R v Thompson; R v Farrugia

[2019] NSWDC 219

District Court

New South Wales

Medium Neutral Citation:	R v Thompson; R v Farrugia [2019] NSWDC 219
Hearing dates:	3 June 2109
Date of orders:	03 June 2019
Decision date:	03 June 2019
Jurisdiction:	Criminal
Before:	Smith SC, DCJ
Decision:	The Crown is directed to answer the question in respect of Count 1 in the indictment
Catchwords:	CONSPIRACY – whether latent duplicity in indictment – power of Court where duplicity found
Legislation Cited:	Corporations Act 2001 (Cth) Criminal Code
Cases Cited:	B v R [2008] NSWCCA 85 Director of Public Prosecutions v Merriman [1973] AC 584 Gerakiteys v R (1984) 153 CLR 317 Johnson v Miller (1937) 59 CLR 467 R v Bolus [2003] NSWSC 658 R v Mitchell [1971] VR 46 Saffron (No.1) (1988) 36 ACrimR 262 Stanton v Abernathy (1990) 19 NSWLR 656 Walsh v Tattersall (1996) 188 CLR 77
Category:	Procedural and other rulings
Parties:	Regina (Crown) Ian Athol Thompson – Defendant Joseph Carmec Farrugia - Defendant
Representation:	Counsel: Crown: Mr L Fernandez with Mr C McGorey Ian Athol Thompson: Mr P Boulten SC with Mr A O’Brien Joseph Carmec Farrugia: Mr P Strickland SC with Mr S Wells   Solicitors: Crown: Commonwealth Department Public Prosecution Ian Athol Thompson: Clayton Utz Joseph Carmec Farrugia: McPherson Kelly
File Number(s):	2017/305308 – Ian Athol Thompson; 2017/305247 – Joseph Carmec Farrugia
Publication restriction:	Nil.

Judgment

1. Mr Thompson and Mr Farrugia are being tried on indictment on three counts of conspiracy. At the conclusion of the Crown’s opening address on Thursday, 30 May 2019, an issue was raised by senior counsel for each of the accused concerning the adequacy of that opening in so far as it concerned the scope of each conspiracy.

2. The Crown accepted an invitation to make a supplementary opening statement giving further particulars of the alleged conspiracy. A written form of that supplementary opening was delivered the next day to counsel for the accused. However, on Monday 3 June 2019, before the hearing resumed, issues with that supplementary opening were raised by the accused. I heard argument in the morning and delivered my decision after lunch, stating that I would provide my reasons the following day. These are my reasons.

The issues

3. There are essentially three issues: first, whether there was a latent duplicity in the first count of conspiracy in light of the particulars of that charge proposed to be given in the Crown’s supplementary opening; secondly, whether the charges were otherwise adequately particularised; and thirdly, if the answer to either of those was in favour of the accused, whether the Court had power to make the direction sought by the accused. It is convenient, and on one view necessary, to address the third issue first. The other two issues are conveniently dealt with by reference to the individual counts on the indictment and the questions the accused ask to be answered by the Crown.

Third issue: the power to grant the relief sought

4. For reasons that will become apparent, the critical question to address is whether, in light of the Crown’s supplementary opening, there is a latent duplicity or ambiguity in the first count on the indictment. Although the conclusion of duplicity can give rise to the power to quash the indictment, the appropriate, and long-held position is that the appropriate step for the trial judge is to put the prosecutor to an election, or to require the prosecutor to provide particulars: B v R at [59] – [61] (Spigelman CJ, James and Howie JJ agreeing), citing Walsh v Tattersall (1996) 188 CLR 77 at 110 (Kirby J), R v Mitchell [1971] VR 46 at 57; Johnson v Miller (1937) 59 CLR 467 at 489 – 490 (Dixon J), 497 – 498 (Evatt J); and Stanton v Abernathy (1990) 19 NSWLR 656 at 670 – 671 (Gleeson CJ). Those cases support the proposition that there is power in the trial judge to require an election to be made as an incident of the power to ensure that there is a fair trial.

