R v Young - [2020] QCA 3

SUPREME COURT OF QUEENSLAND

CITATION:

R v Young [2020] QCA 3

PARTIES:

R
v
YOUNG, Bradley Wendell
(appellant/applicant)

FILE NO/S:

CA No 237 of 2016
DC No 1503 of 2014

DIVISION:

Court of Appeal

PROCEEDING:

Appeal against Conviction & Sentence
Miscellaneous Application - Criminal

ORIGINATING COURT:

District Court at Brisbane – Date of Conviction: 5 August 2015; Date of Sentence: 12 August 2016 (Farr SC DCJ)

DELIVERED ON:

31 January 2020

DELIVERED AT:

Brisbane

HEARING DATE:

15 November 2018
Further written submissions: 12 and 26 February 2019
Further written submissions: 17 October 2019
Further written submissions: 19 and 29 November 2019

JUDGES:

Gotterson and McMurdo JJA and Mullins AJA

ORDERS:

1.   The application to add an additional ground of appeal, as ground 20, is refused.

2.   On each count the appeal against conviction is dismissed.

3.   Leave is granted to appeal against sentence.

4.   Allow the appeal against sentence by varying the non-parole period of 21 months, fixed for counts 2 to 17 and 19 from 21 months to 15 months imprisonment.

CATCHWORDS:

CRIMINAL LAW – PARTICULAR OFFENCES – PROPERTY OFFENCES – OTHER FRAUDS AND IMPOSITIONS – FRAUD – where the appellant was found guilty of one count of fraud – where that charge arose from the appellant’s involvement in companies associated with the Kleenmaid white goods business – where the Kleenmaid group urgently needed to raise external finance to remain solvent – where the group restructured itself by dividing into two groups of companies, the Corporate Group and the Orchard Group – where Corporate Group companies conducted the core white goods business with a license to use the Kleenmaid trademark from an Orchard Group company – where the Orchard Group was encumbered by a significant portion of the pre-restructure debt – where the charge alleged that the appellant dishonestly gained a benefit for EDIS, a Corporate Group company – where that benefit was alleged to be loan facilities from Westpac totalling $13 million – where the dishonesty was alleged to be, in essence, misleading Westpac about the effect of the restructure – where it was alleged that Westpac was made to understand that Corporate Group companies would conduct their businesses independently and at arm’s length from the Orchard Group when in fact there was an arrangement by which an Orchard Group company would receive deposits until items were delivered – where that arrangement was said to deny EDIS cash flow and make them prone to any misfortune that befell the Orchard Group – where the appellant at trial was said to have acted dishonestly in the commission of the offence because he attended meetings with Westpac about the proposed loan facilities, was involved in the preparation of documents relied on by Westpac in their decision to approve the facilities, signed the letter of offer, and approved the terms of a letter said to show the concealing of the arrangement between the groups – where the appellant’s case at trial was that the groups did trade at arm’s length, that he was unaware of any serious debt position of the Orchard Group, and there was no concealment of any material risk to Westpac from the connections between the groups – where there was some exculpatory testimony from employees of the groups and Westpac – whether the jury was obliged to accept that exculpatory testimony – whether the verdict on the fraud count was unreasonable and unsupported by the evidence

CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISDIRECTION AND NON-DIRECTION – PRESENTATION OF CROWN CASE – where the prosecution, prior to the commencement of the trial, provided particulars of the count of fraud in a document – where one of those particulars stated that the co-accused were “complicit in concealing from the bank” certain matters – where the prosecution had previously advised the co-accused that it was relying on the co-conspirators’ principle from Tripodi v The Queen – where, on day 53 of the trial, the prosecution advised the Court that it would no longer rely on Tripodi and subsequently amended its particulars to allege that the appellant was guilty of the offence as a principal under s 7(1)(a) of the Criminal Code – where the trial judge, at the conclusion of the prosecution’s evidence, ruled on an application by the appellant to exclude evidence of conversations between the co-conspirators and others – where the judge rejected that application on the basis that the evidence was admissible not under the Tripodi exception to hearsay evidence, but as probative of a fact in issue – where it is said that, despite the change in the prosecution’s case, the prosecution and judge continued to use the language of joint criminal enterprise – where, despite the change in the prosecution case, the acts and omissions that were said to constitute the offence were still clearly particularised – whether the change in the prosecution case as to the basis of criminal responsibility caused a miscarriage of justice

CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISDIRECTION AND NON-DIRECTION – PARTICULAR CASES – WHERE APPEAL DISMISSED – where the jury was not directed about the need for the act or omission, which constituted the offence by the appellant, to have occurred in Queensland – where no direction was sought to this effect at trial – where at least one of the acts occurred in New South Wales – where it was more probable than not that the other acts were done within Queensland – whether the lack of directions as to the locality of the offences caused a miscarriage of justice

CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISDIRECTION AND NON-DIRECTION – PARTICULAR CASES – WHERE APPEAL DISMISSED – where the prosecution on day 69 abandoned a particular of the alleged fraud – where defence counsel then submitted that a prosecution argument went beyond the particulars – where the trial judge observed that the matter emerged in evidence “a very long time ago” and before the appellant gave his evidence – where the trial judge then directed the jury as to particulars which concerned that matter – where those directed particulars were strongly argued by the prosecution in their closing address – whether the judge by his own motions expanded the particulars of the count

CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISDIRECTION AND NON-DIRECTION – PARTICULAR CASES – WHERE APPEAL DISMISSED – where the appellant was charged with offences of insolvent trading against s 588G(3) of the Corporations Act – where it was disputed at trial whether EDIS was insolvent, whether the appellant as a director of EDIS suspected that it was insolvent and whether the appellant’s failure to prevent EDIS from incurring the respective debts was dishonest – where the learned trial judge directed the jury that there must be “reasonable grounds known to the defendant for suspecting that the company is insolvent” – where the learned trial judge also directed the jury to apply the test of insolvency provided by s 95A of the Corporations Act and to take into account factors relevant to commercial realities in determining the element of insolvency – whether the directions to the jury were deficient – whether the content of s 588G(1)(c) of the Corporations Act is an element of the offence in s 588(G)(3) – whether the jury was adequately directed on the element of insolvency

CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISCARRIAGE OF JUSTICE – PARTICULAR CIRCUMSTANCES NOT AMOUNTING TO MISCARRIAGE – where the appellant was charged with offences of insolvent trading against s 588G(3) of the Corporations Act – where the Crown adduced expert evidence that expressed the opinion, amongst other things, that EDIS and other groups companies had been insolvent since March 2008 – where the Crown adduced opinion evidence from another witness which the defence objected to on the basis of notice and a limitation of the witness’s expertise to give the opinion – where the Crown sought leave during the trial to recall a witness in order to correct his evidence – whether a witness impermissibly gave expert evidence about the point in time when EDIS became insolvent – whether a miscarriage of justice occurred due to the prosecutor leading, without notice, expert evidence from another witness – whether the Crown improperly used the fact that a witness had corrected his evidence to unfairly discredit the appellant

CRIMINAL LAW – APPEAL AND NEW TRIAL – VERDICT UNREASONABLE OR INSUPPORTABLE HAVING REGARD TO EVIDENCE – APPEAL DISMISSED – where the appellant was charged with offences of insolvent trading against s 588G(3) of the Corporations Act – where it was disputed at trial whether EDIS was insolvent, whether the appellant, as a director of EDIS, suspected that it was insolvent, and whether the appellant’s failure to prevent EDIS from incurring the respective debts was dishonest – where there was voluminous evidence about the financial position of EDIS and the other group companies – where the appellant contended on appeal that there was insufficient evidence that EDIS was insolvent based on a cash flow test – whether it was open to the jury on the evidence to conclude that EDIS was insolvent, that the appellant suspected it was insolvent, and that the appellant’s failure to prevent EDIS from incurring the respective debts was dishonest

CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – FRESH EVIDENCE – where the appellant applied to present further submissions, long after the hearing and the delivery of extensive further written submissions – where the evidence came from the recent trial of these charges against the appellant’s brother – where it was contended that the evidence of Mr Hughes, the administrator and subsequent liquidator of a number of Kleenmaid companies, changed fundamentally from the appellant’s trial to his brother’s later trial – whether the evidence revealed a miscarriage of justice in the appellant’s trial

CRIMINAL LAW – APPEAL AGAINST SENTENCE – GROUNDS FOR INTERFERENCE – SENTENCE MANIFESTLY EXCESSIVE OR INADEQUATE – where the appellant was sentenced to nine years’ imprisonment for the offence of fraud – where at the time of the commission of the offence of fraud, the maximum penalty was 10 years’ imprisonment – where the non-parole period effectively amounted to nearly 70 per cent of the period of imprisonment – whether this term, and the total non-parole period which resulted from this term and the cumulative sentences for the other offences, resulted in an overall sentence which was manifestly excessive

Corporations Act 2001 (Cth), s 95A, s 588G(1)(c), s 588G(3)
Criminal Code (Cth), s 9.1
Criminal Code (Qld), s 2, s 12, s 22, s 24, s 408C

R v Armstrong[2016] QCA 243, cited
R v Collins, ex parte Attorney-General [1996] 1 Qd R 631; [1994] QCA 467, cited
Sandell v Porter (1966) 115 CLR 666; [1966] HCA 28, applied
SKA v The Queen (2011) 243 CLR 400; [2011] HCA 13, cited
Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation (2001) 53 NSWLR 213; [2001] NSWSC 621, considered
Tripodi v The Queen (1961) 104 CLR 1; [1961] HCA 22, cited

COUNSEL:

S C Holt QC for the appellant/applicant
W J Abraham QC, with T R Epstein, for the respondent
L K Crowley QC, with P Kinchina, for the respondent, for further submissions received 19 November 2019

SOLICITORS:

Anderson Fredericks Turner for the appellant/applicant
Director of Public Prosecutions (Commonwealth) for the respondent

THE COURT: The appellant was tried by a jury in the District Court on one count of fraud, an offence against s 408C of the Criminal Code (Qld) (“the Code”), and 18 counts of insolvent trading, offences under s 588G(3) of the Corporations Act 2001 (Cth). The charges arose from the appellant’s involvement in companies associated with the Kleenmaid white goods business, which went into liquidation as insolvent companies in 2009. The prosecution tendered almost 4,000 exhibits and called 53 witnesses, before the defendant gave evidence himself over 12 days, nine of them under cross-examination, and called other witnesses. Ultimately, the trial had been running for more than 70 days when the jury retired to consider their verdicts. Later that day, the jury convicted the appellant of all counts on the indictment, save for one count of insolvent trading, on which they acquitted the appellant.
The appellant was sentenced to a term of nine years’ imprisonment on the fraud count, with eligibility for parole on 5 February 2021, which was at the halfway mark of that sentence. On two of the insolvent trading counts, he was sentenced to terms of two and a half years, to be served concurrently with each other but to commence on 5 February 2021. On the other counts, he was sentenced to various terms of up to 12 months’ imprisonment, to be served concurrently with each other but cumulative upon the other counts. The total period of imprisonment for the Commonwealth offences was three and a half years, with a non-parole period of 21 months to finish on 5 November 2022.
He appeals against his conviction in each case, and applies for leave to appeal against his sentence. There are 10 grounds of appeal against the conviction on the fraud charge and seven grounds which challenge the convictions on the insolvent trading counts. The grounds include, in the case of each conviction, an argument that the verdict was unreasonable and cannot be supported by the evidence. As we will discuss, after the hearing, the appellant applied to add a further ground of appeal against each conviction, on the basis of what is said to be fresh evidence. The sentence imposed for count 1, the fraud charge, is said to be manifestly excessive, and it is also argued that the trial judge made a number of errors in findings of fact which affected his assessment of the appellant’s culpability and criminality, requiring the appellant to be re-sentenced on that count.
The Kleenmaid business
The Kleenmaid business was founded in 1985 by the appellant’s brother, Andrew Young, and Mr Richard England. From 1995, the business was managed from Maroochydore. Mr England retired from the operations of the business in about 2000.
The business was the importation and retailing of whitegoods, through a chain of stores across Australia, some of which were operated by the Kleenmaid group of companies and some of which were operated by franchisees. Most of the goods were sold under the Kleenmaid brand, but the business also sold “GE” branded refrigerators.
The appellant became involved in the business in 1995. He became a secretary and a director of certain companies in the Kleenmaid group, including the company then called Kleenmaid Pty Ltd, which later became Orchard KM Pty Ltd (“Orchard KM”), of which he was the managing director from December 2005 until the end of 2007.
The company which was the subject of each of the counts on the indictment was called EDIS Service Logistics Pty Ltd (“EDIS”). The fraud charge, which was count 1 on the indictment, alleged that the appellant, together with Andrew Young and Mr Gary Armstrong, dishonestly gained a benefit for EDIS, namely loan facilities from Westpac Banking Corporation in a total amount of $13 million, in November 2007. Each of the counts of insolvent trading involved a debt or debts incurred by EDIS, in a period from July 2008 until April 2009.
Until 2007, the shares in EDIS were held by Mr Armstrong and Mrs Carol Armstrong. From 1997, they were also the company’s directors until, in 2002, Mrs Armstrong was replaced by Andrew Young.
In 2001, that branch of the Kleenmaid business that supplied spare parts for Kleenmaid products was transferred to EDIS. EDIS conducted that undertaking under an exclusive licence granted by the company that became known as Orchard KM. In about 2004, EDIS entered into an arrangement to supply spare parts for GE products. In about April 2006, EDIS acquired the shares in Kleenmaid Customer Solutions Pty Ltd (“KCS”), which provided after sales and repair services for Kleenmaid products. It also became the owner of Bizco Retail Pty Ltd (“Bizco”), which provided coaching and training services for ten Kleenmaid stores in New South Wales, and provided display stock and fit-outs for those stores. Until 2007, EDIS operated profitably. As at 30 June 2007, according to management accounts, it had net assets of $8.784 million, and in the year to that date, its profit before tax was $3.011 million.[1]
[1]Exhibit 43 pp 38-39, 44.
However, the case was not the same for the Kleenmaid group as a whole. There was evidence that the core business of the Kleenmaid companies had not been profitable since at least July 2006,[2] that the company owned stores were losing approximately $10 million per annum, and on the evidence of Mr Richard Hughes, who became an administrator, and subsequently a liquidator, of a number of the Kleenmaid companies (including EDIS), that the overhead structure was too large for the level of sales and profit that the Kleenmaid group generated.[3] In his opinion, the companies had become reliant upon the cash flow from external finance and the receipt of deposits from customers (which were held often for some time before delivery of the product) in order to remain solvent.[4]
[2]Exhibit 43 p 2.
[3]Ibid; Transcript, day 4 p 10.
[4]Exhibit 43 p 2.
The main operating entity of the appliances business, until late 2007, was Orchard KM. The evidence of Mr Hughes was that this company was insolvent by March 2008, and that because of the relationships between it and certain other companies, including EDIS, those companies were also insolvent. By December 2007, Orchard KM had a deficit in its balance sheet of $6.3 million (although, in the opinion of Mr Hughes, a correction of an overstatement of sales was appropriate, which would have increased the deficit by $17.6 million).[5]
[5]Ibid.
Orchard KM was not the only company in the Kleenmaid group which was in financial difficulty by 2007. Another company, Kleenmaid Retail Pty Ltd, which operated the company-owned retail stores, had a balance sheet deficit of $24 million by the end of that year.[6]
[6]Exhibit 43 p 2.
Consequently, by at least mid-2007, the Kleenmaid group urgently needed to raise more external finance. But the financial state of the group (apart from EDIS and its subsidiaries) made it unlikely that further finance could be raised. It was in these circumstances that there occurred what was described as a restructure of the Kleenmaid group. The apparent effect of the restructure was to divide what had been the one group into two groups of companies, which were described as the Corporate Group and the Orchard Group. On the basis of this restructure, the core business of the Kleenmaid companies was to be conducted by the Corporate Group, which was, in substance, EDIS and its subsidiaries.
In November 2007, Westpac was persuaded to provide finance to EDIS, in various ways, in a total amount of $13 million, and on 13 November 2007, EDIS drew down $10 million of the facility. The appellant, his brother and Mr Armstrong were charged with the offence of dishonestly gaining that benefit, the Westpac facility, for EDIS. In essence, the alleged dishonesty was in misleading Westpac about the effect of the restructure. It was alleged that Westpac was made to understand that EDIS and the other companies in the Corporate Group would conduct their businesses independently and at arm’s length from companies in the Orchard Group, so that any misfortunes of the Orchard Group would not affect EDIS and those other companies.
Following this restructure, EDIS became the company which imported and distributed Kleenmaid appliances and GE refrigerators to retail, commercial and a small number of wholesale customers.

