-4 was no innocent oversight but the prosecution contend that you can come to the conclusion that it was intended because what went on beyond that was conduct in much the same vein for another, about two years.
That is what I was explaining before about cross-admissibility. The contention of the Crown is, dealing with counts 1-4 separately, you can have regard to the other evidence of continuing conduct for the following two years or so if you take the view of course that that is conduct in much the same sort of vein, that it is a continuing course of dishonest conduct, therefore you can, when considering the intention and the mental elements, use that to decide whether this could have been an innocent mistake in that earlier period, or was it intentional, was it dishonest.
That is the prosecution case in respect of counts 1-4.
Counts 5 to 14
The prosecution case in respect to counts 5-14 is that Good Start Contractor continued to work for Torrens Valley Orchards and also supplied labour to Netherhill Strawberry Farm and Agresolve Pty Ltd. Then provoked by an inquiry from Ms Loizos from the ATO, as to why no business activity statements had been lodged for Good Start Contractors, Mrs Ton attended on Karen Phu in September 2005 and instructed her to lodge five business activity statements for:
•the September 2004 quarter;
•the December 2004 quarter;
•the March 2005 quarter;
•the June 2005 quarter; and
•the September 2005 quarter.
Karen Phu lodged them on 10 September 2005 with Ms Loizos from the ATO. Those statements are the subject of the 10 counts. The Prosecution Case is that the BASs that resulted from Mrs Ton’s instructions do not declare and remit the correct amount of GST payable and they do not remit any of the PAYG withholding tax which should have been withheld and remitted.
I turn to the conduct alleged by the prosecution here and then I will turn to the mental elements.
The Prosecution allege that the conduct in the 10 counts which caused the losses particularised in charts A and B which was dishonest, was as follows:
•as to Ms Ton that she, in the course of her attendances upon Karen Phu from mid September 2005 onward, understated sales income from Torrens Valley Orchards, failed to disclose any income at all, initially at least, from Netherhill Strawberry Farm and Agresolve Pty ltd and presented fake subcontractor invoices from SNJ, so that is the conduct alleged against Mrs Ton; the understatement of sales, the failure to disclose initially the number of customers and the presentation of fake subcontractor invoices;
•as to Mr Phan the conduct alleged against him in respect of these 10 counts is that he caused the conduct of Mrs Ton. He was running the business, on the prosecution case, writing out the invoices, all that sort of thing, that he caused her attendance there to do that.
The conduct of both accused in so deceiving the tax agent and therefore producing the final BASs was, according to the prosecution case, blatantly dishonest and the amount of the consequent loss was, as the papers disclosed, considerable. The prosecution contend that evidence of this intended dishonesty can be gleaned from, amongst other things, the multiple discrepancies and anomalies in the SNJ subcontractor invoices. The prosecution case here too in respect of these counts is that when regard is had to the whole of the evidence, it is clear that the accused, both of them, in respect of these counts, were acting dishonestly, particularly bearing in mind the evidence relating to the conduct later and the later counts 15 to 20 which discloses a similar dishonest course of conduct.
So, members of the jury, in relation to the mental elements then, the prosecution case is that you can have regard to not only what happened there itself but also have regard to the evidence of the whole and the later conduct and later behaviour if you find that that is a similar course of dishonest conduct. In other words, you can take the view that that gives colour to the intent on this occasion, what happened later.
Counts 15 to 20
I turn finally to the prosecution case on counts 15-20. On 23 August 2006 Mrs Ton attended upon the tax agent Karen Phu. By this time of course the business name had been transferred to Mr Phan. Mr Phan told Mrs Ton to go to Karen Phu and attend to the preparation and lodgement of the BASs. He confirmed that he told her that in the record of interview. What he said in the record of interview is evidence against himself.
Further, Mrs Ton in her record of interview acknowledged that she went to Karen Phu on instructions from Mr Phan. That is acknowledged in her record of interview which is evidence against her.
The prosecution evidence is that Karen Phu did not lodge the BASs based on the materials provided to her by Mrs Ton on 23 August 2006 but eventually the BASs were lodged or BASs were lodged for those period through the organisation Portal. I remind you of the BASs in the pages 13 to 14 or tabs 13 to 15 in the Jury Book 2.
The prosecution case here, in respect of these counts – I’m clumping them together, but they must be considered separately and individually – but the prosecution case in respect of these counts 15-20 is that the conduct which caused the loss calculated in chart A and confirmed by Ms Loizos is:
•as to Mrs Ton, that she, on instructions from Mr Phan, went to Karen Phu, produced the sales invoices of Good Start Contractors, presented the fake subcontractor invoices from IC Contractors;
•as to Mr Phan, the conduct alleged against him is that he caused, as he admitted, and instructed Mrs Ton, to present those documents.
Again, here the prosecution case is of course that IC Contractor invoices are obviously fake and the dishonesty therefore patent.
In relation to the dishonesty and other mental elements and the proof of it, the prosecution case again is that you can have regard to other evidence in the case, other evidence relating to conduct and other charges. That is the prosecution case is here that when regard is had to the previous and subsequent course of conduct it is clear that the accused here in respect of these counts were acting dishonestly. The contention here is that, members of the jury, this has happened before and now it is happening again in much the same fashion; therefore, how can it be said this was not intended, that this was not dishonest.
Of course, in all that, you have to be convinced that this other conduct has been proven beyond reasonable doubt and that it does bear on the intention in that respect.
Members of the jury, the prosecution case, in respect of counts 15-20 and the previous counts, relies heavily upon the various multiple points made about what the prosecution contend are obvious anomalies and discrepancies in the subcontractors’ invoices such as indicated.
Analysis
I propose to address firstly the directions given in respect of the counts comprising the first phase.