5. The Crown did not put any authority against this proposition but argued that the appropriate course was for each accused to seek a stay of the trial. There are, as the authorities referred to above suggest, a number of ways of dealing with latent duplicity or ambiguity; however, the Crown’s submission goes against the grain of those authorities which appear to me to take a more practical approach, with a view to ensuring a fair trial if possible and then, if that is not possible, to adopt more stringent methods.

6. I note also that the Crown sought to distinguish the decision in Stanton v Abernathy on the basis that it concerned proceedings before a Magistrate. The principles and authorities discussed, however, were not limited to such proceedings.

7. For those reasons I conclude that I have the power to make the orders sought by each of the accused.

First and second issues: duplicity and particulars

8. The rule against duplicity is one of elementary fairness intended to enable the defendant to know what it is of which he has been charged: Walsh at 84 (Dawson and Toohey JJ). It is a matter of form applied in a practical rather than in a strictly analytical way for the purpose of determining what constituted one offence: Director of Public Prosecutions v Merriman [1973] AC 584 at 607 cited in Walsh at 84.

9. Latent ambiguity or latent duplicity falls within the concept of duplicity and can, in an appropriate case, lead to the quashing of an indictment: B v R [2008] NSWCCA 85 at [52] (Spigelman CJ, James and Howie JJ agreeing). In B v R Spigelman CJ further explained (at [53]):

53.   Latent ambiguity can be identified when an indictment does not suggest duplicity on its face, but the way in which the Crown case is to be, or has been, conducted can be seen to subject the accused to the possibility of being convicted of one of a number of distinct offences. In the context of a charge of conspiracy this principle involves the exposure of an accused to being convicted of more than one conspiracy.

10. The argument concerning duplicity arises here in respect of the first count in the indictment which is in the following terms:

IAN ATHOL THOMPSON AND JOSEPH CARMEC FARRUGIA

Between about 7 November 2008 and about 30 June 2011 at Sydney, New South Wales and elsewhere, did conspire with each other, Samantha Cousins, and Glyn Raines, being officers or employees of Hastie Services Pty Ltd to engage in conduct that results in the falsification of books affecting or relating to the affairs of Hastie Service [sic] Pty Ltd

Contrary to subsections 11.5(1) of the Criminal Code and 1307(1) of the Corporations Act 2001 (Cth) (Law Part Code: 44331 and 41450)

11. In its proposed addendum to opening, the Crown relevantly stated:

Scope

1.   The Crown’s case is that there was a single conspiracy running throughout the charged period (7 November 2008 to 30 June 2011). The conspiracy was, at the very least, in existence as at 7 November 2008 and that the first overt act was committed pursuant to that agreement on that same date.

Object of the agreement

2.   The object of the agreement was to reduce the difference between reported Earnings Before Interest and Tax (“EBIT”) for a relevant period (month end; half year end and/or financial year) and that budgeted or forecast.

3.    The means of achieving this was by falsifying the records of Hastie Services.

Continuing nature of the agreement/ offence

4.   It may not have been expressly contemplated by the parties, as at 7 November 2008, that the agreement to falsify records would be ongoing or still in existence as at August 2011.

5.   The agreement may have commenced as an agreement to improve the reported EBIT result on a particular occasion, but then evolved into a continuing agreement to adjust the General Ledger to improve reported EBIT results (relative to that budgeted) on an as needs basis when it was judged that the gap or the magnitude of the gap that existed was unacceptable.