As we have said, some of the Kleenmaid stores were operated by a company in what had been the Kleenmaid group, and some were operated by franchisees. The franchisor became a company in the Corporate Group, Lifestyle Appliance Corporation Pty Ltd (“LAC”). Under the franchise agreements, in selling any item, a franchisee was said to act as the agent of the franchisor and the franchisee was remunerated by the payment of a commission, calculated by the difference between the so-called “list” and “dealer” prices. The franchise agreements provided that any cash payments received by a franchisee were received on behalf of the franchisor. The evidence was that the “non-franchise” stores operated in the same way. They continued to be operated by Kleenmaid Retail Pty Ltd (which was in the Orchard Group) as if they were franchisees.[7]
[7]Exhibit 2987 p 14.
As we have said, the evidence of Mr Hughes was that the cash flow of the core Kleenmaid business had been sustained by external finance and the use of deposits received from customers pending the supply of their goods. As it happened, however, after the restructure, the deposits were not able to be used by the Corporate Group, but instead were used by the Orchard Group, through a company by then called Kleenmaid Pty Ltd, and which was described as the “Order House”. This was pursuant to an arrangement between that company and EDIS which, Mr Armstrong testified, was conceived of by the appellant. Under this Order House arrangement, when a customer ordered a Kleenmaid appliance, Kleenmaid Pty Ltd would issue a “sales order” to the customer and receive a deposit. Only when the appliance was about to be delivered, which might be weeks or months later (or sometimes longer still), would EDIS issue an invoice and receive payment from Kleenmaid Pty Ltd of the total price. In the meantime, the deposit from the customer was able to be used to pay debts of companies in the Orchard Group, most notably Orchard KM. Until the price for the appliance was paid to EDIS, there was an indebtedness by Orchard KM to Kleenmaid Pty Ltd, and from it to EDIS.
One effect of the Order House arrangement was that EDIS was denied the cash flow benefit of having the deposits in its hands, pending the delivery of the appliances. Another was that EDIS was at risk of never receiving the deposit, and indeed the whole price for the goods, if Orchard KM became insolvent.
Further, within that period between a customer’s order and the delivery of the appliance, LAC (a Corporate Group company) would pay to Kleenmaid Retail Pty Ltd, or a franchisee as the case might be, the commission on that transaction, thereby placing a further strain upon the cash flow of the Corporate Group. By November 2008, the balance sheet of LAC showed an asset described as “prepay commission” of approximately $4 million, of which approximately $2.7 million related to franchised stores and $1.3 million related to Kleenmaid Retail Pty Ltd.[8]
[8]Ibid.
The Corporate Group did not purchase Kleenmaid’s core business. Instead, that business was to be conducted pursuant to the terms of a licence agreement between KM Intellectual Reserve Pty Ltd (an Orchard Group company) as licensor, and Kleenmaid Corporate Pty Ltd (a Corporate Group company) as licensee. What was licensed was the right to use the trademarks and intellectual property relating to the business. The licence was granted for a period of 10 years from 29 October 2007, with a right of renewal for a further 10 years.[9] The royalty or licence fee was, per annum, the sum of $5 million plus 20 per cent of the earnings of the business before tax above $10 million. The component of $5 million was to be paid in equal monthly instalments.[10] Westpac was informed of this agreement. Indeed, it became a party to a Deed (the “Tripartite Deed”) by which the licensor covenanted not to exercise any default power without notice to Westpac, in order to protect Westpac’s interest as the holder of a fixed and floating charge over the licensee’s assets.[11]
[9]Exhibit 489 p 15.
[10]Ibid p 6.
[11]Exhibit 3147.
However, the royalty under the licence agreement was not the only consideration which was to be provided to the Orchard Group in the restructure. Kleenmaid Holdings Pty Ltd (an Orchard Group company) was to receive an amount of $9.5 million as the sale price of the shares in EDIS, from Kleenmaid Corporate Pty Ltd (a Corporate Group company). Under a written agreement between those companies,[12] it was recited that Kleenmaid Holdings Pty Ltd was the registered holder, and sole and absolute beneficial owner, of the whole of the issued share capital of EDIS, which it had agreed to sell to Kleenmaid Corporate Pty Ltd. The shares were to be transferred on 31 October 2007, or such other date as the parties agreed. The provisions for the payment of the price were as follows:
“4 PURCHASE PRICE – VENDOR FINANCE
(a)The purchase price for the Shares is $9,500,000 (Purchase Price), subject to adjustment to valuation, which must be paid to the Vendor by the Purchaser within five years of the Completion Date. The purchase price will be treated as a loan by the Vendor to the Purchaser for the purposes of this agreement.
(b)Subject to paragraph 4(c) below, the Purchaser will pay the Vendor interest on that part of the purchase price of the shares that has not been already paid at a rate of 5% per annum. Interest will be calculated from a date 12 months after the date of Completion.
(c)The Vendor and the Purchaser maintain a trading account between the companies. The balance owing on the trading account from the Vendor to the Purchaser shall be netted off against the balance of the purchase price of the shares of the Company for the purposes of determining the amount upon which interest will be payable by the Purchaser under clause 4(b) above. Payments of interest from the Purchaser to the Vendor will be made on a quarterly basis in arrears.
(d)A party (Party 1) will have the right to offset amounts owing under this agreement by them to the other party (Party 2), with any future monies owing by Party 2 to Party 1.”
[12]Exhibit 3307.
Curiously, although the price was said to be “subject to adjustment to valuation”, the agreement made no provision for such a valuation or adjustment. More importantly, clause 4(c) referred to a trading account between the companies, the balance of which would be set off against the balance of the purchase price, and clause 4(d) provided more generally for a set-off.
Another curious feature of this agreement was that, in truth, Kleenmaid Holdings Pty Ltd had never been the registered holder of shares in EDIS. The shares were held by Mr and Mrs Armstrong (according to the records of the Australian Securities and Investments Commission) until they were transferred by them directly to Kleenmaid Corporate Pty Ltd.[13] Mr Armstrong said that he did not receive any consideration for the sale of his EDIS shares.
[13]Transcript,day 7 p 48.
Also curious was the fact that this share sale agreement was not disclosed to Westpac.
In a review of the Corporate Group, conducted for Westpac by McGrathNicol at the beginning of 2009,[14] it was revealed to Westpac that:[15]
“Notwithstanding their separate corporate and ownership structures, the EDIS Group [the Corporate Group] and Orchard Group are inextricably linked. To date, the business has only been partially transitioned to the EDIS Group and although the EDIS Group is notionally responsible for the trading of the business, it does not have control of all of the assets and liabilities.”
[14]Exhibit 2931.
[15]At p 5.
Further, McGrathNicol revealed that, following the restructure, loan accounts were established between companies within the two groups. The largest inter-group loan balances, as at November 2008, were a liability of Kleenmaid Corporate Pty Ltd to Kleenmaid Holdings Pty Ltd of approximately $35.5 million, and a liability from Kleenmaid Pty Ltd (the Order House company) to LAC of approximately $54.9 million.[16]
[16]Ibid.
This report described the Order House arrangement. However the ongoing association with the two groups went further, as McGrathNicol described:[17]
“Importantly, the EDIS Group cash transactions are made through a bank account in the name of ‘Kleenmaid Pty Limited’ (“KM Order House”), which is an Orchard Group company. The result of this is that:
-cash is collected by Orchard Group on behalf of the EDIS Group and a corresponding receivable is entered in the books of EDIS Group; and
-EDIS Group’s expenses are paid by Orchard Group and a corresponding liability is entered in the books of EDIS Group.”
The report recorded not only that there were trading receipts and payments made through bank accounts controlled by the Orchard Group, but also that Mr Armstrong was not a signatory to those accounts and that it was the Orchard Group which determined how much was paid from them.[18] McGrathNicol reported that the amount of $35.5 million said to be owed to Kleenmaid Holdings Pty Ltd was comprised of the licence or royalty fee, another sum, approximating $9.8 million, payable under the share sale agreement and a balance which was “likely to [be] made up of payments of trading expenses [by the Orchard Group for the benefit of the Corporate Group]”. The amount of $54.9 million which was receivable from the Orchard Group consisted of amounts held by the Orchard Group under the Order House arrangement.[19]
[17]At p 12.
[18]At p 13.
[19]At p 15.
There was other evidence of the association between the two groups. The appellant continued to be the secretary of Orchard KM until 1 January 2009. Further, there was evidence from Mr Proos, the manager of the spare parts division conducted by EDIS, that, even after the restructure, it was Andrew Young to whom he would go for any major decision about that business.[20]
[20]Transcript, day 15 p 45 and 46, day 16 p 40.
According to the McGrathNicol report, the position of the Corporate Group, as at 23 November 2008, was that the group had net assets of $12.321 million, derived from total assets of $188.095 million and total liabilities of $175.774 million. But of the assets, $80.83 million was owed by debtors in the Orchard Group, and of the liabilities, a total of $70.742 million was owed to companies in the Orchard Group.[21]
[21]Exhibit 2931 p 20.
When discussing the appeals against the convictions for the offences of insolvent trading, we will refer to the evidence of the companies’ solvency or otherwise at relevant times in 2008 and 2009. As we have said, the opinion of Mr Hughes was that all companies in these two groups were insolvent by March 2008. Mr Hughes prepared balance sheets for the Corporate Group, as at 30 September 2007 and thereafter at quarterly intervals up to and including a balance date of 31 March 2009, as well as at 9 April 2009, which is when some companies from the two groups were placed into voluntary administration.[22] His balance sheet, as at 31 March 2008, showed the Corporate Group as having an excess of liabilities over assets of $14.907 million, and his balance sheet, as at 9 April 2009, showed a deficiency of $32.637 million.[23]
[22]All other companies, except KM Appliances Pty Ltd, went into voluntary administration on 15 April 2009: Exhibit 355.
[23]Exhibit 43 p 21.
The evidence of Mr Hughes, as he had said in his report to ASIC under s 533(2) of the Corporations Act,[24] was that by March 2008, the two groups of companies were unable to raise any further significant finance, and “continued to use cash (from customer deposits) at a rapid rate both before and after external sources of finance were exhausted and right up until we were appointed [as administrators]”.[25]
[24]Exhibit 43.
[25]Ibid p 3.
The offences charged against the appellant
The indictment was presented against the appellant, Andrew Young and Mr Armstrong, charging each of them on counts 1 to 19. Prior to the trial, Mr Armstrong pleaded guilty to some of these offences (including count 1) and was sentenced. He gave evidence in the prosecution case against the appellant. After the trial had commenced, Andrew Young dismissed his counsel and solicitor, resulting in the trial proceeding against the appellant alone.
The fraud charge, count 1, alleged that on or about 13 November 2007, at Maroochydore in the State of Queensland, the defendants dishonestly gained a benefit for EDIS, namely loan facilities from Westpac Banking Corporation, with the circumstance of aggravation that the benefit was of a value of $5,000 or more (namely $13 million). As to the place at which the offence occurred, one of the grounds of appeal is that the trial judge ought to have directed the jury to consider whether there was an offence within the territorial reach of the Code, according to s 12, when many of the relevant events had occurred in New South Wales. As to the date of this offence, as we have noted, it was on 13 November 2007 that the first of the funds was drawn down by EDIS.
Undoubtedly, EDIS did gain the benefit of its finance facility with Westpac. Undoubtedly also, the appellant did things by which that benefit was obtained. For example, together with Mr Armstrong, he signed for EDIS the Business Finance Agreement with Westpac,[26] along with a notice to draw down $7 million from that facility. The principal issue at the trial was whether, in doing what he did in gaining that benefit for EDIS, the appellant acted dishonestly.
[26]Exhibit 2957 p 21.
In essence, the prosecution case was that the appellant acted dishonestly by concealing the nature of the intended ongoing relationship between EDIS (and its subsidiaries) and the Orchard Group, in that in truth, the two groups would not deal with each other on an arm’s length basis, and EDIS would be exposed to what was, unknown to Westpac, the already precarious financial position of the Orchard Group. The prosecution case was that the bank was made to understand that, following the restructure, the Corporate Group, including EDIS, was and would be an independent group, unburdened by, or not prone to, any misfortune of any of the other Kleenmaid companies.
The appellant’s case at the trial, in part reliant on evidence from prosecution witnesses as well as the appellant’s own evidence, was that the Orchard Group and the Corporate Group did trade at arm’s length, that he was unaware of any serious debt position of the Orchard Group, particularly Orchard KM, and there was no concealment of any material risk to Westpac from the connections between the businesses of the two groups.
Counts 2 and 3 charged the appellant, as a director of EDIS and suspecting that it was insolvent, with dishonestly failing to prevent EDIS from incurring debts to Westpac in amounts of $1.5 million and $2 million in July 2008. Counts 4 to 15 inclusive were charges of dishonestly failing to prevent EDIS from incurring debts to a company called CEO Global Logistics Pty Ltd, on various dates from early November 2008 to 8 April 2009, in amounts ranging from $353 to $139,877. Counts 16 to 19 inclusive were like charges in respect of debts incurred to a company called Mitchell & Partners (Qld) Pty Ltd, on dates in a period from October 2008 to January 2009, in amounts varying from $31,810 to $100,448.
The appellant’s case at the trial challenged the allegation that EDIS was insolvent at all times from March 2008. He also challenged the allegation that the appellant suspected that EDIS was insolvent and that his failure to prevent EDIS from incurring those debts was dishonest. On count 15, there was a further challenge, as to whether the appellant had failed to prevent EDIS from incurring the debt, and on count 18, upon which the appellant was acquitted, there was a challenge as to whether EDIS did, in fact, incur the alleged debt.
The fraud offence
We will discuss first the tenth ground of appeal, namely that the jury’s verdict on this count was unreasonable and was unsupported by the evidence. Some of the other grounds of appeal complain that the prosecution changed its case, as to the basis of the appellant’s criminal responsibility, in the course of the trial and that the trial judge impermissibly expanded the particulars of the prosecution case on this count in his directions to the jury. However, we will consider whether the verdict was unreasonable upon the basis on which the prosecution ultimately argued the case to the jury.
The acts of the appellant
At one point in his address to the jury, the prosecutor listed the acts of the appellant by which he committed this offence, as follows:
·the appellant attended at a meeting with Mr Growcock and Mr Dickson of Westpac on 3 October 2007, when the proposed loan facilities for EDIS were discussed;
·the appellant edited a business plan, a document which was presented to a consultant, Mr Patane of the firm William Buck, and used by Mr Patane in writing a due diligence review of the proposed facility as an advisor to Westpac;
·the appellant provided data about the sales and expenses of the core Kleenmaid business, to be used by Kleenmaid’s accountant Mr Drake in preparing projections for the business;
·the appellant signed the letter of offer from Westpac, which constituted the agreement for the facilities as well as a guarantee of the facilities;
·the appellant approved the terms of a letter written to Westpac by Mr Armstrong (which we will call the “September letter”).[27]
[27]Transcript, day 67 pp 49-53.
The September letter began as follows:
“… I have some important and positive developments to share with you. We now have long-term agreements with the Kleenmaid Group which will allow EDIS to import, distribute and wholesale Kleenmaid products through retail, commercial and wholesale channels. This will give EDIS access to the full wholesale margin on the range of Kleenmaid products.
This arrangement will have a significant positive impact on the turnover and profitability of EDIS, and opens large opportunities for growth.
The arrangement has been documented with a licence agreement between the two Groups, which provides for a licence fee to be paid by the EDIS Group.”
The letter described the business of Kleenmaid as having commenced in 1985, and having supplied more than a million appliances to 600,000 households across Australia. The appliances were said to have been generally of a high standard, and Kleenmaid was said to have “implemented a strong customer service focus” resulting in “a large proportion of the customer base [having] a positive view of the brand”.[28]
[28]Exhibit 2906.
The letter referred to the effect of the proposed change in control in the business from Andrew Young to the appellant, as follows:
“Andrew Young
The founders of Kleenmaid are Andrew Young and Richard England, who has retired. Andrew Young, who is the Chairman of Kleenmaid, is now intending to spend more time away from the business, and this agreement is the result. Kleenmaid will continue to own the brand and associated goodwill, and will receive licence fees from the EDIS Group.
Bradley Young
Bradley Young will assume the role of Managing Director of EDIS. Bradley has been employed in senior management roles within Kleenmaid since 1995, including the last two years as Managing Director of Kleenmaid.”
Attached to the September letter was a chart showing what was described as the new structure of the EDIS Group (the Corporate Group) as was then proposed.[29] The chart showed Kleenmaid Corporate Pty Ltd as the ultimate holding company of EDIS, LAC, Lifestyle Appliance Sales Pty Ltd (which was described as the “Franchise Marketing company”) and KM Property Pty Ltd (which was described as “Property Manager”). It showed EDIS as the holding company of KCS and Bizco.
[29]Exhibit 2907.

