R v Sigalla (No. 3)
[2016] NSWSC 1919
•03 November 2016
Supreme Court
New South Wales
Medium Neutral Citation: R v Sigalla (No. 3) [2016] NSWSC 1919 Hearing dates: 3 November 2016 Date of orders: 03 November 2016 Decision date: 03 November 2016 Before: Adamson J Decision: Accused’s application for directed acquittal on counts 1 and 2 refused.
Catchwords: CRIMINAL LAW – application by accused for directed verdict of acquittal on counts 1 and 2 – dishonest use of position as a director with intention of directly gaining a benefit – whether accused a director at the relevant time of counts 1 and 2 – whether accused came within extended definition of director under s 9 of the Corporations Act 2001 (Cth) – application rejected Legislation Cited: Corporations Act 2001 (Cth), ss 9, 184(2)(a) Cases Cited: Doney v The Queen (1990) 171 CLR 207
May v O’Sullivan (1955) 92 CLR 654Category: Procedural and other rulings Parties: Regina
Andrew John SigallaRepresentation: Counsel:
Solicitors:
P McDonald SC/ S Callan (Crown)
W P Brewer (Accused)
Commonwealth Director of Public Prosecutions (Crown)
Brendan Pigott (Accused)
File Number(s): 2013/1511552013/355116 Publication restriction: Nil
EX TEMPORE JUDGMENT
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The accused has made a submission that there is no case to answer in relation to counts 1 and 2 of the indictment. The basis of the application, as outlined by Mr Brewer, who appears on behalf of the accused, is that, at the relevant time of those counts, being 8 December 2006 in respect of count 1 and 28 December 2006 in respect of count 2, the accused was not a director of TZ Limited.
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It has been confirmed by the Crown that the Crown relies on the extended definition of "director" in s 9 of the Corporations Act 2001 (Cth) to establish that element of the alleged offence against s 184(2)(a) of the Corporations Act. Section 9 relevantly provides:
“director” of a company or other body means:
…
(b) unless the contrary intention appears a person who is not validly appointed as a director if:
(i) they act in the position of a director, or;
(ii) the directors of the company, or body, are accustomed to act in accordance with the person's instructions or wishes."
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By reason of the extended definition, the fact that the accused was not otherwise a director at the relevant time does not constitute a defect in the evidence in support of the charge.
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The accused’s application requires me to apply the test which was articulated by the High Court in May v O'Sullivan (1955) 92 CLR 654 at 658. The question is whether, at the time a no case submission is made, the accused could lawfully be convicted on the evidence as it stood at that time.
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It has been subsequently made clear by the High Court, including in Doney v The Queen (1990) 171 CLR 207 at 214 that the question for me is not whether the quality of the evidence is such that any verdict of guilty in respect of counts 1 or 2 would be unreasonable since that would be a matter for the Court of Criminal Appeal. As the High Court said at page 214:
“It follows that, if there is evidence (even if tenuous or inherently weak or vague) which can be taken into account by the jury in its deliberations and that evidence is capable of supporting a verdict of guilty, the matter must be left to the jury for its decision. Or, to put the matter in more usual terms, a verdict of not guilty may be directed only if there is a defect in the evidence such that, taken at its highest, it will not sustain a verdict of guilty.”
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The Crown has identified a number of aspects of the evidence it has adduced in its case which are relevant to the question of whether the accused meets the extended definition of "director" in the period during which he was not formally a director.
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The accused was originally appointed as a director of TZ Limited on 8 January 2004. He resigned from the board of TZ Limited on 15 July 2004. He did not become a director again until 29 January 2007. He remained in that position until 18 June 2009. His resignation on 15 July 2004 came about, according to the minutes of the meeting of TZ Limited on 19 April 2004, by reason of a suggestion which the accused himself made on 19 April 2004 that there be some rationalisation of the board to meet the minimum requirements of the Australian Stock Exchange as to corporate governance. As a consequence, both the accused and Mr Wilson resigned as directors of TZ Limited leaving Mr Kelliher, Mr Falconer and Mr Leibowitz as directors of TZ Limited. The accused was, as I have mentioned, subsequently reappointed on 29 January 2007.
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Whether the accused was a director within the extended definition at the times alleged in the first and second counts requires consideration of the actual conduct of the accused and others associated with TZ Limited. The Crown has adduced evidence from Mr Kelliher, a director of TZ Limited, which was to the effect that, after the accused resigned as a director in July 2004, Mr Kelliher recalled that his dealings with the accused were "pretty much as they had been" in that the accused continued to be acting in the business "in developing high level strategies and business planning and being engaged in capital raising". He took part in making high level decisions regarding how TZ Limited or its wholly-owned subsidiary, TZ Inc., were going to commercialise technology developed by TZ Inc. He also played a significant role in the management of TZ Limited, being the Australian listed corporate entity which was predominantly engaged in capital raising.
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Mr Leibowitz, who was chairman of TZ Limited in 2004 and 2005 and remained a director until July 2006, gave evidence that the accused was the person he spoke to mostly about the organisation and about matters concerning the running of its business and capital raising.
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The Crown has also tendered evidence of email exchanges between Mr Leibowitz and the accused shortly prior to the resignation from the board of Mr Leibowitz in July 2006 which are capable of bearing the interpretation that the accused directed Mr Leibowitz to resign from the board of TZ Limited. This is a material matter in the consideration of whether the evidence is sufficient to fulfil the requirement of the extended definition of "director" in s 9 of the Corporations Act.
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The evidence of Mr Fagredin, who worked subject to Mr Falconer's direction, in preparing the accounts for TZ Limited which were submitted to the Australian Stock Exchange for lodgement, is also significant. Mr Fagredin gave evidence that it seemed to him, from dealings with Mr Falconer at the time, that the accused continued to give directions to Mr Falconer in relation to the management and direction of TZ, although he was not formally a director in the interim period from his resignation on 15 July 2004 until his reappointment on 29 January 2007.
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The Crown also relies on emails between the accused and others on the board, including Mr Leibowitz and Mr Falconer, about transactions to which TZ Limited was to be a party or was contemplating being a party, as well as arrangements concerning the issue of convertible notes which raised $20 million for TZ Limited in 2006 and formed a substantial part of its capital raising efforts during that period.
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The Crown also relies on a Convertible Note Subscription Deed between TZ Limited and DKR Soundshore Oasis Holding Fund Limited dated 1 August 2006 which was signed by Mr Falconer as a director and by the accused as authorised signatory on behalf of TZ Limited.
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In these circumstances, it seems to me that the evidence, at its highest, could well fulfil the requirements of extended definition of "director" within the Corporations Act. It will ultimately be a matter for the jury whether they are satisfied that the evidence has established the Crown case beyond reasonable doubt.
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In these circumstances, I reject the accused's application that I should direct a verdict of acquittal on counts 1 and 2.
Direction
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I make the following direction:
Refuse accused’s application for directed acquittal on counts 1 and 2.
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Decision last updated: 17 February 2017
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