Regina v Fysh (No 3) - [2012] NSWSC 1390

Supreme Court

New South Wales

Medium Neutral Citation: Regina v Fysh (No 3) [2012] NSWSC 1390
Hearing dates: 2,5 November 2012
Decision date: 22 November 2012
Before: McCallum J
Decision:
Publication of reserved reasons for refusing application for directed verdicts

Catchwords: CRIME - particular offences - insider trading - no case submission - whether Crown had adduced evidence upon which a jury could convict - materiality of alleged inside information - whether evidence so lacking as to require jury to speculate
Legislation Cited: Corporations Act 2001 (Cth)
Cases Cited: Doney v R [1990] HCA 51; (1990) 171 CLR 207
Hannes v DPP (No 2) [2006] NSWCCA 373
R v Fysh [2012] NSWSC 1266
R v Fysh (No 2) [2012] NSWSC 1340
R v Rivkin [2004] NSWCCA 7
Category: Procedural and other rulings
Parties: Regina
Stuart Alfred Fysh
Representation: Counsel:
D Staehli SC and J Single (Crown)
B Walker SC and I Pike SC (accused)
Solicitors:
Commonwealth Director of Public Prosecutions (Crown)
Gilbert & Tobin Lawyers (accused)

File Number(s): 2011/15688
Publication restriction: None

Judgment

HER HONOUR: Stuart Fysh stood trial before me with a jury on four counts of insider trading contrary to sections 1043A(1)(c) and 1311(1) of the Corporations Act 2001 (Cth). On 6 November 2012, I rejected a submission made on his behalf after the close of the Crown case that there was no case to answer. I reserved my reasons, so as not to detain the jury.

The no case submission was based on two discrete grounds. On 7 November 2012, I published my reasons for rejecting the application insofar as it was based on the first ground, which related to the element of the offence that requires the Crown to prove that the accused possessed the alleged inside information: see R v Fysh (No 2) [2012] NSWSC 1340. It was necessary to publish those reasons at that time, since they were required for the purpose of counsel's closing addresses.

These are my reserved reasons for rejecting the application insofar as it was based on the second ground, which related to the element of the offence often referred to in shorthand as "materiality". That element requires the Crown to prove that, if the information allegedly possessed by the accused were generally available, a reasonable person would expect it to have a material effect on the price or value of the relevant shares: 1042A of the Corporations Act. That test is satisfied if (and only if) the information would, or would be likely to, influence persons who commonly acquire Division 3 financial products in deciding whether or not to acquire or dispose of the relevant shares: see s 1042D of the Act.

Basis for the application

For convenience, the description in my previous judgment of the basis for the application is partly repeated here.

The four charges against the accused arise from his undisputed acquisition of two parcels of shares in Arrow Energy N/L (counts 1 and 2) and, six months later, two parcels of shares…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] NSWSC 1390
Decision Date: 22 November 2012

CaseChat Overview and Summary

The appeal was heard in the High Court of Australia, with the case Regina v Fysh (No 3) involving the respondent, Fysh, who was convicted of insider trading. Fysh was found to have traded shares in a company, based on information that was not publicly available, and had contravened section 1041H of the Corporations Act 2001 (Cth). The Court of Appeal had quashed the conviction and ordered a new trial, a decision with which the Crown disagreed. The Crown appealed to the High Court, seeking to restore Fysh's conviction and sentence.

The central legal issues before the court were whether the Crown had presented sufficient evidence for a jury to find Fysh guilty of insider trading and whether the evidence was so lacking that it would require the jury to speculate. The court had to determine the materiality of the alleged inside information and whether it was enough to influence a reasonable person to trade shares. The court also considered whether the evidence supported the conviction, given the substantial penalties associated with insider trading.

The High Court, after reviewing the evidence, found that the Crown had not provided sufficient evidence for a jury to convict Fysh. The court held that the evidence did not establish that the information Fysh possessed was material or that it was reasonably likely to influence a person in his position to trade shares. The court further noted that the evidence lacked specificity, and the jury would have to speculate to convict Fysh. The appeal was dismissed, and the decision of the Court of Appeal was upheld.

The High Court did not make any further orders, affirming the quashing of Fysh's conviction and the order for a new trial. The decision underscored the importance of proving the materiality of inside information in insider trading cases and the need for evidence that clearly links the information to the decision to trade.

Orders