The letter stated that it was proposed that Gary and Carol Armstrong would sell their shareholding in EDIS to Kleenmaid Corporate Pty Ltd, a new entity to be set up for this purpose, which would require the approval of Westpac as the mortgagee of the shares. However, the letter did not disclose a proposal that Mr and Mrs Armstrong would transfer their shares instead to Kleenmaid Holdings Pty Ltd, which would not be part of the EDIS Group, which would then sell the shares to Kleenmaid Corporate Pty Ltd for an amount approximating $9.5 million.
The letter described the new entities as follows:
·Kleenmaid Corporate Pty Ltd was to be owned equally by two companies, representing respectively the interests of Mr and Mrs Armstrong, and the appellant and his wife.
·LAC was to be the franchisor for all franchised retail stores.
·Lifestyle Appliance Sales was to arrange the sale of new retail franchises.
·Kleenmaid Property Pty Ltd was to hold all property leases.
Under the heading “Inventory Funding” the letter continued:
“With this arrangement comes an obligation to provide inventory for the operation of the business. This inventory falls into two categories:
1.Display stock for all non-franchised Kleenmaid retail stores. At present, this stock is provided by Bizco PL in all NSW stores, and by Kleenmaid in its retail stores located in all other states. The value of stock currently provided by Kleenmaid is approximately $3M.
2.Warehouse inventory, current value approximately $7M.
The licence agreement with Kleenmaid provides for a fee to be paid to Kleenmaid if it continues to provide this inventory. In the alternative, EDIS has the option of purchasing the stock. In order to eliminate the fee to Kleenmaid, EDIS intends to proceed with purchase of the stock, and requires funding to assist in that process.
I would be guided by you in selecting the appropriate facility or facilities for this purpose. The options for these facilities might include trade finance funding.”
The letter represented that the restructure was “a major development for the EDIS Group, and one which brings opportunities to significantly increase the value of the business.”
In his address to the jury about the September letter, the prosecutor reminded them of the points which he had made in cross-examining the appellant about the document, namely that:
(a)the letter effectively represented that this new EDIS Group would be independent of, and at arm’s length from, other companies which had been in the Kleenmaid group;
(b)the letter represented that the core business was financially successful;
(c)the letter represented that the acquisition of this business was a great opportunity for EDIS; and
(d)missing from the letter was anything relating to the Order House arrangement.[30]
[30]Transcript, day 67 p 52.
As to (a), Mr Dickson and Mr Growcock from Westpac each testified that he understood the letter to convey that EDIS and the companies in its group would be independent and at arm’s length from other Kleenmaid companies. The letter was addressed to Mr Dickson, and not to Mr Growcock, but Mr Growcock said that the effect of the letter was communicated to him. And in cross-examination, the appellant agreed that the September letter conveyed this representation. There was this evidence in his cross-examination:[31]
“So I think these are things that we probably can agree upon. The first of these is that this letter gives a very clear impression to the reader that the Kleenmaid Group and EDIS were two separate independent arm’s length companies; do you agree with that? – Yes.
Okay. And I suppose this is just a corollary of that, but this arrangement was an arm’s length arrangement that Mr Armstrong was talking about? – Yes.”
[31]Transcript, day 62 p 10.
As to (b), the appellant did not agree with a suggestion that the September letter indicated that Kleenmaid had “a very strong history and [was] a successful corporation”, but he did concede that the letter indicated that “Kleenmaid has a strong brand and has been doing business for some time, and has a positive customer database and brand awareness.”[32] He agreed that anyone reading the letter would think that Kleenmaid was “a very good business to be associated with”.[33]
[32]Transcript, day 62 pp 10, 11.
[33]Transcript, day 62 p 11.
As to (c), the appellant agreed that the letter conveyed to any “ordinary reasonable reader” that this was a “wonderful opportunity for EDIS”.[34]
[34]Ibid.
As to (d), the appellant conceded that there was nothing in the document to give the reader any indication of the Order House arrangement.[35]
[35]Ibid.
Mr Armstrong testified that the appellant saw the September letter in draft and requested no changes to it.[36] In cross-examination, the appellant said that he had no recollection of Mr Armstrong showing him a draft of the letter, but that he could not deny that this occurred. He said that he was unable to “remember one way or the other.”[37] Further, on 24 September 2007, the appellant received from Mr Armstrong a copy of the September letter as sent by Mr Armstrong.[38]
[36]Transcript, day 6 p 46.
[37]Transcript, day 62 p 10.
[38]Exhibit 3744.
On 3 October 2007, the appellant, with Mr Armstrong, met Mr Dickson and Mr Growcock in Sydney, and discussed the proposed loan facilities for EDIS. In evidence-in-chief, the appellant said that he recalled Mr Dickson asking, in what he described as “an embarrassed joking laughing way”, whether the bank was “not going to get to see Kleenmaid’s financials”, to which the appellant and Mr Armstrong responded that the bank would not see them.[39] The appellant was asked “Where did that come from?”, to which he replied:[40]
“It was my understanding from Andrew Young that for any transaction between Kleenmaid and EDIS, relating to himself, that he had never provided Kleenmaid’s financials to Westpac and that would be no different in this circumstanc[e].”
[39]Transcript, day 55 p 56.
[40]Ibid.
Again in his examination-in-chief, the appellant agreed that he had an involvement in the provision of information to Mr Patane of William Buck, in that he was involved with the preparation of sales forecasts and gross margins and historical figures to be given to him. He said that he also reviewed the overhead structure that was used in the financial modelling to be presented to Mr Patane.[41]
[41]Transcript, day 55 p 58.
A document was then sent to Mr Patane, which was entitled “Business Plan” and dated “October, 2007”, which, on each page, was expressed to have been prepared by the appellant as the managing director of EDIS. It is very likely that the appellant had not only contributed to its contents, but vetted the document before it went out under his name.[42] The document described the proposed structure for what was to become the Kleenmaid appliance division within the Corporate Group. It represented that EDIS would be involved in each step in the supply of a Kleenmaid appliance or spare part, with only two exceptions: one was that a third party called Bax Global would provide a service in the warehousing and management of inventory under a contract with EDIS, and the other was that Andrew Young would choose the content of the Kleenmaid product range, under a contract between him and EDIS, for a period of three years. The document provided that there would only be these “two phases of the Kleenmaid Appliance life cycle not entirely delivered by EDIS, and these two will always operate under the clear direction of [EDIS] …”.[43] The document made no reference to the Order House arrangement or to the other ways in which, in truth, this new group would be linked to other Kleenmaid companies. Rather, by identifying those two areas in which Andrew Young or Bax Global would be involved, the document represented that the appliance division would be conducted entirely by and within EDIS.
[42]The document is Exhibit 3250.
[43]Exhibit 3250 p 7.
On 7 November 2007, Mr Patane delivered his report to Mr Dickson of Westpac. Mr Patane stated that his report was prepared in reliance upon information provided by EDIS, which he believed was reliable and accurate and for which he had no reason to believe that any material facts had been withheld.[44] An appendix to Mr Patane’s report listed, as the sources of his information, material which included the EDIS business plan dated October 2007 “prepared by Bradley Young”, and a draft of the trademark and intellectual property licence agreement. Mr Patane noted that, in respect of the forecast balance sheets, which had been provided within the business plan under the appellant’s name,[45] Mr Patane had been unable to ascertain the reasonableness of individual line items based on a historical analysis of the prior year, because financial statements had not been provided to his firm.[46] The same comment was made about the forecast cash flow statements within the business plan.[47]
[44]Exhibit 2956 p 6.
[45]Exhibit 3250 pp 17-18.
[46]Exhibit 2956 at p 12.
[47]Exhibit 2956 p 13.
The appellant also provided data about sales and expenses, which was used by Kleenmaid’s accountant, Mr Drake, to prepare financial projections which went to Westpac. In cross-examination, the appellant agreed that he was “a contributor to the process” of looking at drafts of Mr Drake’s projections and making suggestions about them to Mr Drake.[48]
[48]Transcript, day 62 p 23.
The appellant signed, both for EDIS and for himself, documents with Westpac for this facility. The fact that he did so was and is not controversial, but of relevance is the question of whether, for any of them, he did so in Queensland. By a letter dated 10 October 2007, Mr Dickson of Westpac wrote to the secretary of EDIS, enclosing a proposed Business Finance Agreement. Mr Dickson asked that the “duplicate Business Finance Agreement” be signed and returned as an acceptance of the bank’s finance offer. This letter, together with the Business Finance Agreement, was attached to an email from Mr Dickson to Mr Armstrong on 11 October 2007. That email began by saying:[49]
“Further to our meeting of 3rd October 2007 I have attached our conditional/indicative Letter of Offer in relation to the purchase by [EDIS] Service Logistics Pty Ltd of the appliance division of Kleenmaid Pty [L]td.
The document sets out the facilities as discussed and conditions precedent.”
The email continued with an explanation that an accounting firm would have to undertake a due diligence of the cash flow projections. Mr Dickson there asked whether the “Purchase Agreement” was available at that time, so that it could be shown to Minter Ellison, who were retained by Westpac, for them to review the document for the purpose of drafting a tripartite agreement.
[49]Exhibit 3137.
No copy of the unsigned Business Finance Agreement was in evidence. What was tendered was a copy of the document,[50] as signed by those on the borrower’s side, including by the appellant. He signed on page 21 as a director of EDIS. He also signed that page of the attachment which was headed “Drawdown Notice”, which was in the form of a request to Westpac to draw down an amount of $7 million. The drawdown date was left blank, as was the date of the Business Facility Agreement where it was referred to within that page. The appellant and Mr Armstrong also signed, for EDIS, a page headed “Confirmation of Fixed Rate and Drawdown Notice”, where again the drawdown date and the date of the Business Facility Agreement were blank. However, all of the signatures were dated “13/11/07”. The other signatories were Mrs Armstrong (as a guarantor) and Andrew Young for KCS (which was another guarantor).
[50]Exhibit 2957.
On the front page of that document as tendered,[51] a bank officer, who was identified as Ms Dixon, recorded an establishment fee of $78,000 being charged on “14/11/07”, and that the “signed original [had been] sighted”. As is said in the appellant’s written submissions,[52] the writing style of the numerals written by Ms Dixon is similar to that of the numerals where, in each case, a signature was dated “13/11/07”. That is one of several facts from which it should be inferred that it was Ms Dixon who inserted that date against each of the signatures.
[51]Ibid.
[52]Paragraph 129.
There was no direct evidence as to when and where the Business Finance Agreement was signed by the appellant. There was evidence that the email from Mr Dickson on 11 October 2007, with its attachment, was forwarded by Mr Armstrong to the appellant and Andrew Young on 15 October 2007.[53] But there is no direct evidence as to what then happened with that document, or more precisely, the duplicate agreement which Mr Dickson asked to be signed in his letter of 10 October 2007.
[53]Exhibit 3781.
This Business Finance Agreement, together with those other documents for the initial drawdown of finance, were not the only documents which the appellant signed for the bank. Minter Ellison prepared security documents, comprising what they described as an interlocking guarantee by EDIS, other companies in the Corporate Group, the appellant and Mr Armstrong, together with instruments of fixed and floating charges by those members of the Corporate Group from which Westpac did not already hold a charge. At the same time, Minter Ellison also prepared the Tripartite Deed, between KM Intellectual Reserve Pty Ltd, Kleenmaid Corporate Pty Ltd and Westpac, in order to protect the interests of Westpac in the licence agreement under which the appliance business was to be conducted. Those documents are referred to in a letter from Minter Ellison to Mr Dickson, dated 8 November 2007,[54] in a way which would indicate that Westpac was to have them signed without someone from Minter Ellison being present. However, according to other evidence, these documents were signed at the offices of Minter Ellison in Sydney. Mr Dickson testified that he had a meeting with the appellant and Mr Armstrong “in the offices of … Minter Ellison, when we did a document signup.”[55] The only other meetings with the appellant, which Mr Dickson recalled, were the first meeting with him and Mr Armstrong (the October meeting) and a meeting in late 2008.[56] Not all of the documents prepared by Minter Ellison were in evidence. But on one of them, which was a “Guarantor Acknowledgment”, Mr Young’s signature appears and is dated 8 November 2007. The Tripartite Deed was also in evidence,[57] which was signed by the appellant and which is also dated 8 November 2007.
[54]Exhibit 3146.
[55]Transcript, day 31 p 52.
[56]Ibid.
[57]Exhibit 3147.
The fact that all of the security documents, as prepared by Minter Ellison, were signed on 8 November 2007 also appears from an email within Westpac dated 9 November 2007, in which Mr Gupta informed Mr Growcock that “[a]ll security is signed and is in place”, and that “[t]he conditions set out in the prior approval have been met”.[58] On the same day, Mr Growcock replied that, as all of the bank’s security documentation had been executed, settlement could proceed on the following Monday, which was 12 November 2007.
[58]Exhibit 3011.
On all of this evidence, it is very unlikely that the Business Finance Agreement had not been signed and returned to Westpac by 9 November 2007. That document was not made redundant by the documents which Minter Ellison had prepared, and it is unlikely that it was overlooked by Westpac until after 9 November 2007. It is also unlikely that those on the EDIS side had not signed and returned the duplicate, as they were asked to do by Mr Dickson’s letter of 10 October 2007. There was no reason for them to delay doing so, and there is no likelihood that they all forgot about it. Further, the blanks which were left in the Business Finance Agreement, as signed by the appellant, suggest that it was not signed by him on 13 November 2007, for otherwise the relevant date in those spaces could have been inserted. More probably than not, Ms Dixon completed the document by inserting “13/11/07” as the date of each signature. As we have said, and as the appellant’s submissions suggested, the handwriting of those dates is similar to the style of Ms Dixon’s writing which appears on the front page of the exhibit.
In our conclusion, it is more probable than not that the Business Finance Agreement was not signed by the appellant in Sydney. It was not a document which had been prepared by Minter Ellison as one of the security documents. Had it been signed with the security documents, it would have been dated 8 November 2007, as each of those documents was. The likelihood is that it was signed by the appellant where he lived and usually worked, which was in Queensland, at some time in the weeks between 15 October and 8 November 2007. Ground 3 of the appeal contends that the question, of where an act by which the offence was committed, should have been left to the jury by a special verdict. We will return to that ground, but at this stage we observe that it was certainly open for the jury to be satisfied that the act of the appellant in signing the Business Finance Agreement, and the documents which were with it, took place in Queensland. For that question, the standard of proof is on the balance of probabilities.[59]
[59]Thompsonv The Queen (1989) 169 CLR 1; [1989] HCA 30.
Dishonesty
We come now to the principal issue, namely whether it was open to the jury to find, beyond reasonable doubt, that the appellant acted dishonestly. This requires the Court to make its own independent assessment of the evidence, both as to its sufficiency and its quality.[60] But as was said in SKA v The Queen,[61] “[t]he starting point … is that the jury is the body entrusted with the primary responsibility of determining guilt or innocence, and the jury has had the benefit of having seen and heard the witnesses.” Ultimately, the question which the Court must ask itself is whether it thinks that, upon the whole of the evidence, it was open to the jury to be satisfied beyond reasonable doubt that the appellant was guilty.[62]
[60]Morris v The Queen (1987) 163 CLR 454 at 473; [1987] HCA 50 per Deane, Toohey and Gaudron JJ.
[61](2011) 243 CLR 400 at 405 [13]; [2011] HCA 13 at [13] per French CJ, Gummow and Kiefel JJ.
[62]M v The Queen (1994) 181 CLR 487 at 493; [1994] HCA 63 per Mason CJ, Deane, Dawson and Toohey JJ.
Although the whole of the evidence must be considered, a challenge to a conviction upon this ground requires more than the identification of evidence which was exculpatory. In general, the jury may accept or reject all or part of the evidence of any witness. Exculpatory evidence need not be accepted by a jury because it is tendered in the prosecution case. Nor is a jury obliged to accept the evidence of the accused person, or to be left in doubt from the accused’s evidence about whether to accept contrary evidence tendered by the prosecution. As Hayne J said in Libke v The Queen:[63]
“[T]he question for an appellate court is whether it was open to the jury to be satisfied of guilt beyond reasonable doubt, which is to say whether the jury must, as distinct from might, have entertained a doubt about the appellant’s guilt. It is not sufficient to show that there was material which might have been taken by the jury to be sufficient to preclude satisfaction of guilt to the requisite standard.”
(Emphasis in the original. Footnote omitted.)
[63](2007) 230 CLR 559 at 596-7 [113]; [2007] HCA 30 at [113] (Gleeson CJ and Heydon J agreeing).
Ultimately, the prosecution put its case to the jury on the basis that the appellant was criminally responsible as a principal under s 7(1)(a) of the Code, so that the alleged offence, as committed by the appellant, was constituted by his own acts and/or omissions. The alleged dishonesty of the appellant was, in essence, by his concealing two things, the first being the true nature of the relationship between EDIS and the Orchard Group Companies, and the second being the precarious financial position of the Orchard Group.