(Emphasis in original)

12. The accused raised two issues with this part of the Crown opening: first, that the words “at the very least” in [1] introduces uncertainty and might suggest that the conspiracy might have existed before 7 November 2008; and secondly, that, contrary to the express prohibition identified in Gerakiteys v R (1984) 153 CLR 317, [4] and [5] introduce the possibility that there was more than one conspiracy: one to improve the apparent profit position of Hastie Services in respect of the October 2008 period; and another to take steps to improve the apparent profit position of Hastie Services as the need arose. The accused asked for a direction that the Crown answer the following questions:

(a)   Is it contended that the agreement allegedly made on 7 November 2008:

(i)   Was an agreement to deliberately understate expenses for the month of October 2008 in the general ledger of Hastie Services; or

(ii)   Was it an agreement to falsify entries in the general ledger of Hastie Services to improve the reported EBIT results on an ongoing “as needs” basis, when it was judged that the gap or the magnitude of the gap (between the actual EBIT and the budget or forecast was unacceptable.

(b)   If the Crown case is that an ongoing agreement to falsify entries in the general ledger of Hastie Services to improve the reported EBIT results on an as needs basis, was reached after 7 November 2008:

(i)   When was that agreement reached?

(ii)   Who were the parties to the agreement?

13. In Gerakiteys Deane J said, at 333-334:

A count in conspiracy must comply with the general rule of charging one offence only … Where a count in conspiracy charges, as it should do, only one conspiracy to effect some one or more improper purposes, the only issue before the jury under that count is whether all or any of the accused are guilty of the conspiracy alleged” (per Jordan C.J., R v Ongley). Where the single conspiracy charged is to effect more than one unlawful purpose, the jury may find a single conspiracy to effect some only of those purposes (see O’Connell v R). The jury cannot however, find two conspiracies under a count which charges one only nor find an accused guilty of a conspiracy which is a distinct and different conspiracy to that which the count alleges. In particular, where a single conspiracy has been charged, it is not open to the jury to find the accused guilt of a consequential but different conspiracy which flowed from that which is the subject of the actual charge.

(Footnotes omitted)

14. The Crown argued that it was open for it to present its arguments on count 1 as outlined in its opening. It supported this contention by reference to a number of principles concerning conspiracy. It is useful to set these out in full (omitting citations) as they are applicable to other issues to be decided:

THE NATURE OF A CONSPIRACY

8.   The offence of conspiracy is complete when the conspiratorial agreement is made and at least one party to the agreement commits an overt act in furtherance of the agreement.

9.   While the offence of conspiracy is complete upon the commission of at least one overt act “this does not mean the conspiratorial agreement is finished with. It is not dead. If it is being performed, it is very much alive. So long as the performance continues, it is operating, it is being carried out by the conspirators, and it is governing or at any rate influencing their conduct. It continues in operation and therefore in existence until it is discharged (terminated) by completion of its performance or by abandonment or whoever it may be”.

10.   Conspiracies by their nature can be fluid and evolving:

(a)   Unlike a formal contract, a criminal conspiracy is a fluid creature and can continue in existence even though parties enter and depart from it throughout its life. The means to be adopted in order to bring about the object of the conspiracy can vary continually as circumstances change.

(b)   An agreement might, when it is formed, be a mere skeleton without flesh and blood, yet provided there is an agreement (and an overt act committed pursuant to the same) the conspiracy is still on foot. A conspiracy can develop and take shape as it proceeds towards its objective.

(c)   There are many cases in which a conspiracy, having been formed, changes during its life. Once formed, a conspiracy is capable of remaining a single offence notwithstanding that during its currency a number of identifiable and separate acts, within its ‘general purpose’ are carried into effect.

(d)   Consistent with its fluid nature, parties can join, or leave, a conspiracy after it has been formed, and acts done in furtherance of a conspiracy will constitute continuing performance, as well as evidence, of the unlawful agreement.

(e)   It does not follow that a person who has allegedly entered and left the conspiracy cannot be convicted of the offence with others who enter or leave either before or after his participation.

15. The Crown argued that this case was like that in Saffron (No.1) (1988) 36 ACrimR 262. There it was alleged that Mr Saffron had conspired with a Mr Anderson to defraud the Commonwealth of income tax with respect to earnings from a number of bars and restaurants in which both had an interest.