In my view it cannot be said that the judge failed to discriminate between the positions of the two applicants in his directions. In fact, the judge clearly set out the relevant conduct of each accused person during the two parts of the first phase and linked the required mental element to that conduct. The roles attributed to each applicant on the prosecution case could hardly have been more different. It was impossible to discuss the facts of the case without drawing the relevant distinction.
I do not agree with the submission that the directions encouraged the jury to take as a starting point the question of whether there was a dishonest scheme and then to determine whether it was proved that either applicant was part of it. The structure of the elements of the offence, as presented by the judge, did not encourage such an approach. However, even if the jury chose to approach the matter in that way, I do not allow that this would have led to error. For example, if the jury decided that the case against Mr Phan on the counts comprising the first phase was made out, then there would be nothing wrong in examining Ms Ton’s conduct, along with her statements to Ms Phu and to the investigator, to determine whether she had intentionally and dishonestly performed acts to contribute to or promote that scheme.
The passages which I set out earlier and numbered as 1 to 17 contain repeated instructions to the jury to consider the case against each accused separately and to consider each count individually.
It is not suggested that the directions permitting use of evidence in relation to one group of counts when evaluating the position of the applicants in respect of other counts were in error. The effect of them was to invite the jury to consider the whole of the course of events in order to put into context the allegations against each applicant and in particular the issue of dishonesty. As I have said, it is not suggested that these directions were, of themselves, incorrect. Rather, it is put that the directions might have encouraged the jury to impute the dishonesty of one applicant to the other, or to infer from dishonesty at one point that behaviour at another point was also dishonest. However, if the jury faithfully followed the directions – and we are entitled to assume that it did – then it must have given the individual counts the separate consideration which was required. In addition, the directions clearly required proof, not just of knowledge of a dishonest scheme, but of dishonesty at the time the acts comprising the relevant conduct were performed.
Accordingly, at least insofar as the counts comprising the first phase are concerned, the arguments put on behalf of Ms Ton, and adopted by Mr Phan, are not made out.
In relation to the second phase, the case against Mr Phan remained much as it was in relation to the latter part of the first phase. As before, he continued to provide and supervise workers and to charge for their labour. In addition he was now the registered owner of the business name and was using his own ABN as well as being registered for GST purposes. I consider that the directions given in relation to the second phase, insofar as they concern Mr Phan, were clear and adequate.
The position is slightly different for Ms Ton. The only conduct alleged against her in proof of counts 15 to 20 was her attendance at the office of Ms Phu on 23 August 2006. As mentioned earlier, on this occasion she handed to Ms Phu a number of documents in relation to the business. It is not clear from Ms Phu’s evidence whether these were contained in an envelope or folder, or whether they were individually presented. However, Ms Phu’s evidence was that there was no discussion about the documents or the business on that occasion, as Ms Phu believed that Ms Ton was no longer involved in the business. Therefore, there was no evidence that Ms Ton was familiar with the contents of the documents. Ms Ton later told the investigator that on this occasion she went to Ms Phu on the instructions of Mr Phan. In his interview, Mr Phan similarly said that he instructed Ms Ton to take documents to Ms Phu.
Therefore, in relation to this phase, the case against Ms Ton was a much weaker and more subtle one. The prosecution was relying on an inference from Ms Ton’s earlier conduct that she was still playing the same role; that is, deliberately misinforming Ms Phu about the affairs of the business so that, in turn, the ATO would be deceived. The striking difference between the nature and extent of Ms Ton’s conduct here was not adverted to by the judge in these directions. I do not imply that the judge was necessarily required to draw that contrast at this point in his directions. However the matter is complicated, because after having deliberated for most of a day, the jury asked a question on this very issue. The question was to this effect:
If Ton only knew about the dishonesty but didn’t engage directly in the conduct, what is the legal position?
It may be noted that the words of the question reflect, to a degree, the words used in the memorandum provided to the jury setting out the elements of the offence, and, in particular, the fifth element.
When the question was received there was a good deal of discussion between counsel and the judge about the appropriate way of addressing it. Counsel for Ms Ton suggested that the appropriate answer to the question was that, if it were not proved that Ms Ton directly engaged in the conduct, then she was not guilty. He suggested the jury should be directed to that effect. Contrary to that submission, the judge determined to do as the prosecuting counsel suggested and to simply reiterate what conduct was alleged against Ms Ton in proof of all the charges.
With the benefit of hindsight and being removed from the pressure of a long and difficult trial, it seems fairly clear that the jury question related to Ms Ton’s involvement in the second phase. Only in that context could it be said that she did not “engage directly in the conduct”. The redirection was in these terms:
We have discussed your question at some length. Members of the jury, in respect of counts 1-4, the conduct alleged by the prosecution is the failure by both accused, but Mrs Ton, to lodge the required BAS and more particularly to remit to the government, the Commissioner, the GST and the PAYG tax. That’s the conduct in respect of each of counts 1-4.
The dishonesty or the mental elements in respect of that are when you address the elements, that she knew that the failure to do that was dishonest and you need to address the other elements, that it was intentional, that she knew or believed. So, you have to address the other mental elements as well in respect of that conduct.
The conduct in respect of counts 5-14 is the provision of documents and information to Karen Phu in September 2005 and, in summary, the mental elements attached to that are that that was dishonest in that she knew at the time that she had not remitted the GST and the PAYG tax in respect of those counts.
The conduct in respect of counts 15-20 is the provision again of those documents and information to the tax agent on 23 August 2006 which had the effect of omitting to pay all the GST and all the PAYG tax involved. So, the dishonesty there, to wrap up the mental elements, is the knowledge and the intention that that not be done.