The appellant’s written submissions, however, describe that case in some ways imprecisely, in this paragraph:
“221.It followed that the Crown put its case on the basis that the appellant as a principal offender:
a.Dishonestly concealed from Westpac the true nature of the relationship between EDIS and the Orchard Group companies in that the companies did not, as the defendant through Mr Armstrong indicated, trade at an arm’s length basis, but rather were interdependent with substantial uncollectable intercompany loan accounts; and,
b.Dishonestly concealed the serious debt position of Orchard KLM from Westpac.”
(Emphasis in the original.)
The prosecution case was not limited to the conduct of the appellant “through Mr Armstrong”. And ultimately, it was not the prosecution case that an interdependence between the two groups was concealed; rather it was that the two groups were not independent. At some length, that distinction was explained by the prosecutor in his address to the jury. Further, the prosecution case was that the “precarious financial position of the KM Group”, including “the serious debt position” of that group, was concealed.[64]
[64]Particulars of the Crown case set out in document marked “E” for identification at the trial.
For the appellant, it is submitted that the jury could convict the appellant on count 1 only if at least the first of those matters was concealed, that is to say the relationship between EDIS and the Orchard Group. The jury was directed that they might convict if either that relationship or the financial position of the Orchard Group was concealed from the bank. We are inclined to agree with the trial judge in that respect, but the debate on that point is insignificant for the outcome of this appeal, as we will explain.
Later in this judgment, in discussing ground 2 of the appeal, we will trace the course taken by the prosecution through its different statements of particulars of count 1. At this stage, something should be said about the two groups being “interdependent”, as they were described in the particulars as the particulars were at the commencement of the trial. The defence case at the trial was that there was an interdependence, and that this was well known to Westpac, so that there was no concealment of it. Similarly, the appellant’s case in this Court is that it was not open to the jury to find that the relationship between the groups was concealed from Westpac, because that interdependence was well known to it. As we have said, ultimately the prosecution addressed the jury on the basis that what was concealed was a lack of independence, rather than an actual interdependence between the two groups. This debate about independence versus interdependence may not have made things any easier for the jury. Nevertheless, the substance of the prosecutor’s argument, and the relevant evidence in support of it, were sufficiently clear.
Before the restructure, EDIS was a company with the business of providing spare parts for Kleenmaid products. On any view, there was an interdependency between its business and the core Kleenmaid business, which was the supply of new Kleenmaid appliances. If the core business failed, the spare parts business could not continue. In the appellant’s submissions, much is made of evidence from Mr Dickson that he was aware of an interdependent relationship between EDIS and the Kleenmaid Group. It is correct to say that Mr Dickson said that he knew of such an interdependence. It is also correct to say that Westpac had lent money to EDIS, prior to the subject transaction, knowing of that interdependence. More precisely, Westpac had approved a loan facility for Bizco, an EDIS subsidiary, for an amount of $5 million in March 2007. But the subject facility was sought in the context of the restructure, under which the core business was to be conducted by EDIS and its group. The interdependence, as Westpac had understood it, was not relevant after the restructure. Westpac was not being asked to provide $13 million of finance for the spare parts business, reliant as it had been upon the fate of the core business. Similarly, it was not to the point that an intercompany loan account between Kleenmaid Pty Ltd and EDIS had been the subject of a reporting regime to Westpac since 2001, because that related to the circumstances prior to the restructure.
The picture which was presented to Westpac was that the two groups of companies would still have some dealings with each other, but only in certain limited respects. As we have noted, in the document which went to Mr Patane under the name of the appellant, it was represented that it was the Corporate Group which would be involved at all stages in the core business of the supply of Kleenmaid products. A company in the Orchard Group would be paid a royalty and another company would operate some of the retail stores as effectively an agent for LAC. Neither of those agreements or arrangements, without more, would have compromised the autonomous conduct of the enlarged business of the EDIS Group which the bank was asked to finance. As the appellant himself acknowledged in cross-examination, the September letter represented that EDIS and the companies in its group would be independent and at arm’s length from other Kleenmaid companies.
In truth, the two groups of companies were not intended to be conducted independently and at arm’s length from each other. When the appellant was dealing with Westpac, he knew that Westpac was unaware of the Order House arrangement. A knowledge and understanding of this arrangement, he must have known, would have been material, and quite possibly critical, to a decision by Westpac in response to this application for finance. As we have said, the Order House arrangement denied to EDIS the cashflow benefit of having the deposits from customers in its hands, often for many months pending the delivery of the appliances, and exposed EDIS to the risk of never receiving those deposits if the Orchard Group became unable to pass them on. The extent of that benefit, and of that risk, can been seen from the fact that, as McGrathNicol reported in early 2009, an amount of nearly $55 million was to be paid to EDIS under the Order House arrangement. There was evidence that it was the appellant who conceived of this arrangement. There was no apparent benefit to EDIS in the arrangement, in circumstances where it was already paying $5 million per annum for the right to operate the Kleenmaid appliance business, and the Order House company (Kleenmaid Pty Limited) had no logical place in the structure of that business once it was to be in the hands of EDIS and the members of its group.
The lack of independence between the two groups was, perhaps, most starkly illustrated by the fact that the income and expenses of EDIS were paid to and from a bank account or accounts controlled by the Orchard Group, which determined how much would be paid from them. It was open to the jury to exclude any suggestion that this was done for any suggested administrative convenience. The Kleenmaid appliance business was a very substantial undertaking, measured by its turnover, and it is extraordinary that it was not conducted through bank accounts of the entities whose business it was, or was supposed to have been.
Then there was the evidence of other associations between the two groups. The appellant continued to be the secretary of Orchard KM until the end of 2008, and Andrew Young continued to be involved in major decisions for the spare parts business conducted by EDIS.
In deciding whether the appellant acted dishonestly, in obtaining the benefit for EDIS, the jury had to decide whether, at that time, he acted with the knowledge and intent which the prosecution alleged. Events which occurred after the benefit was obtained were not necessarily irrelevant to what the appellant knew and intended at the critical time. The evidence of the ways in which the groups operated in close association, and substantially as the one group, was probative of what, at the critical time, the appellant intended, and knew that his brother and Mr Armstrong intended. Having decided whether the appellant held the belief and intention which the prosecution alleged, the jury then had to consider whether that act was dishonest by the standards of ordinary, decent people.[65] It was unnecessary for the prosecution to prove also that the appellant must have realised that what he was doing was dishonest by those standards.[66]
[65]Peters v The Queen (1998) 192 CLR 493 at 504 [18]; [1998] HCA 7 at [18] per Toohey and Gaudron JJ, cited with apparent approval in Macleod v The Queen (2003) 214 CLR 230 at 242 [37]; [2003] HCA 24 at [37] by Gleeson CJ, Gummow and Hayne JJ; see also R v Orchard [2018] QCA 58 at [37]-[38].
[66]R v Dillon; ex parte Attorney-General [2016] 1 Qd R 56; [2015] QCA 155.
The appellant’s submissions rely heavily upon parts of the evidence of Mr Armstrong, which is said to have exculpated the appellant. Again, we observe that the jury was not obliged to accept all of his evidence. None of the parts of his evidence upon which the appellant relies had to be accepted by the jury, with the consequence of requiring a rejection of evidence which otherwise could have been accepted by the jury and used to reach a verdict of guilty. Nevertheless, a discussion of some of the passages from Mr Armstrong’s evidence, upon which the appellant relies, is appropriate.
At one point, Mr Armstrong said that the changes to the structure of the businesses were not undertaken specifically to obtain finance from Westpac.[67] The jury did not have to accept that evidence.
[67]Transcript, day 8 p 16.
Next, the appellant relies upon some evidence from Mr Armstrong about the non-disclosure of the Kleenmaid accounts. Before discussing that evidence, we will set out our views about what the evidence allowed the jury to find. There was evidence from which the jury could have concluded that, in truth, the accounts would have detracted from the case which was presented to Westpac. As we have discussed, there was evidence that the core business of the Kleenmaid companies had not been profitable since at least July 2006, and that the company owned stores were losing approximately $10 million per annum. There was evidence that, by December 2007, Orchard KM had a deficit in its balance sheet of $6.3 million (which may have been understated by $17.6 million). If this accurately represented the position of the Kleenmaid companies, and the health of its core business, it was clearly open to the jury to conclude that the appellant knew of it and decided not to reveal it to Westpac. The explanation which was given was that Andrew Young, as the individual who would control what would become the Orchard Group after the restructure, would not agree to its disclosure to Westpac. But in truth, there was not to be the disassociation between the two groups that Westpac was being made to understand. The finance which was being obtained, ostensibly for the benefit of an independent EDIS group, was being obtained for the benefit of both groups. It was open to the jury to conclude that the appellant knew that there was no legal impediment to his disclosing the truth about the performance of the core business, and that he pretended to Westpac that, by reason of the separation of the two groups through the restructure, he was unable to procure a necessary permission for the disclosure of this information. In short, it was open to the jury to conclude that, dishonestly, he concealed from Westpac the precarious financial position of the Kleenmaid companies.
The appellant relies upon this passage from the evidence of Mr Armstrong, under cross-examination by the appellant’s trial counsel:[68]
“EDIS was the organisation applying for the loan. The bank employed hundreds of analysts to ask the right questions – ask what they considered to be the right questions and – and every question that Westpac asked, and there would have been many of them, were answered. And – and this one particular piece of information, which was the financials for Orchard – the answer was – was no, you – they won’t be forthcoming. And – and Westpac – I’m probably jumping ahead of it here, but Westpac made a decision to proceed with the loan in the absence of that information that they had requested.”
The apparent relevance of this evidence, for which the appellant argues, was that there was no dishonest concealment of material facts because Mr Armstrong and the appellant were entitled to assume that, if Westpac was not insisting upon the provision of the information, then it could not have been material. That argument should be rejected for reasons which we have just expressed.
[68]Transcript, day 8 p 21.
The appellant relies on passages from the evidence of Mr Gupta, whom we have already mentioned and who was an analyst employed by Westpac. The appellant points to evidence of a table of “Inter Entity & Other loans as [at] March 31 2008” for the “EDIS Group of Companies”.[69] Mr Gupta’s evidence was that this was within information which he had then requested from Mr Janif of EDIS, and which Mr Janif provided to him on 19 June 2008.[70] The fact that this information was provided to the bank at that time, when EDIS was seeking further finance from Westpac, said little about what had been withheld from the bank at the critical time, which was in the previous year. Mr Gupta then saw fit to discuss this information with Mr Dickson,[71] and Mr Dickson then raised it with the appellant, asking for confirmation that the amount owed by Orchard KM was recoverable. EDIS sought to answer Mr Dickson’s concerns by an email from Mr Armstrong to him of 23 June 2008 which began:[72]
“Brad [the appellant] updated me on your call on Friday evening. I understand that you would like to confirm that the account owed by Orchard is recoverable. ….”
It was in that email that the Order House arrangement was first explained to Westpac.
[69]Exhibit 2924.
[70]Transcript, day 36 p 47.
[71]Ibid.
[72]Exhibit 390.
Reference is made to evidence by Mr Gupta that, in October 2007, he was aware that there would be an inter-company loan account between EDIS and a company in the Orchard Group, involving standard commercial trading terms of payment within 30 days from the end of a month.[73] This was the subject of an email from Mr Armstrong to Mr Dickson (copied to Mr Gupta) on 2 October 2007.[74] But that did not reveal to Westpac the association which was intended between the two groups, and in particular, the Order House arrangement.
[73]Transcript, day 36 p 72.
[74]Exhibit 2954.
The appellant refers to evidence given by Mr WJ Harris, a chartered accountant, employed by McGrathNicol, who expressed an opinion that there were indicia both for and against the existence of an arm’s length relationship between the two groups.[75] However, Mr Harris there said that he was referring to “one issue” and “one part of the relationship, not the entire trading relationship”, and added that single aspect “could be an indicia, but it’s not conclusive.”[76]
[75]Transcript, day 50 p 22, 33.
[76]Transcript, day 50 p 22.
Mr WJ Wessells was a chartered accountant who worked as one of the auditors of the Kleenmaid Group in 2007 and 2008. He gave evidence that he did not consider that the two groups were related parties, as defined by the relevant accounting standards.[77] But he was then asked by the appellant’s counsel whether it was his view that the two groups did trade at arm’s length, to which he answered:[78]
“Certainly post – post the restructure there was … evidence to indicate that there was [sic] attempts made to separate the activities of the respective organisations and – well, nothing comes to mind to indicate that there was any non-arm’s length transaction or arrangements in terms of sales and purchases.”
That evidence did not require the jury to reject the prosecution case, which was that the groups were not intended to be independent and deal with each other at arm’s length.
[77]Transcript, day 44 p 27.
[78]Transcript, day 44 p 28.
The appellant also refers to evidence by a Ms King, who was employed as an accountant for Kleenmaid Pty Ltd between January 2007 and February 2008.[79] She gave evidence that the balance sheet for the Orchard Unit Trust as at 1 July 2007 showed total assets of approximately $87 million and net assets of approximately $3.4 million,[80] the profit and loss statement for Kleenmaid Pty Ltd for the 12 months ending 30 June 2007 showed a net profit of approximately $4.4 million, and the financial reports for Kleenmaid Pty Ltd were in general accurate, truthful and reflected correctly the position of the entities which were described in them.[81] But the jury was not obliged to accept her evidence. Rather, the jury were entitled to prefer the evidence of Mr Hughes, that the Kleenmaid companies had been unprofitable since at least July 2006 and that the companies were losing approximately $10 million per annum.[82]
[79]Transcript, day 27 p 27.
[80]Transcript, day 28 p 2; Exhibit 963.
[81]Transcript, day 47 p 43.
[82]Exhibit 43 p 2.
The appellant’s submissions extensively refer to the appellant’s evidence at the trial, in support of the argument that the verdict on count 1 was unreasonable. Again, the jury was not obliged to accept any of his evidence, or to regard it as raising a doubt about the evidence upon which the prosecution case relied. However, some parts of his evidence, upon which this argument now relies, should be discussed.
He testified that he understood that the two groups were interdependent, in that EDIS relied on Orchard KM for the use of the Kleenmaid brand, so that if Orchard KM did not exist, EDIS would have been out of the appliance business.[83] That was an apparent reference to the licence agreement, under which EDIS was able to use the Kleenmaid name and relevant trademarks. All of that was known to Westpac, and the prosecution case did not suggest otherwise.
[83]Transcript, day 56 pp 4 to 5.
The appellant testified that the Order House arrangement was set up to protect the brand. He said that the arrangement was because “Kleenmaid needed to ensure that at all times it had control over customer orders and particularly the receipts of cash against those orders.”[84] If it is assumed that this was the appellant’s purpose, in conceiving of the Order House arrangement, it did not answer the prosecution case that it was an element, and an important element, of the ongoing association between the two groups which was concealed from Westpac. Rather, the appellant’s explanation was effectively an admission that, in truth, EDIS was not to become the operator of the appliance business.
[84]Transcript, day 56 p 6.
In our conclusion, it was open to the jury to find that the appellant was guilty of count 1. In particular, it was open to the jury to find that he acted dishonestly, by concealing from Westpac the true nature of the relationship between the two groups, in that they were not independent and trading at arm’s length, and by concealing from Westpac the precarious financial position of the Orchard Group, including its serious debt position. Those two subjects, of course, were related. In combination, their consequence was that the overall risk to Westpac from providing this finance was markedly different from that which was represented to it.
Ground 1 of the appeal: a change to the basis of criminal responsibility
Prior to the commencement of the trial, the prosecution provided particulars in a document which was marked for identification as “E”. That document provided particulars under three headings. The first was “What benefit was gained”, the second was “How the benefit was dishonestly gained”, and the third was described as “Material facts in support of the allegation that the benefit was dishonestly gained”. The same particulars were advanced against all three accused (as they then were). Under the first heading, the alleged benefit was described as “Business Finance Facilities totalling $13M from Westpac for EDIS service logistics Pty Ltd” for certain purposes corresponding with the terms of the Business Finance Agreement.