16. Hope JA stated, at 280-81:

There was evidence in relation to the other businesses to entitle the jury to find that, to the knowledge of Saffron and Anderson, the same system of using false and true books was adopted. There was no evidence of any separate conversation or agreement between Saffron and Anderson that this should be done; it happened ‘automatically’ … The scheme devised before the end of 1972 and implemented initially in relation to the Venus Room continued to be implemented in relation that business from then until 1981. It was implemented in relation to other businesses as Saffron and Anderson acquired interests in them … The object of this system was at all times the same, namely to defraud the Commonwealth of taxation.

(Emphasis added)

17. His Honour continued, at 282:

[I]n my opinion it is clear enough that the charge brought and relied upon by the Crown was that which was put to them by [the trial judge]. That charge was that Saffron and Anderson conspired, in the context of the arrangement made between them in relation to the Venus Room, that they would defraud the Commonwealth of tax by failing to declare in the appropriate income tax returns the amounts of cash takings which they would receive and that in support of such a scheme they would adopt a system of having false books of account written up upon the basis of which income tax returns would be made. The agreement initiating this conspiracy was made at a time when the running of other businesses by Saffron and Anderson was not in contemplation but the agreement was not expressly or impliedly limited to the business carried on at the Venus Room. When both became interested in other named businesses, the scheme devised in the context of the Venus Room business was applied ‘automatically’ to the income derived from the business and to the keeping of their books. Words otherwise used in relation to this automatic application are ‘continued in respect of’ and ‘extended to’. In their context all these expressions have the same meaning.

18. Finally, His Honour said, at 290:

In my opinion the question was properly left to the jury. It is not merely that the object of the conspirators throughout was to defraud the Commonwealth of tax. Thus if there were one charge such as the present formal charge of conspiracy, and the evidence showed the arrangement in the context of the Venus Room, and another arrangement some eight or nine years later to invest money won at the races in a mortgage, using pseudonyms instead of real names, and defrauding the Commonwealth by not returning the true income from the investment in the relevant tax returns, it would not be enough that the parties to the agreements were the same and that the objects were the same. There would clearly be two separate conspiracies. However, in the present case there were throughout not only the same object and the same parties; there were the same scheme, the same general class of business and income, the same bookkeeper or bookkeepers implementing the conspiracy at the same office, and a substantial inter-mixing of the tax evasion activities in respect of all the businesses … coupled with the absence of further discussions to bring the new businesses within the scheme, all justified an inference that Anderson and Saffron assumed, and it was the fact, that the scheme originating in the context of the Venus Room was not limited to that business but was to be applied without further agreement to other businesses as they acquired interests in them.

19. The Crown sought to apply the reasoning of Hope JA in Saffron to the facts of this case. The gist of its argument was put in [19] of its written submissions:

19.   Regarding Count 1, the original agreement may have been to commit a single instance of falsification of records (e.g. November 2008). The subsequent alleged falsifications involved the same scheme and object. The application of the scheme may have automatically followed. Alternatively, it is possible the agreement preceding the falsification of records in November 2008 was intended by one or more parties to be (at that time) ongoing thereafter. In either scenario there remains a single conspiracy. It is not necessary that the Crown specify which it was, or be confined in the manner which its puts the single alleged conspiracy to the jury.

20. I disagree with this submission. Leaving aside the questionable proposition that there may be a conspiracy where only one party has the necessary intention, the allegations here are qualitatively different from those in Saffron. As the passages set out above reveal, it was critical to the conclusion in that case that the object of the scheme implemented in respect of the Venus Room was to defraud the Commonwealth of taxation and that that object did not change when later businesses were acquired by Mr Saffron and Mr Anderson when the same scheme was implemented in respect of those businesses. The scheme was the maintenance of two sets of books: one that accurately recorded the income of the business and another that recorded figures that were designed to reduce the liability to return income tax to the Commonwealth. The last passage above from the judgment of Hope JA makes it plain that, in that case, there were numerous other similarities between the conduct concerning the Venus Room and the later business that were necessary to enable the inference to be drawn that the original conspiracy continued in respect of those later businesses. However, that did not change the central importance of the single object of the agreement or understanding.