I consider that there is a real risk that, in treating the jury question as if it related to all the charges and in failing at this point to advert to the fact that the evidence implicating Ms Ton in the second phase was tenuous, the judge might have unwittingly encouraged the jury to put aside the concern about the level of Ms Ton’s conduct expressed in its question. The jury may well have taken the view that when she delivered the documents to Ms Phu, Ms Ton would have assumed that the documents concerned the business and assumed that, as before, they might have been deficient. However, acting in obedience to Mr Phan’s direction to deliver the documents coupled with that belief would not, of itself, render her guilty of these counts.
Given the prominence this issue seems to have been given in the jury’s deliberations, the failure to directly respond to the jury’s question might well have resulted in the loss of the chance of acquittal in respect of counts 15 to 20. As I have already remarked, the case against Ms Ton in respect of counts 15 to 20 was weak and it could not be said that the jury would inevitably have convicted Ms Ton on those counts. For these reasons the complaint that the directions on the elements of the offence were not adequately related to the facts must be upheld, at least as far as Ms Ton is concerned. The convictions on counts 15 to 20 should be quashed. In light of the state of the evidence against Ms Ton on those counts I would not order a retrial.
There is one other matter concerning the evidence against Ms Ton which should be mentioned. I remarked earlier that Ms Phu did not ultimately file the BASs prepared on the basis of the documents Ms Ton delivered to her on 23 August 2006. As seen, the only conduct relied upon in proof of the second phase was Ms Ton’s delivery of those documents and Mr Phan’s instruction to her to deliver them.
No ground of appeal before us raised the issue of causation; that is, whether misrepresentations to Ms Phu made in those documents, which ultimately came to nothing, were capable of causing a loss to the Commonwealth.
However, since I have already determined that Ms Ton’s convictions on counts 15 to 20 should be quashed for other reasons, nothing turns on this.
In respect of Mr Phan, the evidence before the jury on the second phase went further. The jury had evidence that on 24 January 2008 (being after the last of the dates referred to in the charges and after the charges were laid on 22 October 2007) Mr Phan lodged BASs through the ATO internet portal. The BASs lodged gave rise to obligations to the ATO which, like the obligations disclosed by the materials given to Ms Phu, were falsely low. Again, it was represented that expenses for labour incurred to IC Contractor were almost as much as moneys received from Torrens Valley Orchards. Again no PAYG was declared. The jury also had Mr Phan’s admitted instruction to Ms Ton to deliver what the jury must have found were false documents to Ms Phu so that she might prepare and file BASs based on them. Therefore in the case against Mr Phan, the jury had before it the failure, within the charged dates, to file any BAS declaring liability to the ATO for PAYG or GST amounts, supported by evidence of dishonesty. In light of the availability of this evidence, and absent any ground of appeal raising the question of causation, I do not propose to explore the matter further.
Appeal ground relating only to the applicant Phan
The applicant, Mr Phan pursued a further ground of appeal, arguing that the trial judge failed to put the defence case adequately to the jury. Counsel for Mr Phan submitted that the nature of the trial made it incumbent on the judge to present carefully the defence case to the jury. He pointed out that the case for the prosecution spanned almost three weeks and required the prosecutor to extensively address the jury in order to assist it in understanding the prosecution evidence and using the jury books. This, it was submitted, allowed the prosecutor to develop a rapport with the jury. In addition, here the defendants did not give evidence, and the jury had only recorded video interviews of each. Against this background, it was said that it was necessary to thoroughly set out the defence cases and ideally to weave an encapsulation of the defence cases through the summing up, showing how they interacted with the elements, rather than simply mentioning the cases at the end of summing up. Counsel argued that the real thrust of Mr Phan’s defence was inadequately put and was swamped by the lengthy portions of the summing up directed to the prosecution case.