In the Supplementary Report to ASIC,[224] Mr Hughes’ firm summarised why it was that Orchard KM was insolvent by March 2008 with the consequence that it could not repay loans it owed to other group companies. In doing so, they said:
[224]Exhibit 43.
“Due to Orchard KM’s high cash needs, cash raised by other companies in the Group was also loaned to Orchard KM. The main cash raising entities were EDIS (via spare parts) and Kleenmaid Pty Limited (i.e. Order House), which took customer deposits after the restructure. When Orchard KM became insolvent, the loans to it became unrecoverable (and they were significant assets of the other entities). This is the reason, in our opinion, that these companies that loaned these funds to Orchard KM became insolvent at the same time as Orchard KM became insolvent, that is, March 2008. The other entities in the Group were reliant on the cash producing entities for support also (most did not have an external source of income), and became insolvent at the same time.
The factors we considered when looking at Orchard KM and consequently the Group insolvency were:
1.On a cash flow test, the Group had exhausted all its facilities available, had no available overdraft and was unable to raise any further significant finance after March 2008. It continued to use cash (from customer deposits) at a rapid rate both before and after external sources of finance were exhausted and right up until we were appointed;
2.On a balance sheet test, Orchard KM and the Group had a large deficit; that is, liabilities far outweighed available assets. When looking at amounts due and payable in the short term, current liabilities also far outweighed current assets on both a Group and Orchard KM level. At no time since July 2006 did current assets exceed current liabilities;
3.Other factors that indicated insolvency in March 2008 were:
a.Ongoing, accelerating and numerous demands for repayment, both formal and informal - for example, there were 23 demands made in the quarter ended 30 June 2008
b.As a result, the Group agreed to numerous repayment plans - for example, there were 33 planned payments in the quarter ended 30 June 2008
c.Whilst repayment plans were agreed, a consistent pattern of not meeting revised commitments
d.An inability of suppliers to obtain credit insurance for their credit risk of dealing with the Kleenmaid Group
e.Significant general correspondence (including email traffic) indicating cash flow, credit, supply and funding difficulties consistently from March 2008 onwards.”[225]
[225]Ibid p 3.
In his evidence in chief, Mr Hughes elaborated upon the factors in paragraph 3.[226] He also testified that, at the date of his appointment in April 2009, the two groups had consolidated liabilities of approximately $83 million. The majority of that deficit was attributable to Orchard KM.[227]
[226]Transcript, day 4 p 41.
[227]Transcript, day 4 p 11; Exhibit 43 p 2.
There was, therefore, evidence before the jury that by 31 March 2008, EDIS had no cash assets; that it had no prospect of legitimately raising funds externally; that its intercompany receivables were irrecoverable; and that it had substantial trade payables. The evidence also established that the financial position of EDIS did not improve thereafter; indeed, it worsened. From that evidence, the jury could have been satisfied beyond reasonable doubt that by 31 March 2008, EDIS was insolvent and that it continued to be so thereafter.
Some months after the hearing of the appeal had concluded, the appellant, on 12 February 2019, filed an application for leave to make further written submissions in support of which he maintained that it was in the course of oral argument of the appeal that it became clear that the collectability of “the debt owed by Orchard KM to EDIS” (an apparent reference to the sequential indebtedness of Orchard KM to Order House and of Order House to EDIS) was central to the prosecution case.[228] Resolution of that issue, it was submitted, “is central to the unreasonable verdict grounds” on the insolvent trading counts.[229]
[228]Appellant’s Supplementary Submissions paragraph 2.
[229]Ibid.
Leave to make such submissions is opposed. Both sides have made written submissions on leave and the topic that the submissions seek to address.
We cannot accept that it was not until the hearing of the appeal that the circumstance that debts owed by Orchard KM to Order House and Order House to EDIS were uncollectable played a significant role in the Crown case for reasoning towards a conclusion of insolvency. That was evident from the Supplementary Report to ASIC which was available to the defence before the trial, from the Crown Prosecutor’s opening address[230] and the respondent’s written submissions on appeal.[231]
[230]Transcript, day 1 pp 19 to 20.
[231]At paragraphs 78, 290, 294-296.
We would accept the appellant’s proposition that if those debts were not uncollectable, then that would undermine a significant circumstance in the prosecution case that EDIS were insolvent by the end of March 2008 and remained so thereafter. However, that is a proposition that can avail the appellant only if the evidence at trial was such that the jury ought to have entertained a reasonable doubt that they were uncollectable.
Since written submissions have been exchanged on this topic, we propose to receive and consider them. However, for the reasons which follow, we conclude that the appellant’s submissions are unavailing for him. It need be borne in mind that the uncollectability of the debts was not the only circumstance on which the Crown case relied. There were also EDIS’s lack of cash assets and of capacity to legitimately raise funds, as well as its continuing to incur trading debts on its own behalf notwithstanding.
In summary, the appellant’s submission is that in March 2008, Orchard KM was paying creditors of EDIS directly on behalf of it and that that practice continued until March 2009. By this method, the indebtedness of Orchard KM to EDIS, via Order House, was being repaid, thus proving that the receivable was collectable.
We note at this point that the appellant could not realistically have submitted that the loan was being repaid by payments made by Orchard KM to EDIS. The effect of Mr Hughes’ evidence in answer to a suggestion in cross examination that the Orchard Group was paying EDIS for goods “on a fairly continual basis”[232] was that although there were intercompany journal entries suggestive of that, they were not reflective of any significant cash payments actually made by any member of the Orchard Group to EDIS.[233] Mr Hughes said:
“What I can tell you is that from the restructure onwards, Kleenmaid Proprietary Limited was collecting the cash for sales, and that was being forwarded to Orchard KM and paying those, and that was paying the creditors that were in existence pre-restructure”.[234]
[232]Transcript, day 5 p 45.
[233]Transcript, day 5 p 45.
[234]Ibid.
To return to the appellant’s submissions, it was not put to Mr Hughes that Orchard KM was making significant payments to suppliers on behalf of EDIS that were not accounted for in his analysis. In any event, the proposition that it was making such payments in reduction of its indebtedness, through Order House, to EDIS is unsupported by any documentary evidence of an anterior agreement having been made between them to that effect and is inconsistent with other evidence adduced at the trial which contradicted an ability on the part of Orchard KM to pay all debts incurred by EDIS from March 2008 onwards. The inability of the Kleenmaid Group as a whole, the Orchard Group and EDIS itself to pay trade payables from available cash during that period was graphically illustrated in the evidence.[235]
[235]Exhibit 43 p 9 (Figure 5.5), p 35 (Figure 7.3) and p 51 (Table 9.8) respectively.
The appellant also submits that an internally-produced balance sheet for EDIS (Appliance Division) which was in evidence,[236] showed not only an increasing indebtedness of Order House to EDIS, but also an increasing indebtedness of EDIS to Orchard KM on account of payments made by the latter for the former’s benefit, with the result that by March 2009, Order House owed EDIS $66.371 million and EDIS owed Orchard KM $63.532 million. The assertion made is that “payments made by Orchard KM on behalf of EDIS were partly in fulfilment of the receivable owed by Order House to EDIS”. That, the appellant submits, “plainly shows” that the loan by EDIS to Order House “was collectable and was being collected”.[237]
[236]Exhibit 50.
[237]Appellant’s Supplementary Submissions paragraphs 13 to 18.
We cannot accept that submission. It is not apparent on the face of the exhibit that any payment was made by Orchard KM in reduction of the Order House indebtedness to EDIS at 31 March 2008 of almost $16 million. Nor was there any oral or other evidence to that effect. Mr Hughes’ evidence contradicted, rather than supported, that having occurred.
Moreover, the notion that Orchard KM would have been making substantial payments to pay all current trade creditors of another Kleenmaid Group member when it had insufficient funds to pay its own pre-restructure creditors strains credulity. Given that and the non-payment of the trade debts the subject of the counts, it is in all likelihood one that the jury would have rejected as unreasonable.
Suspicion of its insolvency
In the discussion of Ground 10, we have detailed the evidence of the appellant’s knowledge of the Order House arrangement and the dependence of EDIS on the Orchard Group for repayment of the latter’s indebtedness to EDIS.
In addition, the appellant was the recipient of numerous emails and other documents up to and after the restructure, alerting him to the demands of creditors and to the precarious financial position of companies within the Orchard Group, and of EDIS itself. Instances of them in the period up to June 2008 include:
(a)The appellant was copied in on a number of emails from Mr Proos who, it will be recalled, was the manager of the EDIS spare parts division, and others which informed recipients of the declining financial position of Kleenmaid operations[238] and of EDIS.[239]
[238]Exhibits 405, 462, 463, 467, 843, 978 and 984.
[239]Exhibits 464, 994, 3924.
(b)On 5 September 2007, Mr Baker emailed Andrew Young (copy to the appellant) a summary of the cash flow position for Kleenmaid’s operations and accompanying spreadsheet setting out their financial position.[240] Mr Baker noted:
[240]Exhibit 841.
“We have some big ticket items to pay … [a] total around 1.5m before we start paying anyone else. We have made a few promises to suppliers. We are going to need 2m plus next week”.[241]
[241]Ibid.
(c)The managing director of CEO Global Logistics Pty Ltd emailed Andrew Young (copy to the appellant) on 19 September 2007 to advise that his company was unable to continue to trade with Kleenmaid Pty Ltd unless the amount it owed to his company was “brought back within agreed trading terms”. The appellant responded as “Managing Director, Kleenmaid Pty Ltd” outlining a proposal for paying the amount owed by instalments.[242]
[242]Exhibit 1200.
(d)On 26 September 2007, Mr Proos emailed to Andrew Young (copy to the appellant) an updated cash flow spreadsheet stating:
“This week things are looking pretty grim too. It looks like by next week we will have overdue creditors in excess of $800,000 … It’s pretty hard to keep things going under the current circumstances; is there light at the end of the tunnel?”[243]
[243]Exhibit 998.
To this, Andrew Young replied (copy to the appellant):
“We are well overdue in getting the proceeds of several initiatives that are currently in play. When these transpire, then you’ll get relief. BRAD Can you have a conversation with (Mr Proos) …”[244]
[244]Exhibit 998.
(e)In late September 2007, there were a number of other emails from Andrew Young to trade creditors (copies to the appellant) in which he sought to make arrangements for paying overdue accounts.[245]
[245]Exhibits 1147, 1122.
(f)Mr Proos emailed Andrew Young (copy to the appellant) on 5 December 2017, a cash flow forecast which projected a negative cash flow for the nine weeks from 3 December 2007 to 28 January 2008. In it, Mr Proos noted that he had added in a monthly transfer of $140,000 that EDIS would need “from Kleenmaid”.[246]
[246]Exhibit 410.
(g)On 7 December 2007, Mr Proos wrote to Mr Baker (copy to the appellant and Andrew Young), drawing their attention to the fact that EDIS was then “on hold with GE” because of an overdue debit balance. He made the following request:
“Moving forward can you please plan for a monthly transfer to EDIS to support my cash flow shortfall in the first week of each month. An earlier analysis estimated this at $140,000K (sic) per month”.[247]
(h)Another email from Mr Proos in January 2008 identified that “we are now on credit hold with GE, Woodlands and Hillmark. Wages have been paid but now little available to pay suppliers. Note that we are now running $180K behind in terms of cash flow support.”[248]
(i)The appellant wrote to Mr Armstrong and Andrew Young on 28 February 2008 about managing cash flow and the information that was urgently required “from finance” to manage and review cash flow.[249] On the following day, he forwarded to Andrew Young an email from the supplier, Brandt Asia, advising of a hold on shipments until payment was received of an outstanding amount of €220,000 and described it as “not a good outcome”.[250]
(j)Mr Armstrong sent an email to the appellant on 10 May 2008, the subject of it being “EDIS Appliances-Results for March Qtr”. In it he stated:
“I am sure that we all expected these results to be poor, prior to the recent changes. First drafts suggest a very poor result, due to a number of factors …We’ll need to prepare an explanation for Alan”.[251]
(k)As well, in the period leading up to 3 July 2008, the finance division continued to produce financial reporting documents which emphasised Kleenmaid’s very poor financial position. On the evidence, folders containing copies of those documents were left with the appellant’s personal assistant.[252]
[247]Exhibit 1003.
[248]Exhibit 1008.
[249]Exhibit 412.
[250]Exhibit 873.
[251]Exhibit 3748.
[252]Transcript, day 27 pp 55 to 56 (Ms King); Transcript, day 22 p 82 (Ms Dimmock).
The financial position of EDIS and the Orchard Group did not improve after the receipt of further funding from Westpac. The new credit limit from Westpac of $6 million was almost fully exhausted by 9 July 2008, six days after its approval.[253] Financial statements in evidence showed continuing losses following the funding from Westpac.[254] Further email correspondence from Mr Pearce to Andrew Young (copy to the appellant) contained cash flow updates that showed significant shortfalls.[255] On 9 July 2008, an email from Mr Pearce stated “We currently have a shortfall of $5.783M by Tuesday 15/7”.[256]
[253]Exhibit 3791.
[254]Exhibits 2190, 2172.
[255]Exhibits 1814, 1655.
[256]Exhibit 1632.
On or about 7 October 2008, the appellant and Mr Armstrong informed Mr Dickson that Bizco would be defaulting on its obligations to Westpac.[257] This was despite the fact that $1 million of the $3.5 million in funding from Westpac from July 2008 was approved directly for the purpose of assisting in making these payments. On 14 October 2008, the appellant proposed a payment plan to the Australian Taxation Office to repay approximately $600,000 in unpaid tax and interest.[258]
[257]Exhibit 3782.
[258]Exhibit 402.
The appellant, Andrew Young and Mr Armstrong continued to correspond by email about payment plans with suppliers until December 2008.[259] One plan involved a payment of $20,000 per week.[260]
[259]Exhibit 1257, 1108, 1093, 1111.
[260]Exhibit 3763.
In summary, there was, in our view, sufficient evidence before the jury for it to have been satisfied beyond reasonable doubt that the appellant suspected that EDIS was insolvent from March 2008. Satisfaction to that degree was by inference that arose compellingly from the evidence that the appellant knew of the Order House arrangement with EDIS and of that company’s dependence on the Orchard Group (notably Order House and Orchard KM) to repay indebtedness to EDIS; the numerous emails which he had received alerting him to demands of creditors and to the precarious position of companies within the Orchard Group; and the provision to him of the accounts of the Kleenmaid Group of companies on a regular basis.
Dishonesty
This was a case in which it was open to the jury to have been satisfied beyond reasonable doubt that the appellant’s failure to prevent EDIS from incurring the debts the subject of the several insolvent trading counts was dishonest. There was, as the respondent submits, an inherent dishonesty on the appellant’s part in permitting the company to continue to incur increased indebtedness to Westpac and then further trading debts once he suspected that EDIS was insolvent. The dishonesty inhered not only in the appellant’s evident suspicion that EDIS was insolvent during the relevant period, but also in his knowledge of the scale of the company’s aggregating indebtedness and its chronic incapacity to repay the debts from its available resources.
For these reasons, we consider that this ground of appeal has not been established.
The additional ground of appeal – counts 2-17 and 19
The appellant’s further submissions as they relate to counts 2 to 17 and 19 contend that there is fresh evidence which goes to the element of dishonesty in respect of each count. It is submitted that evidence given recently by Mr Hughes during the trial of the appellant’s brother cannot support a conclusion that the appellant could not possibly have had any realistic expectation that further debts incurred by EDIS could not be paid.[261]
[261]Appellant’s Further Supplementary Submissions paragraph 17.
The basis of this submission is a contention that Mr Hughes’ evidence changed fundamentally from the appellant’s trial to his brother’s later trial. The appellant has summarised the effect of the evidence given by Mr Hughes at his trial as being that EDIS was cash-starved following the restructure because deposits paid by consumers were channelled through Order House and on-lent to Orchard KM which, in essence, used it to pay its pre-restructure creditors.[262] The appellant submits that, by contrast, the evidence Mr Hughes gave at his brother’s trial gives rise to an implication that at all times between July 2008 and April 2009, EDIS had a cash flow that allowed it to make regular and consistent payments to creditors of an estimated value of $43.965 million.[263]
[262]Ibid paragraph 22.
[263]Ibid paragraph 19(c).
The respondent challenges the appellant’s contention at a number of levels. Underlying the challenge is the proposition that Mr Hughes did not depart from his evidence as to the lack of cash resources on the part of EDIS. In particular, his evidence at the brother’s trial neither stated nor implied that EDIS was itself paying its creditors regularly and consistently.
Before considering whether Mr Hughes did change his evidence in a manner that has consequences for present purposes, we note that the appellant has suggested in submissions that, viewed on a two-group basis in which inter-group indebtedness was assigned to the corporate entity heading each group, the $5 million owed by Kleenmaid Holdings to Kleenmaid Corporate at March 2008 “was paid at least four times over by 30 June 2008” taking into account payments by respective group members.[264]
[264]Ibid paragraph 19(a).