21. Here, by contrast, the Crown’s case is that the original agreement was to improve the reported EBIT result on a particular occasion, namely the result for October 2008. That object was an isolated, time specific, and self-contained matter. Contrary to the assertion in the first sentence of [19] of the Crown’s submissions, it could not be that the same object could be served by altering the books of Hastie Services in respect of later periods. Conversely, however, it is possible that the object of improving the reported EBIT result as the need arose could include the October 2008 results as well as the later results.

22. This is not a case, such as one the examples given by Howie J in R v Bolus [2013] NSWSC 658 at [21], where the means to be adopted were varied over time in order to bring about the object of the conspiracy.

23. Once the limited nature of the scope of the original agreement asserted by the Crown is appreciated, it can readily be seen that the extended agreement asserted is, in fact, a different conspiracy. For that reason, there is a latent ambiguity or duplicity in the Crown’s case as explained in its supplementary opening and it ought, as a matter of fairness to the accused, to be put to an election as to which conspiracy it relies on. That election may be indicated by reference to an answer to question (a) posed by the accused.

20. I note in passing that the question is posed by reference to the agreement “allegedly made on 7 November 2008”. That is not the allegation. The allegation is made by reference to a period “about 7 November 2008 …”. However, as neither party raised this as a critical matter, and the Crown’s supplementary opening statement makes the date range clear, I will say nothing further about this.

21. I do not agree that question (b) needs to be answered by the Crown. First, the indictment makes plain the period of the alleged conspiracy. Secondly, it is unnecessary for the Crown to define exactly when the conspiracy began or the exact act which marked its inception: Saffron at 283 (Hope JA citing Jordan CJ in Ongley at 117), 300 (Clarke JA). Thirdly, both the indictment and the addendum do indicate who were parties to the agreement.

Count 2

IAN ATHOL THOMPSON AND JOSEPH CARMEC FARRUGIA

2.   Between about 5 May 2010 and about 13 February 2011 at Sydney, New South Wales and elsewhere, did conspire with each other, Samantha Cousins, and Glyn Raines, being officers or employees of Hastie Services Pty Ltd to engage in conduct that results in the falsification of books affecting or relating to the affairs of Hastie Service [sic] Pty Ltd.

Contrary to subsections 11.5(1) of the Criminal Code and 1307(1) of the Corporations Act 2001 (Law Part Code: 44331 and 41450)

26. The accused asked that the Crown be required to answer the following questions in respect of count 2 in the indictment:

(c)   When was the alleged agreement of the subject of count 2 reached?

(d)   If the answer to the preceding question is mid-May 2010, what reliance is placed on the alleged overt acts that are said to have occurred pre mid-May 2010, namely, overt acts numbers 63 and 64?

27. The answer to this argument is the same as that in respect of question (b)(i), namely, that there is no requirement for the Crown to be precise about the commencement of a conspiracy.

Count 3

IAN ATHOL THOMPSON AND JOSEPH CARMEC FARRUGIA

3.   Between about 17 June 2010 and about 9 April 2011 at Sydney, New South Wales and elsewhere, did conspire with each other, Samantha Cousins, and Glyn Raines, being officers or employees of Hastie Services Pty Ltd to make false information available to an auditor that related to the affairs of Hastie Services Pty Ltd, knowing that the information was false or misleading in a material particular.

Contrary to subsections 11.5(1) of the Criminal Code and 1309(1) of the Corporations Act 2001 (Law Part Code: 44337 and 41450)

28. The Crown’s supplementary opening statement says this in respect of count 3:

Scope

17.   The Crown’s case is that there was a single conspiracy running throughout the charge period (17 June 2010 to about 9 April 2011). The conspiracy was in existence, at the very least, by 17 June 2010 and continued thereafter.

Object of the agreement

18.   The object of the agreement was to conceal the true financial position of the company in Western Australia from the auditor.

19.   This was done by making available to the auditor records that concealed overstatements of assets within the WA’s financial records.