Prior to giving his summing up, the judge invited counsel to provide a list of defence contentions in the form of a bullet point analysis of their respective cases. The judge later read those summaries, verbatim, to the jury. Counsel for Mr Phan submitted that in so doing, the judge failed adequately to relate that defence case to the elements of the offence. It was also submitted that because the judge read the notes of the defence case as supplied by defence counsel, those directions lacked the authority of the bench.
The principles concerning the duty to put the defence case emerge from a number of cases decided in this jurisdiction, in the New South Wales Court of Appeal and in the High Court. I draw the following principles from R v Lavery No 2 (1979) 20 SASR 430, 444-446 per Wells J; R v Von Einem (1985) 38 SASR 207, 216 per King CJ; 38 SASR 207 R v Perks (1986) 43 SASR 112, 115-117 per King CJ; R v Whittingham (1988) 49 SASR 67, 69-70 per King CJ; Reg v Veverka (1978) 1 NSWLR 478, 480-482 per Street CJ; Domican v The Queen (1992) 173 CLR 555, 560-1.
The extent of the duty upon a trial judge to put the defence case can be described in general terms. However the obligations cast will vary from case to case depending on the length and complexity of the legal issues, the way in which the issues have been crystallised both during the evidence and in counsel’s addresses, and the structure of the summing up. In principle, the trial judge must fairly and impartially put the defence so that the jury is fully apprised of the challenge mounted to the prosecution case, both in the course of the evidence and argument.
That duty will involve stating the substance of the defence case and explaining its bearing on the legal issues. Generally speaking, fulfilment of these requirements would lead the judge to refer to the crucial parts of the evidence of the accused (if any) or to his explanation given in interview or otherwise. In many cases the encapsulation of the defence case would be found in an identifiable part of the summing up. But in other cases, particularly long and complex matters, it may be preferable to deal with both prosecution and defence cases on an issue by issue basis.
However, a judge is not obliged to read, or to refer in detail to, evidence called by the defence and is not obliged to repeat all the arguments of defence counsel.
Where the prosecution evidence is lengthy and the defence does not present evidence, there will necessarily be a disparity in the time taken to put each case adequately.
If the judge desires to make his or her own observations as to aspects of the defence, that should be done in a separate part of the directions.
In this case the judge chose to put the defence cases in a section of the summing up separate from the putting of the prosecution case. There was no obligation upon him to do otherwise. It was a matter for his decision. In a case in which an accused person had given evidence and called evidence, it might have been expedient to deal with contentious issues of fact from both viewpoints as those issues were discussed in the course of the summing up. But that was not this case. Here, the defence cases amounted to matters raised in cross-examination and arguments made to the jury by counsel. Many counsel would relish the opportunity to provide to the judge a summary of the defendant’s case for incorporation into the summing up. In any event, the case of each applicant was summarised at some length. I think that the way in which the arguments bore on the elements of the offence was clear enough. Mr Stewart, for the applicant Mr Phan, argued that, in putting the defence case, the judge merely reiterated counsel’s arguments. In the circumstances of this case, I do not see that he could have done more. It is not a question of the judge giving the authority of the bench to the summary. The judge’s obligation is not to be likened to a warning about use of or evaluation of evidence.
I would dismiss this ground of appeal.
Conclusion
In relation to the first ground of appeal and the ground of appeal raised only by the applicant Mr Phan, I would refuse permission to appeal.
In relation to the second ground, raised by both applicants, I would grant permission to appeal. In respect of Ms Ton’s convictions for counts 15 to 20 I would allow the appeal and quash the convictions. In relation to all other counts I would dismiss the appeal.
WHITE J. I agree with the orders proposed by Vanstone J and with her reasons.
KELLY J: I agree with the orders proposed by Vanstone J and with her reasons.

[2010] SASCFC 53

16 November 2010

Key Legal Topics

Areas of Law

Criminal Law

Evidence

Legal Concepts

Appeal

Charge

Sentencing