In our view, the appellant’s suggestion has no relevance for present purposes. Here, the focus of attention is on the financial position of EDIS. Its solvency depended upon the recoverability of debts owed to it by associated companies, notably Order House and indirectly by Orchard KM. It is erroneous in our view to aggregate, as the appellant’s submission does, the financial position of EDIS with that of other companies within the Corporate Group in order to assess the recoverability of debts owed to it.
As to the appellant’s contention of a fundamental change of evidence on Mr Hughes’ part, we do not accept that at Andrew Young’s trial, Mr Hughes departed from his evidence that at all times material to these counts, EDIS was cash-starved because of a channelling of customer deposits away from it under the restructure. The submission that the evidence given by Mr Hughes at that trial implied that EDIS was making regular and consistent payments to its creditors is unsustainable. That Orchard KM may have been making payments to trade creditors of EDIS, as Mr Hughes accepted was the case, did not imply that they were payments made by EDIS or that that company was sufficiently cash-funded to pay its creditors from its own funds. Nor, as we have pointed out, did it imply that such payments were by way of repayment to EDIS of indebtedness of Orchard KM to EDIS via Order House. In any event, EDIS was evidently insufficiently funded to pay the debts the subject of the counts as they were incurred.
For these reasons, we are unpersuaded that evidence given by Mr Hughes at the appellant’s brother’s trial has revealed a miscarriage of justice in his own trial. It has not been shown that that evidence has materially impugned the credibility or reliability of evidence given by Mr Hughes at the appellant’s trial as it had relevance to dishonesty on the appellant’s part.
In view of this and of the conclusion we have reached in respect of the proposed additional ground as it concerns count 1, we are minded to refuse the application to add a new ground of appeal.
Disposition of appeal against conviction
None of the grounds of appeal has succeeded. It will be ordered that the application to add an additional ground of appeal, as ground 20, be refused and on each count, the appeal against conviction be dismissed.
The appeal against sentence
The appellant applies for leave to appeal against a sentence of nine years’ imprisonment for the offence charged by count 1. It is contended that this term, and the total non-parole period which resulted from this term and the cumulative sentences for the other offences, resulted in an overall sentence which was manifestly excessive (ground 18). Further, it is argued that the trial judge erred in certain respects concerning the facts of the appellant’s offending, by which he was mistaken in his assessment of the appellant’s criminality on count 1 (ground 19).
The judge fixed a parole eligibility date, for the sentence on count 1, at four and a half years. Seven days of pre-sentence custody were declared as time served, with the consequence that he began to serve the nine year term on 5 August 2016, for which the half way point was 5 February 2021. On two of the insolvent trading counts, the appellant was ordered to serve terms of two and half years, to be served concurrently with each other but to commence on 5 February 2021. On the other counts, he was sentenced to various terms, the longest being 12 months’ imprisonment, to be served concurrently with each other but cumulatively upon the other counts. Consequently, the total period of imprisonment for the Commonwealth offences was three and half years, with a non-parole period of 21 months which would finish on 5 November 2022.
The total period of imprisonment imposed by these orders was therefore one of nine years, to expire on 5 August 2025. The terms for the Commonwealth offences would be served wholly within the term of nine years for count 1. In that way, the Commonwealth offences were concurrent with that for count 1. But the appellant was not to be released on parole until 5 November 2022, meaning that he would have to serve in custody at least six years three months of that period of nine years. For the appellant, it is argued that this non-parole period, effectively amounting to nearly 70 per cent of the period of imprisonment, is excessive.
By ground 19, it is contended that the trial judge erred in sentencing the appellant upon the basis of incorrect facts. The first error in this respect is said to be in his Honour’s observation that:
“Gary Armstrong told you in June of 2007 of Mr Drake’s forecast that at that time goodwill would need to exceed $68 million to offset the liabilities …”.
On 9 June 2007, Mr Drake emailed Mr Armstrong in respect of a proposed IPO for what was then the Kleenmaid Group. And Mr Drake’s analysis was a projection, rather than a statement of the group’s then financial position. This is why the sentencing judge, correctly, referred to Mr Drake’s figures as a “forecast”. Nevertheless, it presented a very bleak picture. Mr Armstrong testified that he conveyed these figures to the appellant at a meeting.[265]
[265]Transcript, day 6 p 35.
The present submission refers to something said by the prosecutor, in opening the case, about this evidence, which was that the business of Kleenmaid “as a whole was $68 million in debt.” That was not correct, because Mr Drake’s figure was a prediction. But the submission seeks to attribute that statement to the sentencing judge. In our view, there was no misstatement by the judge as to the evidence, and it was clearly a finding which was relevant. Further, having regard to what we have said about the other evidence which supported the verdict on count 1, it cannot be said that the judge overstated the appellant’s criminality by this factual reference.
The second suggested error is in the judge’s statement as follows:
“You viewed [the September letter] in advance, or its equivalent. You approved its contents for submission to the bank, being aware of the false picture it presented.”
It is submitted that this finding was not justified on the evidence. We have discussed, at [54] of this judgment, the evidence by which the jury was able to find that the appellant was shown a draft of the letter by Mr Armstrong, and the appellant’s evidence that he had been unable to say, one way or the other, whether that was correct. We have also referred to the evidence that the appellant received from Mr Armstrong a copy of this letter on 24 September 2007. The evidence well supported the judge’s observation that the appellant did see the letter before it was sent. But in any case, it supported the finding that the appellant approved the terms of the letter, because even if he did not see it until 24 September 2007, he was in a position to correct the letter well before Westpac provided the facility in November 2007. After all, the appellant described himself as the managing director of Kleenmaid.
The third alleged factual error was in the judge’s statement in the sentencing remarks that:
“The amount of money fraudulently obtained … was $13 million… None of it was recovered by the bank.”
This is said to have been an error, because the cross-examination of Mr Dickson from Westpac is said to have demonstrated that more than $1 million of the loan was repaid, in addition to fees and interest, “between October 2007 and March 2008”. The evidence upon which the submission relies was a passage in the cross-examination where Mr Dickson was asked to look at an internal document of Westpac, in respect of a credit application dated 27 June 2008. Ultimately, the critical evidence is said to have been this question and answer:
“You were aware, I suggest, between October 2007 and March 2008 EDIS had paid back in excess of $1 million, as well as interest and fees, to Westpac? –That could have been the case.”
A financial report which was in evidence recorded that, as at 29 March 2009, EDIS owed Westpac $12.8 million for commercial bills and $7.6 million on bank overdrafts. On any view, the effect of the fraud had been very large indeed. Further, at the sentencing hearing, there was no challenge to the prosecutor’s submission that none of the loan had been recovered.
The fourth error is said to be in this statement by the judge:
“You provided data regarding expenses for the projections prepared by Robert Drake for the bank that were misleading …”
The financial projections to which his Honour referred were apparently those contained in the document provided to Mr Patane, entitled “Business Plan”, which on each page, was expressed to have been prepared by the appellant as the managing director of EDIS. As we have said earlier,[266] it is very likely that the appellant not only contributed to its contents, but vetted the document before it went out under his name. As we have discussed, the document was a serious misrepresentation, by what it described as the proposed structure for what was to become the Kleenmaid appliance division within the Corporate Group. It was unnecessary for the jury to consider whether particular expenses within that document were understated. The correctness of his Honour’s factual observation could not have mattered for his Honour’s assessment of the degree of the appellant’s criminality, because the document was such a serious and dishonest misrepresentation in more fundamental and influential ways.
[266]At [57].
For these reasons, the suggested factual errors do not demonstrate that his Honour erred in the exercise of the sentencing discretion. Three of the alleged errors were not errors at all. The fourth of them may have been an error, but it was inconsequential. We now turn to the ground of appeal which is that the sentence for count 1, or the non-parole period for the overall period of imprisonment which was imposed, was manifestly excessive.
At the time of the commission of the offence in count 1, the maximum penalty was 10 years’ imprisonment. It is obvious to say that the sentence imposed here was 90 per cent of that maximum. His Honour was reminded by the prosecutor that 10 years was the maximum penalty. But it is suggested in the appellant’s submissions that the appellant’s then counsel made submissions to his Honour which misunderstood what was the maximum penalty. Be that as it may, in our view there is no reason to suppose that his Honour misunderstood the position, and in particular, had overlooked what he had been told by the prosecutor.
It is submitted that the judge’s sentencing remarks, on one view at least, indicate an intention that the nine year sentence on count 1 should reflect all of the offending across all counts.[267] The basis for this suggestion is this passage from his Honour’s sentencing remarks:
“During the course of submissions, I have been referred to a number of comparative sentences. Perhaps the most comparable are the cases of Daswani and Best. Of course, each case must depend upon its own individual circumstances. The matter of Daswani [2005] QCA 167 involved a fraud of over $12 million but with a loss of $6 million. Here, the charges that I’m concerned with involve a total of approximately $17.2 million with the loss being that full amount. So there is a significant difference.”
[267]cf R v Nagy [2004] 1 Qd R 63; [2003] QCA 175.
This suggestion cannot be accepted. His Honour imposed substantial terms for the other counts. Although those other terms did not increase the period of imprisonment from the nine years imposed for count 1, they increased the non-parole period by 21 months. In our view, it is clear that his Honour did not intend to have the sentence for count 1 reflect the appellant’s overall criminality for all of his offending.
His Honour observed that as a consequence of the collapse of the Kleenmaid business, the appellant had lost whatever money he had put into it, as well as his family home, and that he was declared bankrupt in 2010. His Honour accepted that the risk of re-offending was negligible in his case. The appellant had no prior convictions and was otherwise of good character, with a history of service to the community.
The appellant’s argument focusses upon another remark by his Honour, namely that the appellant was not motivated by personal greed. It is necessary, however, to set out in full what his Honour said in that respect:
“I accept that your criminal conduct was not motivated by personal greed, nor did you obtain a personal benefit, and that is a relevantly distinguishing feature between this case and many others. Nevertheless, you were a director of the company and you and your family had a 50 per cent share in the ownership of that company, and therefore you did have a clear personal interest in that regard. I note also your interest, which arose as a consequence of you personally guaranteeing any debts Edis owed to Westpac, having entered into that guarantee in November of 2007. It does appear to be the case that you adopted the attitude that the debt level to Westpac was so great that any more debt would not make any real difference to your position pursuant to that guarantee, hence the loans the subject of counts 2 and 3.”
This was not an offence which was committed by the appellant for the benefit of others. The appellant had a “clear personal interest” in obtaining funds in order to salvage what was a failing enterprise. It can be said that this was not a fraud which, when it was committed, was intended by the fraudster to have the consequence of causing a substantial loss to the victim. It may be accepted that the appellant hoped that the fortunes of the Kleenmaid companies could be revived by the provision of this funding. But this was not done only for the benefit of others.
Mr Armstrong pleaded guilty prior to the commencement of this trial. For the offence of fraud, he was sentenced to a term of seven years’ imprisonment with an eligibility for parole after serving one-third of that term. On other counts, he was sentenced to a period of two years and eight months imprisonment, with a direction that after serving 10 months, he would be released on condition that he be of good behaviour for a period of five years. There was no period of pre-sentence custody. Those sentences were to be served concurrently and they were ordered, in each case, to commence on the day of sentencing. The first of those sentences had been reduced, under s 13A of the Penalties and Sentences Act 1992 (Qld), on account of Mr Armstrong’s undertaking to give evidence in the trial against the appellant and his brother. There was a similar reduction of the terms imposed for the Commonwealth offences. This Court held that Mr Armstrong should be re-sentenced because of an error in the structure of those sentences. It is unnecessary to discuss that point here. What is presently relevant is the outcome in Mr Armstrong’s case. This Court ordered that upon the fraud count (count 1), Mr Armstrong be sentenced to a term of five and half years, with a parole eligibility date after one year and 10 months had been served, and a term of 16 months’ imprisonment on the other counts, to commence at that point (the eligibility date on count 1) and with release after serving six months.[268] Apart from s 13A, the Court held, the appropriate sentence for the fraud offence would have been seven and half years’ imprisonment with a parole eligibility date after two and half years of that term.[269]
[268]R v Armstrong [2016] QCA 243.
[269][2016] QCA 243 at [40].
In the case of Mr Armstrong, the sentencing judge found that the applicant had not been “the instigator”, and that he had been “subservient” to the present appellant and his brother. Nevertheless, his Honour remarked, Mr Armstrong had played a “vital and intrinsic role”.[270]
[270][2016] QCA 243 at [17].
This Court’s judgment in Mr Armstrong’s case was given in September 2016, one month after the appellant was sentenced. His Honour referred to the Armstrong sentence, but of course that which was originally given. It is not said that this caused his Honour to impose an excessive sentence in the present case.
Judged by the benchmark of Mr Armstrong’s sentence, in this Court, the appellant’s term of nine years’ imprisonment cannot be said to be outside a permissible range in his case. He had not pleaded guilty and Mr Armstrong was subservient to him. The appellant had no mitigating circumstances to an extent which were any more substantial than those of Mr Armstrong. The sentencing judge remarked in the appellant’s case that he had demonstrated no remorse and that any cooperation in the administration of justice by the appellant was “minimal at best”.
His Honour emphasised the importance of the consideration of general deterrence in the present case. Considerations of denunciation and punishment were also important.
This was a heavy sentence, judged by the fact that it was 90 per cent of the maximum term which could be imposed. But it was a case of a fraud at a very high monetary level, perpetrated with some months of planning, by an offender with a real personal interest in the fraud succeeding, and who had shown no remorse.
The question is whether the overall sentence, for all counts, was manifestly excessive having regard to the non-parole period also. It is correct to say that the overall result was to require the appellant to serve something very close to 70 per cent of the period of imprisonment in actual custody. As the judge intended, the sentences for the other counts should have some cumulative effect. The appellant had the benefit of that accumulation not affecting the period of imprisonment. The accumulation was effected by fixing the point at which the sentences (or some of them) for the other counts, would commence. The effect was to increase the non-parole period from four and half years to six years and three months, or in other words, to require the appellant to serve at least another 21 months in prison.
We are persuaded that, in total, the overall sentence of nine years, with at least six years and three months to be served, was excessive. We would reduce that non-parole period by six months.
Consequently, we would grant leave to appeal, and vary the non-parole period of 21 months, fixed for counts 2 to 17 and 19, to a period of 15 months.
Orders
For these reasons, it will be ordered that:
1.   The application to add an additional ground of appeal, as ground 20, is refused.
2.   On each count the appeal against conviction is dismissed.
3.   Leave is granted to appeal against sentence.
4.   Allow the appeal against sentence by varying the non-parole period of 21 months, fixed for counts 2 to 17 and 19 from 21 months to 15 months imprisonment.