20.   There were two aspects to this.

21.   First, the transfer to approximately $500K of the overstated assets from WA account to SEQ account on 17-18 June 2010. WIP spreadsheets were then produced for WA, omitting reference to the approximately $500K transferred out of the WA account, and provided to the auditors. The approximately $500K transfer was then reversed back to the WA account after the creation of the spreadsheets.

22.    Second, after transferring approximately $3.195 million in overstated assets in the WA Accounts to the Suspense Account (between August and October 2010), approximately $1.45 million of that amount was transferred from the Suspense Account to various accounts within WA between December 2010 and January 2011. This amount of the overstated assets was not disclosed to the auditor.

23.    The transfer to various accounts was done for the purpose of that amount of overstated assets being placed, within the WA’s financial records, not coming to the attention of the auditor. This was to conceal the full extent of the overstatement from the auditor. It meant the balance sheets reviewed by the auditor contained assets that were overstated, so that the profit and loss statement for the branch was not an accurate reflection of the profit and loss of that branch.

When the agreement came into existence

24.   It may not have been expressly contemplated by the parties, at the time the agreement first came into existence prior to the 17 June 2010 transfer, that the agreement would later extend to the transfer of the undisclosed amount of approximately $1.45 million to various WA accounts between December 2010 and January 2011. But the Crown’s case is that the agreement was a continuing one that evolved to include that latter act (which was directed to the same purpose, namely concealment of the true extent of the overstatement from the auditor).

Participants

25.   The discussions about conceal [scil. – concealment] of overstatements of assets within the WA’s financial records from the auditor, and the manner in which the concealment was to take place, may not have always involved all four conspirators at the same time. The Crown case however is that the actions taken by Ms Cousins and Mr Raines were done pursuant to the agreement to which Mr Farrugia and Mr Thompson were a party.

(Emphasis in original)

29. The accused ask that the Crown be required to answer the following questions in respect of this count:

(e)   was the alleged agreement made on 17 June 2010:

(i)   an agreement that was limited to the transfer of approximately $500k of the overstated assets from the WA accounts to the SEQ accounts on 17 and 18 June 2010; or

(ii)   an agreement that involved the transfer of approximately $500k of the overstated assets from the WA accounts to the SEQ accounts on 17 and 18 June 2010, and also the transfer of $1.45 million dollars to various accounts within the WA region in December 2010 and January 2011;

(iii)   an agreement that constituted a standing agreement to provide information or material to the auditors that was false and misleading in a material respect or particular on an as needs basis;

(f)   If the Crown case is (e)(ii) or (e)(iii) but it was made after 17 June 2010, then:

(i)   which of the sub-paragraphs (e)(ii) or (e)(iii) is the Crown’s case on count 3?

(ii)   when was that agreement reached? And

(iii)   who were the parties to the agreement?

30. These are similar to the questions raised in respect of count 1. The answer to the first, however, is different. In my view, the proposed addendum to the Crown’s opening makes it plain that there was one agreement with one object (to conceal the true financial position of the company in Western Australia). The fact that the agreement evolved so that it was put into action by different means does not create a separate agreement. This count is, in relevant respects, similar to the conspiracy in Saffron. To adopt the language used by Howie J in R v Bolusi, the later acts were the flesh and blood of the skeleton that had previously been agreed.

31. As for the remaining questions, as I have explained above, there is no need for the Crown to be any more precise about the date of the agreement and the parties to it have been clearly identified in both the indictment and the proposed addendum to the opening.

Conclusion and order

32. The Crown is directed to answer the following question in respect of Count 1 in the indictment:

Is it contended that the agreement allegedly made on 7 November 2008:

was an agreement to deliberately understate expenses for the month of October 2008 in the general ledger of Hastie Services; or

was it an agreement to falsify entries in the general ledge of Hastie Services to improve the reported EBIT results on an ongoing “as needs” basis, when it was judged that the gap or the magnitude of the gap (between the actual EBIT and the budget or forecast) was unacceptable.

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Decision last updated: 18 July 2019