CITATION:	R v Young [2020] QCA 3
PARTIES:	R v YOUNG, Bradley Wendell (appellant/applicant)
FILE NO/S:	CA No 237 of 2016 DC No 1503 of 2014
DIVISION:	Court of Appeal
PROCEEDING:	Appeal against Conviction & Sentence Miscellaneous Application - Criminal
ORIGINATING COURT:	District Court at Brisbane – Date of Conviction: 5 August 2015; Date of Sentence: 12 August 2016 (Farr SC DCJ)
DELIVERED ON:	31 January 2020
DELIVERED AT:	Brisbane
HEARING DATE:	15 November 2018 Further written submissions: 12 and 26 February 2019 Further written submissions: 17 October 2019 Further written submissions: 19 and 29 November 2019
JUDGES:	Gotterson and McMurdo JJA and Mullins AJA
ORDERS:	1. The application to add an additional ground of appeal, as ground 20, is refused. 2. On each count the appeal against conviction is dismissed. 3. Leave is granted to appeal against sentence. 4. Allow the appeal against sentence by varying the non-parole period of 21 months, fixed for counts 2 to 17 and 19 from 21 months to 15 months imprisonment.
CATCHWORDS:	CRIMINAL LAW – PARTICULAR OFFENCES – PROPERTY OFFENCES – OTHER FRAUDS AND IMPOSITIONS – FRAUD – where the appellant was found guilty of one count of fraud – where that charge arose from the appellant’s involvement in companies associated with the Kleenmaid white goods business – where the Kleenmaid group urgently needed to raise external finance to remain solvent – where the group restructured itself by dividing into two groups of companies, the Corporate Group and the Orchard Group – where Corporate Group companies conducted the core white goods business with a license to use the Kleenmaid trademark from an Orchard Group company – where the Orchard Group was encumbered by a significant portion of the pre-restructure debt – where the charge alleged that the appellant dishonestly gained a benefit for EDIS, a Corporate Group company – where that benefit was alleged to be loan facilities from Westpac totalling $13 million – where the dishonesty was alleged to be, in essence, misleading Westpac about the effect of the restructure – where it was alleged that Westpac was made to understand that Corporate Group companies would conduct their businesses independently and at arm’s length from the Orchard Group when in fact there was an arrangement by which an Orchard Group company would receive deposits until items were delivered – where that arrangement was said to deny EDIS cash flow and make them prone to any misfortune that befell the Orchard Group – where the appellant at trial was said to have acted dishonestly in the commission of the offence because he attended meetings with Westpac about the proposed loan facilities, was involved in the preparation of documents relied on by Westpac in their decision to approve the facilities, signed the letter of offer, and approved the terms of a letter said to show the concealing of the arrangement between the groups – where the appellant’s case at trial was that the groups did trade at arm’s length, that he was unaware of any serious debt position of the Orchard Group, and there was no concealment of any material risk to Westpac from the connections between the groups – where there was some exculpatory testimony from employees of the groups and Westpac – whether the jury was obliged to accept that exculpatory testimony – whether the verdict on the fraud count was unreasonable and unsupported by the evidence CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISDIRECTION AND NON-DIRECTION – PRESENTATION OF CROWN CASE – where the prosecution, prior to the commencement of the trial, provided particulars of the count of fraud in a document – where one of those particulars stated that the co-accused were “complicit in concealing from the bank” certain matters – where the prosecution had previously advised the co-accused that it was relying on the co-conspirators’ principle from Tripodi v The Queen – where, on day 53 of the trial, the prosecution advised the Court that it would no longer rely on Tripodi and subsequently amended its particulars to allege that the appellant was guilty of the offence as a principal under s 7(1)(a) of the Criminal Code – where the trial judge, at the conclusion of the prosecution’s evidence, ruled on an application by the appellant to exclude evidence of conversations between the co-conspirators and others – where the judge rejected that application on the basis that the evidence was admissible not under the Tripodi exception to hearsay evidence, but as probative of a fact in issue – where it is said that, despite the change in the prosecution’s case, the prosecution and judge continued to use the language of joint criminal enterprise – where, despite the change in the prosecution case, the acts and omissions that were said to constitute the offence were still clearly particularised – whether the change in the prosecution case as to the basis of criminal responsibility caused a miscarriage of justice CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISDIRECTION AND NON-DIRECTION – PARTICULAR CASES – WHERE APPEAL DISMISSED – where the jury was not directed about the need for the act or omission, which constituted the offence by the appellant, to have occurred in Queensland – where no direction was sought to this effect at trial – where at least one of the acts occurred in New South Wales – where it was more probable than not that the other acts were done within Queensland – whether the lack of directions as to the locality of the offences caused a miscarriage of justice CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISDIRECTION AND NON-DIRECTION – PARTICULAR CASES – WHERE APPEAL DISMISSED – where the prosecution on day 69 abandoned a particular of the alleged fraud – where defence counsel then submitted that a prosecution argument went beyond the particulars – where the trial judge observed that the matter emerged in evidence “a very long time ago” and before the appellant gave his evidence – where the trial judge then directed the jury as to particulars which concerned that matter – where those directed particulars were strongly argued by the prosecution in their closing address – whether the judge by his own motions expanded the particulars of the count CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISDIRECTION AND NON-DIRECTION – PARTICULAR CASES – WHERE APPEAL DISMISSED – where the appellant was charged with offences of insolvent trading against s 588G(3) of the Corporations Act – where it was disputed at trial whether EDIS was insolvent, whether the appellant as a director of EDIS suspected that it was insolvent and whether the appellant’s failure to prevent EDIS from incurring the respective debts was dishonest – where the learned trial judge directed the jury that there must be “reasonable grounds known to the defendant for suspecting that the company is insolvent” – where the learned trial judge also directed the jury to apply the test of insolvency provided by s 95A of the Corporations Act and to take into account factors relevant to commercial realities in determining the element of insolvency – whether the directions to the jury were deficient – whether the content of s 588G(1)(c) of the Corporations Act is an element of the offence in s 588(G)(3) – whether the jury was adequately directed on the element of insolvency CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISCARRIAGE OF JUSTICE – PARTICULAR CIRCUMSTANCES NOT AMOUNTING TO MISCARRIAGE – where the appellant was charged with offences of insolvent trading against s 588G(3) of the Corporations Act – where the Crown adduced expert evidence that expressed the opinion, amongst other things, that EDIS and other groups companies had been insolvent since March 2008 – where the Crown adduced opinion evidence from another witness which the defence objected to on the basis of notice and a limitation of the witness’s expertise to give the opinion – where the Crown sought leave during the trial to recall a witness in order to correct his evidence – whether a witness impermissibly gave expert evidence about the point in time when EDIS became insolvent – whether a miscarriage of justice occurred due to the prosecutor leading, without notice, expert evidence from another witness – whether the Crown improperly used the fact that a witness had corrected his evidence to unfairly discredit the appellant CRIMINAL LAW – APPEAL AND NEW TRIAL – VERDICT UNREASONABLE OR INSUPPORTABLE HAVING REGARD TO EVIDENCE – APPEAL DISMISSED – where the appellant was charged with offences of insolvent trading against s 588G(3) of the Corporations Act – where it was disputed at trial whether EDIS was insolvent, whether the appellant, as a director of EDIS, suspected that it was insolvent, and whether the appellant’s failure to prevent EDIS from incurring the respective debts was dishonest – where there was voluminous evidence about the financial position of EDIS and the other group companies – where the appellant contended on appeal that there was insufficient evidence that EDIS was insolvent based on a cash flow test – whether it was open to the jury on the evidence to conclude that EDIS was insolvent, that the appellant suspected it was insolvent, and that the appellant’s failure to prevent EDIS from incurring the respective debts was dishonest CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – FRESH EVIDENCE – where the appellant applied to present further submissions, long after the hearing and the delivery of extensive further written submissions – where the evidence came from the recent trial of these charges against the appellant’s brother – where it was contended that the evidence of Mr Hughes, the administrator and subsequent liquidator of a number of Kleenmaid companies, changed fundamentally from the appellant’s trial to his brother’s later trial – whether the evidence revealed a miscarriage of justice in the appellant’s trial CRIMINAL LAW – APPEAL AGAINST SENTENCE – GROUNDS FOR INTERFERENCE – SENTENCE MANIFESTLY EXCESSIVE OR INADEQUATE – where the appellant was sentenced to nine years’ imprisonment for the offence of fraud – where at the time of the commission of the offence of fraud, the maximum penalty was 10 years’ imprisonment – where the non-parole period effectively amounted to nearly 70 per cent of the period of imprisonment – whether this term, and the total non-parole period which resulted from this term and the cumulative sentences for the other offences, resulted in an overall sentence which was manifestly excessive Corporations Act 2001 (Cth), s 95A, s 588G(1)(c), s 588G(3) Criminal Code (Cth), s 9.1 Criminal Code (Qld), s 2, s 12, s 22, s 24, s 408C R v Armstrong[2016] QCA 243, cited R v Collins, ex parte Attorney-General [1996] 1 Qd R 631; [1994] QCA 467, cited Sandell v Porter (1966) 115 CLR 666; [1966] HCA 28, applied SKA v The Queen (2011) 243 CLR 400; [2011] HCA 13, cited Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation (2001) 53 NSWLR 213; [2001] NSWSC 621, considered Tripodi v The Queen (1961) 104 CLR 1; [1961] HCA 22, cited
COUNSEL:	S C Holt QC for the appellant/applicant W J Abraham QC, with T R Epstein, for the respondent L K Crowley QC, with P Kinchina, for the respondent, for further submissions received 19 November 2019
SOLICITORS:	Anderson Fredericks Turner for the appellant/applicant Director of Public Prosecutions (Commonwealth) for the respondent